FILE PHOTO: A sign is pictured at the entrance to a Planned Parenthood building in New York August 31, 2015. REUTERS/Lucas Jackson/ File Photo

By Nate Raymond

BOSTON (Reuters) - A federal appeals court cleared the way on Thursday for U.S. President Donald Trump's administration to implement a provision of his recently enacted tax and spending bill that would deprive Planned Parenthood and its members of Medicaid funding.

The Boston-based First U.S. Circuit Court of Appeals agreed to put on hold a preliminary injunction issued in July by a lower-court judge who concluded the law likely violated the U.S. Constitution by targeting Planned Parenthood's health centers specifically as punishment for providing abortions.

That provision in the One Big Beautiful Bill Act passed by the Republican-led Congress denied certain tax-exempt organizations and their affiliates from receiving Medicaid funds if they continued to provide abortions.

Planned Parenthood and some of its affiliates sued to block the funding provision, arguing it would have "catastrophic" consequences for its nearly 600 health centers, putting nearly 200 of them in 24 states at risk of closure.

The U.S. Department of Justice told the 1st Circuit that in halting the provision, U.S. District Judge Indira Talwani overrode the judgment of the democratically elected branches of government that "taxpayer funds should not be used to subsidize certain entities that practice abortion - conduct that many Americans find morally abhorrent."

Talwani was appointed by Democratic U.S. President Barack Obama. All three judges on the panel that put Talwani's injunction on hold were appointed by Democratic President Joe Biden. The panel did not explain its reasoning for issuing the stay.

In a statement, Planned Parenthood said more than 1.1 million patients would now be unable to use their Medicaid insurance at its centers.

"We will continue to fight this unconstitutional law, even though this court has allowed it to impact patients," said Alexis McGill Johnson, the group's president.

The White House did not respond to a request for comment.

In seeking to pause Talwani's order, the Justice Department said the judge used "flimsy" reasoning to conclude the law constituted an unconstitutional "bill of attainder."

A bill of attainder is a legislative act prohibited by the Constitution that seeks to inflict punishment on a person or group without a trial. The Supreme Court has only invalidated laws passed by Congress five times under that clause, the Justice Department said.

"Halting federal subsidies bears no resemblance to the punishments - including death, banishment, and imprisonment - previously understood as implicating the Clause," the Trump administration argued.

Talwani also blocked the law's implementation on the grounds that it burdened the right of some Planned Parenthood affiliates who do not provide abortions to associate with their parent organization in likely violation of the U.S. Constitution's First Amendment, which protects the right to free speech.

But the administration said Congress has often enacted laws designed to prevent regulated entities from using their corporate structures to evade legal requirements, none of which have been understood to raise First Amendment concerns.

(Reporting by Nate Raymond in Boston and Luc Cohen in New York; Editing by David Bario, Nia Williams, Alexia Garamfalvi and Richard Chang)