The Health and Human Services Department said Wednesday that the de-funding of Planned Parenthood of Indiana is illegal. Indiana's Medicaid director received a letter from the federal government that HEA 1210 violates federal law.

The new law bars the state of Indiana from providing money to any facilities, besides hospitals and ambulatory surgical centers, that provide abortions.

In a letter to the Office of Medicaid Policy and Planning, Donald M. Berwick explained the denial.

Berwick wrote, "federal law requires Medicaid beneficiaries to be able to obtain services from from any provider qualified to provide services."

He said that Medicaid cannot exclude qualified health providers simply because of the scope of practice.

"I am unable to approve SPA 11-011 as submitted, because it does not comply with the requirements of section 1902(a)(23) of the Social Security Act," Berwick said in the letter.

Something PPIN President Betty Cockrum has been saying all along.

In a statement to Fox59 Cockrum wrote:

"It is right that the federal government take action against Indiana and set an example for other states to adopt this type of harmful legislation."

Supporters of the new law, however, say taxpayer money should not go to a group that provides abortion, even though it does so with private dollars.

"I'm impressed with the message that the legislature is sending to the federal administration," said Sue Swayze, Indiana Right to Life Spokesperson.

Swayze said the Obama administration is using bully tactics to push their agenda forward.

"I think its unfortunate when you have a presidential administration that's pushing a pro-abortion agenda over the wishes of the state's legislative branch. I think that's unfortunate. However it’s not surprising," Swayze said.

What is surprising is that the state said it plans to defy the administration's letter.

In a statement to Fox59, Director of Communications Marcus Barlow wrote:

"For now, our lawyers advise us that we must continue to follow the law the Indiana General Assembly passed. We will seek guidance from the Attorney General on how to proceed going forward."