A dispute between Indiana and federal Medicaid officials over Indiana's new abortion law cutting off some public funding for Planned Parenthood should be resolved by government administrators and not the courts, Indiana Solicitor General Thomas Fisher told a federal judge Monday.

Fisher and Ken Falk of the American Civil Liberties Union, which represents Planned Parenthood of Indiana in its request for a federal injunction blocking the law, presented oral arguments on the injunction and the law before U.S. District Judge Tanya Walton Pratt.

Pratt has said she will rule on the case by July 1, when some provisions in the law take effect. She gave Fisher and Falk 10 days to file additional written arguments in the case.

"Time is of the essence," Pratt said, noting that Planned Parenthood has said June 20 is the day it expects to run out of funding to provide general health services such as breast exams and Pap tests to the 9,300 Medicaid patients it serves at 28 health centers across Indiana.

The law signed by Gov. Mitch Daniels on May 10 would cut off about $1.4 million in Medicaid funds to Planned Parenthood, but Falk and Fisher agreed that as much as $5.3 billion in Medicaid funds to the state could be at risk since Medicaid Administrator Donald Berwick rejected changes in Indiana's state Medicaid plan brought on by the law. Berwick told Indiana Medicaid Director Pat Casanova last week that federal law says beneficiaries can obtain services from any qualified provider.

Fisher told Pratt the amount of money at stake in the state-federal dispute isn't resolved yet because Indiana has 60 days to appeal Berwick's decision last week, and the two sides will try to work out a resolution. He referred to the $5.3 billion as a "nuclear option" and conceded under questioning by Pratt that it could happen.

"Does that make you nervous?" she asked Fisher.

"Of course it does," he replied.

Planned Parenthood must show it's likely to eventually prevail in the case before Pratt will grant an injunction, and Falk said Berwick's decision does exactly that.

Falk said the law made Indiana the first state to deny Medicaid funds to Planned Parenthood for general health services

The state argues that federal law forbids Medicaid to cover abortions in most circumstances and that the joint federal-state health insurance program indirectly funds abortions because the organization's financial statements show it commingles Medicaid funds with other revenue.

Planned Parenthood of Central Indiana conducted more than 5,500 abortions last year.