An attempt by Indiana legislators to cut off Medicaid funding to Planned Parenthood, primarily because the group provides abortions, was turned down in a federal appeals court Tuesday.

The law in question, signed by Republican governor Mitch Daniels in 2011, was the first of its kind. It was designed to cut off all Medicaid funding for all abortion providers in Indiana -- for any and all medical services provided by the organization. The decision, at the 7th US Circuit Court of Appeals in Chicago, follows an earlier ruling by U.S. District Judge Tanya Walton Pratt in June 2011, which blocked parts of the law.

The American Civil Liberties Union of Indiana filed the class action suit on behalf of Planned Parenthood of Indiana and others, including two patients.

Planned Parenthood of Indiana President and CEO Betty Cockrum stated, “At a time when Hoosiers are struggling, it’s shameful that our elected officials are spending their time, and our tax dollars, on cutting basic health care services – such as preventing unintended pregnancies – and restricting basic rights, rather than focusing on what we need most in Indiana: jobs for our hard-working neighbors and access to high-quality, affordable health care.”

ACLU of Indiana Executive Director Jane Henegar said, “The ACLU of Indiana commends the Court for its ruling, which will protect the liberties of thousands of Hoosiers. Lawmakers across the country are watching the resolution of this case. The ACLU of Indiana is on the front lines of protecting the individual rights and liberties of health care providers and the women they serve.”

Cockrum told Huffington Post on Tuesday, "We're really pleased, particularly in Indiana where the economy continues to be a challenge, that it's so clearly affirmed by the Seventh Circuit Court that it's appropriate for us to continue to serve as Medicaid providers. We've got 9,300 Medicaid patients, men and women, who rely on us for health and family planning services such as birth control, pap tests, breast exams and STD tests."