Canderson03,
Yes, you can withdraw money from an IRA to cover "deductible medical expenses", and the withdrawal will be penalty-free (although you must still pay income taxes on the amount you withdraw).

HOWEVER, in order for the medical expense to be deductible (and thus eligible for penalty-free withdrawal), it must be for medical expenses that exceed 7.5% of your AGI.

Thus, for example, if your income was $50,000, then the medical expense threshold would be $50,000 x 7.5% = $3,250. Thus, if you withdrew $10,000 to cover medical expenses, the last $6,750 would be penalty free (because it exceeds the 7.5%-of-AGI threshold), but the first $3,250 would still be subject to the 10% early withdrawal penalty. Either way, all $10,000 will be subject to income taxes.

For more information on this, take a look at:
http://www.ehow.com/how_2126522_tap-ira-medical-expenses.html

I hope that helps a little!