A dispute between Indiana and federal Medicaid officials over the state'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.

"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 9,300 patients on Medicaid, the state-federal health insurance program for the needy.

Once the money runs out, and if Pratt denies the injunction, Planned Parenthood will have to close seven of its 28 health centers that served nearly 21,000 patients of all types last year and lay off 24 employees, Betty Cockrum, president of Planned Parenthood of Indiana, said in an affidavit filed Friday.

She said donations totaling $96,000 that her group has received to keep serving Medicaid patients since the law gained national attention already were slowing down.

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 because Indiana has 60 days to appeal Berwick's decision, and the two sides will try to work out a resolution. He referred to the $5.3 billion as a "nuclear option" but conceded under questioning by Pratt that it could happen.

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

"Of course it does," Fisher replied. He said later in an interview that Berwick's rejection of the Indiana Medicaid changes could end up before a federal court months from now under a prescribed appeals process.

Planned Parenthood must show it's likely to eventually prevail in its lawsuit against the state 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. He said a federal Medicaid bulletin issued the same day as Berwick's letter to Casanova effectively prevents other states from passing similar laws. The bulletin said Medicaid programs may not exclude qualified health care providers merely because they also provide abortions.

The state argues that federal law forbids Medicaid to cover abortions in most circumstances and that the program indirectly funds the procedures because Planned Parenthood's financial statements show it commingles Medicaid funds with other revenues. Medicaid funds might end paying the electricity bill for rooms where abortions are performed, Fisher said.

"We don't want state funds incidentally used to support abortions," he said.

Fisher told Pratt she should reject Planned Parenthood's request for an injunction because the lawsuit is not the "proper forum" for resolving the state-federal dispute over Indiana's new law.

If Indiana doesn't succeed with its administrative appeal of Berwick's decision, it can petition a federal appeals court to resolve the dispute, a process that would prolong the disagreement even longer, he said later in an interview.

"We have nothing that's final," Fisher told the judge.

Fisher and Falk also presented oral arguments over a provision of the new law taking effect July 1 that requires doctors providing abortions to inform their patients a fetus can feel pain at 20 weeks of gestation or sooner.

Falk said Planned Parenthood provides abortion only during the first 13 weeks and science shows fetuses do not feel pain during that period.

Fisher argued the information is relevant to the development of the fetus.

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AP writer Ken Kusmer can be reached at http://twitter.com/kkusmer.