Law defunding Ind. Planned Parenthood blocked

Updated at 9:15 p.m. ET

INDIANAPOLIS - The state of Indiana is not allowed to cut off most of Planned Parenthood's state and federal public funding solely because the organization also provides abortions, a federal judge said Friday in blocking part of the state's tough new abortion law.

U.S. District Judge Tanya Walton Pratt granted Planned Parenthood of Indiana's request for preliminary injunction on the state's move to defund the organization. Her ruling sides with federal officials who said states cannot disqualify Medicaid providers merely because they also offer abortions or restrict Medicaid recipients' freedom to choose their health care provider.

Indiana attorney general's office spokesman Bryan Corbin said the state likely will appeal.

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The law that went into effect last month made Indiana the first state to deny Medicaid funds to Planned Parenthood for general health services such as breast exams and Pap tests. It cut off about $1.4 million to Planned Parenthood, which serves about 9,300 clients in Indiana who are on the state-federal health insurance plan for low-income and disabled people who receive Medicaid.

The state had argued federal law forbids Medicaid to cover abortions in most circumstances and that the program indirectly funds the procedures because Planned Parenthood's financial statements show it commingles Medicaid funds with other revenues. The state has said the state-federal health insurance plan for low-income and disabled people might subsidize some of the overhead costs for space where abortions are performed.

Pratt's ruling said the state's new law would cause "dire financial effects" for Planned Parenthood and that plaintiffs in the case wouldn't be able to get certain medical services from their Medicaid providers of choice because of the defunding.

Planned Parenthood of Indiana has been without Medicaid funding since Gov. Mitch Daniels signed the law May 10 and was forced to stop seeing Medicaid patients this week after private donations that had paid those patients' bills ran out.

"We are extremely happy that Planned Parenthood will be able to continue to provide these necessary medical services that benefit thousands of Hoosiers," Planned Parenthood's attorney, Ken Falk of the American Civil Liberties Union, said after the ruling Friday.

Marcus Barlow, a spokesman for the state's Family and Social Services Administration, said while the injunction is in effect, Planned Parenthood will be able to provide services and then apply for Medicaid reimbursement as it did previously. He said the agency was unsure if it would push for an appeal of the decision or whether Planned Parenthood would continue to get funding during any appeal period.

"We're still deciding on what our next step will be," Barlow said.