NEW ORLEANS (CN) – Sixteen judges on the Fifth Circuit heard arguments Tuesday on whether Texas can sever Planned Parenthood from the state’s Medicaid program, in a case stemming from a 2015 sting video made by anti-abortion activists that supposedly shows clinic representatives bartering the sale of fetal tissue.

The court’s decision could also affect funding for Planned Parenthood in Louisiana and Mississippi.

Texas Solicitor General Kyle Hawkins argued before the full panel of New Orleans-based U.S. circuit judges Tuesday that it is within the discretion of the states to choose which groups receive Medicaid funds. Hawkins also said individual Medicaid recipients cannot sue a state for denying funding to particular providers, as recipients did in the 2017 suit at issue in the Fifth Circuit hearing.

Hawkins told the judges Planned Parenthood “had the opportunity to avail themselves of the remedies that are built into the Medicaid Act,” but did not.

Jennifer Sandman, arguing for plaintiffs, said cutting Medicaid to Planned Parenthood would violate plaintiffs’ “free choice of provider” rights.

A unanimous ruling in January from a three-judge panel of the Fifth Circuit overturned a decision that barred Texas from eliminating Planned Parenthood from the state’s Medicaid program.

Following the release of the heavily edited fetal tissue-related videos in 2015, Texas officials claimed Planned Parenthood and its affiliates had misrepresented the services it provides, saying the clinics engage in a “policy of agreeing to” and “willingness to violate medical and ethical standards.”

They alleged Planned Parenthood alters the type and timing of abortions performed for the purposes of harvesting tissue.

In November 2015, five Planned Parenthood affiliates and seven Jane Doe plaintiffs filed a federal class action seeking to preserve Medicaid coverage for birth control, cancer screenings and other non-abortion related health services that could affect as many as 11,000 people in Texas.

The full New Orleans-based federal appeals court agreed to hear the case, which challenges a February 2017 preliminary injunction issued by U.S. District Judge Sam Sparks in Austin.

Sparks found that Texas Health and Human Services Commission “likely acted to disenroll qualified health care providers from Medicaid without cause” and that doing so would violate Medicaid recipients’ rights and disrupt the care of thousands of patients.

The three-judge Fifth Circuit panel – which included Judges Edith Jones and Grady Jolly, both Reagan appointees, and Judge Catharina Haynes, an appointee of George W. Bush – sent the case back to Judge Sparks for review in a January order, saying Sparks hadn’t followed the proper standard in his decision to issue the injunction and that he should examine more closely whether Planned Parenthood clinic staff members are “qualified” under Medicaid’s medical and ethical standards. The ruling also asked the court to take a closer look at the issue, which led to Tuesday’s full-court hearing.

Judge Sparks’ injunction noted that investigations into the state’s allegations came up empty and said the sensational details, including “secretly recorded video, fake names, a grand jury indictment, [and] congressional investigations,” added up to “a best-selling novel rather than a case concerning the interplay of federal and state authority through the Medicaid program.”

The Fifth Circuit’s January ruling, however, found that Planned Parenthood Gulf Coast has sold tissue for outside research and directed Sparks to give greater consideration to state findings on whether clinic staff members are “qualified” under Medicaid’s medicinal and ethical standards.

The appeals court judges said that Texas’ investigation of the videos found that Planned Parenthood had “violated ‘generally accepted medical standards, and thus [was] not qualified to provide medical services.’”

In 2017 the Fifth Circuit issued a split 7-7 decision on whether Louisiana could withhold Medicaid funding from Planned Parenthood, which ultimately upheld a district court ruling preserving the funding. In December, the Supreme Court ruled against the state’s appeal.

In a statement after Tuesday’s hearing, the Texas Attorney General’s office said Hawkins’ oral arguments made clear that individual Medicaid recipients cannot use lawsuits to force taxpayer funding of Planned Parenthood.

“As the raw footage makes clear, Planned Parenthood is an ethically-challenged organization at best,” Hawkins said in the statement. “This is exactly why Texas made the perfectly legal decision to strip it of Medicaid funding.”

“Texans shouldn’t have to send any more precious tax dollars to such a morally bankrupt organization,” Hawkins added.

Planned Parenthood did not immediately reply Tuesday to a request for comment.