Another mental health worker, Terre Reid, said she heard a CPS worker say, "These women will have to choose between their church and their kids."
The church has cast the raid as the latest attack on its religious rights -- the continuation of a conflict that has gone on for more than 70 years between the fundamentalist sect and the government.
Thursday's ruling in many ways echoes the sect's last major encounter with law enforcement, a 1953 raid on the Fundamentalist Church of Jesus Christ of Latter Day Saints community in Arizona.
After that raid, Arizona authorities arrested dozens of men and took 263 sect children into custody.
Within two years, all of them were back, and the group's polygamous practices continued.
"Every one of them came back home," said Benjamin Bistline, a former sect member who was 18 at the time.
In that case, the raid backfired. Public opinion turned against the government after images of crying children being torn from their parents were splashed on the front pages of newspapers across the country. The raid has been widely credited with ending Gov. Henry Pyle's political career.
Texas can appeal Thursday's decision to the Texas Supreme Court, and by Thursday evening CPS was still determining its course of action. Status hearings for the children that began earlier this week were suspended for the rest of the week.
Despite the ruling, the state can still continue its investigation into allegations of abuse among sect children and can ask the court to grant the state permanent custody of the children.
"We just received this information from the Court of Appeals, and it is being reviewed," Child Protective Services said in a statement. "We are trying to assess any impact this may have on our case and what our next steps will be."
Texas Rio Grande Legal Aid, which represents 38 of the mothers, also said it was not immediately clear what would happen to the children.
Though the decision applies only to the 41 mothers and their families, the court's reasoning appears to apply to many of the other sect children in state custody who are not underage brides or did not live in a house where an underage girl was married to an older man.
"Both TRLA attorneys and the mothers that we represent are ecstatic about this news," said Balovich. "In ruling this way, the 3rd Court of Appeals has stood up for the legal rights of these families and given these mothers hope that their families will be brought back together."
The state Child Protective Services had argued that more than 450 children taken from the sect's compound in West Texas were at risk of abuse, arguing that the sect coerced underage girls to marry older men and groomed boys to become sexual perpetrators.
But contrary to what the state had argued, the court found that the polygamist sect's belief system, by itself, did not place the children in danger of abuse.
"The department did not present any evidence of danger to the physical health and safety of any male children or any female children who had not reached puberty," the court said.
There was also no evidence that any of the children of the 41 mothers had been sexually abused or lived in a household where another child had been abused, the court stated, rejecting the state's argument that the entire ranch constituted one household. Nor was there any evidence that any of the mothers had allowed or would allow their daughters to be abused, the court said.