Appeals Court Allows One Year Medicaid Funding Pause for Planned Parenthood

A three judge panel of the U.S. Court of Appeals for the First Circuit on December 12, 2025 reversed a district court order and permitted a one year suspension of Medicaid payments to move forward for nonprofit providers that both offer abortion services and received more than $800,000 in Medicaid payments in 2023. The provision, identified on the court docket as Section 71113, is part of a broader federal measure linked to the 2025 domestic policy legislation enacted as part of the federal budget and tax negotiations.

The ruling lifts a July preliminary injunction issued by a federal judge in Massachusetts that had blocked enforcement of the provision nationwide. That lower court had found plaintiffs were likely to prevail on claims that the law amounted to an unconstitutional bill of attainder and that it violated the First Amendment and the Equal Protection Clause. The appeals panel concluded at the interlocutory stage that Planned Parenthood was unlikely to succeed on certain constitutional claims, and that the district court had overreached by imposing a nationwide block.

The litigation was brought by Planned Parenthood Federation of America, the Planned Parenthood League of Massachusetts and the Planned Parenthood Association of Utah. They sued Robert F. Kennedy Jr. in his official capacity as Secretary of the U.S. Department of Health and Human Services, the Department of Health and Human Services, and Mehmet Oz in his official capacity as Administrator of the Centers for Medicare and Medicaid Services. The First Circuit docket lists the matters as Nos. 25 1698 and 25 1755.

In its memorandum opinion the appeals panel emphasized doctrines of statutory interpretation, including constitutional avoidance. The court said the statute’s definition of affiliates could be read in a manner that does not directly turn on protected First Amendment activity, and therefore plaintiffs were not likely to show at this preliminary stage that the law constituted an unconstitutional condition or bill of attainder. The court also narrowed the scope of the district court’s injunction, allowing enforcement to proceed while the plaintiffs pursue further appellate review.

The decision has immediate practical consequences for clinics that both provide abortion care and rely on Medicaid reimbursements. Enforcement could require such clinics to provide services for up to a year without Medicaid payment unless they change practices to avoid the funding pause. Local reporting and clinic officials in several states say that could strain budgets and patient access, particularly for low income women and families. Planned Parenthood has warned that the ruling jeopardizes care for about 1.1 million patients served by its affiliates.

A parallel lawsuit brought by 22 states and the District of Columbia challenged the same provision on different grounds. The same district court judge who issued the July injunction in the states case is identified in reporting as Judge Talwani. The First Circuit has temporarily stayed the injunction in the states case while it considers whether to lift it as part of appellate review.

The litigation will continue in the First Circuit, with further briefs and argument expected. Depending on outcomes at the appeals stage, the parties could seek Supreme Court review. For clinics and patients the case will be watched closely for its near term budgetary effects and for its broader implications about Congress’s power to condition federal reimbursements on providers’ conduct.