(Reuters) - A group of religiously affiliated nonprofit organizations in Indiana must comply with the Affordable Care Act's provision allowing their employees to get insurance coverage for contraception, despite their religious objections, a federal appeals court ruled on Friday.
A divided panel of the 7th U.S. Circuit Court of Appeals lifted a lower court order exempting the groups from the law.
The nonprofits, including the Saint Anne Home & Retirement Community of the Diocese of Fort Wayne-South Bend, Grace Schools, Biola University and others, sued the federal government in 2012.
The Affordable Care Act, commonly known as Obamacare, requires employers to provide insurance for their employees, including access to contraception and sterilization and other preventative services for women.
It allows religiously affiliated nonprofits to opt out of paying for contraception themselves if they notify the federal government of their objection. Insurers are then required to provide the coverage to employees at no extra cost.
The nonprofits argue that the opt-out process still makes them complicit in providing contraception, which they oppose. They claim this violates the Religious Freedom Restoration Act, a federal law that prevents the government from burdening anyone's exercise of religion without a compelling reason, as well as their religious freedom under the Constitution's First Amendment.
In December 2013, U.S. District Judge Jon DeGuilio of the Northern District of Indiana granted the nonprofits a preliminary order preventing the government from enforcing the law against them.
However, the 7th Circuit on Friday reversed that decision, following the lead of two of its own earlier decisions and those of six other federal appeals courts that have addressed the issue.
Circuit Judge Ilana Rovner, who wrote the majority opinion, said the law did not burden religious organizations because it did not require them to pay for, or even arrange, contraceptive coverage. She was joined by Circuit Judge David Hamilton.
Circuit Judge Daniel Manion dissented, saying that the contraceptive coverage still depended on the religious organizations' actions and remained connected to the health plans they paid for.
Gregory Baylor, an attorney for some of the nonprofits, said his clients were disappointed with the result and would consider asking the U.S. Supreme Court to hear the case.
"We believe that the majority simply made a mistake," he said.
The case is Grace Schools et al v. Burwell et al, U.S. Court of Appeals, 7th Circuit, No. 14-1430.
Reporting By Brendan Pierson in New York; Editing by Alexia Garamfalvi, Marguerita Choy and Jonathan Oatis