But Joseph Mead, an attorney from the U.S. Department of Justice, said federal law gave Sebelius discretion to approve or deny state funding requests. Medicaid rules also guaranteed patients the chance to choose their provider, Mead said.
"The state wants to have its cake and eat it too," Mead said.
Smith did not detail why he declined to grant an injunction.
Goodman said the state has signed up more than 1,000 new providers to replace Planned Parenthood, and that its surveys indicated there were enough providers for major metropolitan areas. Officials are still evaluating some smaller and rural areas, she said.
But Planned Parenthood and its supporters question whether participants in the state-funded program will have access to care if the reproductive care provider is excluded. It has sued in state court to be included in the new program.
"There is no sound reason Texas should jeopardize this important program by cutting off access to the health care provider relied on by nearly half of the women receiving basic, preventive health care through the program," Ken S. Lambrecht, president and CEO of Planned Parenthood of Greater Texas, said in a statement Friday. "Our top priority is ensuring women in Texas have access to high quality, affordable health care. We wish Texas politicians shared this commitment to Texas women, their health, and their wellbeing."
Lauren Bean, a spokeswoman for the Texas Attorney General, said the state was evaluating its options.