Teina Pora has filed an action in the High Court seeking a judicial review of the government's handling of his compensation package.
Mr Pora was paid $2.5 million by the government In June, after he spent nearly 22 years in prison for the 1992 murder and rape of Susan Burdett in Auckland - crimes he never committed.
His compensation was based on 1998 guidelines that award $100,000 a year for loss of liberty.
An independent report had recommended the figure be adjusted for inflation but the government rejected that.
In a statement, Mr Pora's lawyer, Jonathan Krebs, said the papers filed last week related to the government's failure to take into account that recommendation.
"Despite Sir Rodney Hansen saying it should be inflation adjusted and to not do so would be anomalous and unjust, the Cabinet has decided not to [do so]."
The case will come before the High Court in Wellington next month.