A federal appeals court has ruled that a key provision in President Donald Trump’s sweeping tax and domestic policy legislation reducing Medicaid funding for certain Planned Parenthood affiliates does not amount to unconstitutional punishment, clearing the way for the measure to take effect while legal challenges continue.

In a decision issued Friday, the 1st U.S. Circuit Court of Appeals, based in Boston, reversed an earlier ruling by U.S. District Judge Indira Talwani that had temporarily blocked enforcement of the provision. The appeals court concluded that the law does not violate the Constitution’s ban on legislative punishment and allowed the funding restriction to begin in September as the administration’s appeal moves forward.

Judge Talwani had previously issued a preliminary injunction in July, finding that the provision likely violated the Constitution by singling out Planned Parenthood for punitive treatment. Her ruling followed a lawsuit brought by the organization after President Trump signed the legislation into law earlier this summer.

According to Planned Parenthood, at least 20 of its health centers have closed since the law was enacted, a trend the organization attributes to the anticipated loss of federal Medicaid funding.

Although the appeals court lifted Talwani’s initial injunction, the legal battle is far from over. In a separate lawsuit filed by 22 Democratic-led states and the District of Columbia, Talwani again blocked enforcement of the same provision. That ruling, however, has been temporarily paused by the appeals court as judges consider whether to fully overturn it.

Planned Parenthood Federation of America President Alexis McGill Johnson criticized Friday’s decision, arguing that it will limit access to healthcare services for low-income patients.

“This decision allows the administration to push Planned Parenthood health centers closer to financial collapse and restrict access to care for people who need it most,” Johnson said in a statement.

At the center of the dispute is a section of the One Big Beautiful Bill Act, a wide-ranging measure passed by the Republican-controlled Congress. The provision bars Medicaid reimbursements to nonprofit organizations that offer family planning services if they also provide abortion care and received more than $800,000 in Medicaid funding during the 2023 fiscal year.

Supporters of the law say it reflects Congress’s authority to determine how federal funds are spent, particularly in the wake of the Supreme Court’s 2022 decision overturning Roe v. Wade, which returned primary authority over abortion regulation to the states.

Judge Talwani had ruled that the funding restriction amounted to a “bill of attainder,” a type of legislative act explicitly prohibited by the Constitution. A bill of attainder imposes punishment on a specific individual or group without the benefit of a judicial trial. Talwani concluded that Congress intentionally targeted Planned Parenthood in order to penalize it for providing abortion services.

The appeals court rejected that reasoning.

Writing for a three-judge panel, U.S. Circuit Judge Gustavo Gelpí stated that the law does not meet the historical definition of punishment. The panel was composed of judges appointed by former President Joe Biden.

“The statute does not impose punishment as that term has traditionally been understood,” Gelpí wrote. Instead, he explained, the provision uses Congress’s spending authority to present organizations with a policy choice.

Under the law, nonprofits must either forgo Medicaid funding and continue providing abortion services or retain that funding by discontinuing abortion care. According to the court, forcing that decision does not rise to the level of unconstitutional punishment.

The Trump administration argued that Congress acted within its constitutional powers, emphasizing that participation in Medicaid is voluntary and that the government may attach conditions to the receipt of federal funds. Administration lawyers also pointed to longstanding restrictions on federal funding for abortion services as support for the policy.

Judge Talwani had also found that the law potentially violated the First Amendment rights of certain Planned Parenthood affiliates that do not perform abortions. She ruled that cutting their funding based on their association with the broader Planned Parenthood network improperly burdened their right to freely associate.

The appeals court overturned that finding as well. It narrowly interpreted the provision to apply only to organizations that operate under common corporate control with entities that provide abortion services, rather than to all affiliates sharing the Planned Parenthood name.

That interpretation, the court said, limits any potential constitutional concerns related to association rights.

As the litigation continues, the ruling represents a significant legal victory for the Trump administration and congressional Republicans seeking to restrict federal funding for abortion providers. At the same time, Planned Parenthood and its supporters warn that the decision could accelerate clinic closures and reduce access to reproductive healthcare for low-income patients who rely on Medicaid.

The final outcome will likely depend on further appellate review—and potentially a future decision by the U.S. Supreme Court—as courts continue to weigh the balance between congressional spending authority and constitutional protections.