The government can withhold funds from Planned Parenthood, appeals court rules

A federal appeals court on Friday allowed the Trump administration to continue withholding funds from Planned Parenthood, as required by the tax and domestic policy law signed by President Trump in July.

The provision requires the government to stop providing Medicaid reimbursements to a subset of the nation’s largest abortion providers, in a way so narrowly defined that Planned Parenthood claimed it was intentionally singled out. The decision clears the way for the provision to remain in effect and sends the group’s lawsuit back to a lower court for resolution.

A three-judge panel, including members of President Joseph R. Biden Jr., voted unanimously to overturn a district judge’s July decision. That judge concluded that the provision appeared to designate the organization unlawfully, with potentially drastic implications.

In an opinion justifying Friday’s ruling, Judge Gustavo A. Gelpí wrote that the legislature has broad discretion to limit federal spending and that the changes affecting the fate of Medicaid funds do not amount to unlawful punishment.

The law “establishes new conditions for receiving appropriated funds in service of a new policy goal favored by Congress,” he wrote. “And it does so by imposing conditions that plaintiffs can meet by ceasing abortion services.”

Planned Parenthood sued the Trump administration shortly after the bill passed in July, arguing that the law was written to force the group to stop offering abortions or give up millions of dollars in funding. It added that the provision, if enacted, could lead to the closure of the organization’s health clinics and decimation of its budget.

The bill directed the government to stop providing Medicaid reimbursements for any type of health care to organizations that provide abortions and received more than $800,000 in reimbursements in 2024 – a tiny umbrella that covers Planned Parenthood and some of its largest competitors. The reimbursement ban provided for in the draft law should apply for one year.

In a statement about the ruling, Alexis McGill Johnson, president of the Planned Parenthood Federation of America, said the law was designed to push the organization’s health centers “to the financial brink.”

“The intent is clear: They want to close Planned Parenthood health centers and make it harder for everyone, everywhere to get the health care they need,” she said.

Judge Indira Talwani of the Federal District Court for the District of Massachusetts blocked the provision in July, writing that the policy appeared to be punitive and intended to force the organization to change its mission. Judge Talwani added that Planned Parenthood’s unique role, which includes an arm that supports candidates and does political advocacy, raises free speech concerns.

The appeals court suspended that order in September while it considered the case, leaving funding frozen in the months that followed.

Earlier this month, Judge Talwani, who had filed a second, parallel lawsuit, blocked the law from taking effect in 22 states and the District of Columbia. This week, a separate panel of the same appeals court also stayed that ruling and continued to freeze the funds.

The law already prohibits the use of federal funds to finance abortions. But Planned Parenthood and other organizations provide a range of primary care and family planning services, none of which are legally reimbursable. This includes sexually transmitted disease testing, cancer screenings and behavioral health services.

The financial uncertainty caused by the bill and litigation was costly for the organization, as states such as New York, California and Washington pledged to provide funding to keep clinics operating.

The organization also faces uncertainty over the fate of funds from a decades-old federal program that provides affordable birth control and reproductive health care, known as Title. Funding was also limited during Mr. Trump’s first term.

In a statement Friday, the group said the provision could jeopardize care for 1.1 million patients served by Planned Parenthood.

The group can continue to hear the case before Judge Talwani. But the slow pace at which it has progressed leaves open the possibility that the case will not be resolved before the provision expires next year. .