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Under the rule, the health care providers could cite moral or religious reasons to opt out of providing procedures such as abortion, sterilization and assisted suicide.
On Wednesday, District Judge Paul Engelmayer vacated the rule, writing in his order that it "would upend the legal status quo" and potentially jeopardize billions of dollars in federal health care funds.
The Department of Health and Human Services first announced the final rule in May, claiming it would protect "individuals and health care entities from discrimination on the basis of their exercise of conscience in HHS-funded programs.”
But opponents of the rule argued that it would have put patients’ care in jeopardy and could limit health care access for women and LGBTQ patients.
"The Trump-Pence Administration will stop at nothing to strip patients of the care they deserve," Fatima Goss Graves, the president and CEO of the National Women's Law Center, said when the rule was first announced, calling it a "vicious and underhanded attack."
Graves said the rule would allow "anyone from a doctor to a receptionist, to entities like hospitals and pharmacies" to deny critical "sometimes lifesaving" care to patients. She said personal beliefs should not determine whether a patient has access to the care it needs.
"This is a vicious and underhanded attack on the health and lives of patients, particularly targeting women and LGBTQ individuals," she said. "We will fight against it until all patients get the care they deserve."
Because the rule concerned hot button issues, like abortion and assisted suicide, the judge's Wednesday decision said the rule was too "politically significant," and that Congress, not HHS, should make any new rules.
"In these circumstances, it is ‘not sustainable’ to conclude that Congress would cede such broad and unusual authority through an implicit delegation’ to HHS,” the ruling said.
HHS told ABC News it will not comment on the pending litigation and is currently reviewing the court's opinion alongside the Justice Department.
Alexis McGill Johnson, the acting president and CEO of Planned Parenthood Federation of America, applauded the court’s decision, saying in a statement that nobody should have to worry about being denied health care "simply because of their health care provider’s religious, moral, or personal beliefs.”
"Today, the Trump administration has been blocked from providing legal cover for discrimination,” McGill Johnson said. "As the federal district court made clear, the administration acted outside its authority and made false claims to try to justify this rule. This rule put patients’ needs last and threatened their ability to access potentially lifesaving health care."
She added, "Everyone deserves to access the health care they need.”
ABC News' Aaron Katersky contributed to this report.