having to release medical/mental health info to others to get services is illegal in the USA (unless it it a case of investigating child abuse. if social services thinks a child is being abused they can take the child into custody and request the parent or guardian to release medical/mental health records to find out if the children are being abused, taken care of and whether the parent/guardian has a medical or mental issue that may be causing that person to abuse the children.)

Im assuming thats not the case here (abuse of children)

short version the USA have nation wide privacy/ada laws that prevent people (employers, social services, treatment providers, friends, family, strangers...) from having access to a persons mental/medical files and prevents them from discriminating against the mentally/physically challenged. forcing someone to release medical records in order to get welfare is illegal just like forcing a person to release medical records for a job, or job services is illegal...

my suggestion is contact that caseworkers supervisor and let them know the caseworker is committing a crime against HIPPA/HIPAA privacy laws and ADA laws by refusing you services if you dont release your medical/mental health records. Per new mexico standards (I know some people from new mexico) that supervisor will review your case and if this caseworker is indeed with holding services for the reason they told you (because you wont release your medical/mental health records and this isnt a child abuse or immigration issue (meaning you are from another country and are trying to get USA status established) that caseworker will most likely be fired for violating the privacy and ADA laws.

If you are an immigrant from another country you will need to contact your treatment providers in other countries and release your files in order to establish services here in the USA. America doesnt give services without first establishing that immigrating person isnt also getting services, medical care /medical treatment from another country.

but if you are an american then this caseworker is committing a crime by withholding services for your medical/mental health records.

my suggestion report them to their supervisor because if they are committing privacy/ada laws with you, they most likely are doing the same thing with others.