By Jonathan Stempel
(Reuters) - A U.S. appeals court on Thursday rejected a Christian university's challenge to President Barack Obama's 2010 healthcare overhaul, which the school said unconstitutionally imposes costly burdens on large employers and infringes religious liberty.
The 4th U.S. Circuit Court of Appeals in Richmond, Virginia, rejected Liberty University's argument that the law violated the constitution's Commerce Clause by forcing large employers to provide health insurance to full-time workers and violated First Amendment religious protections by subsidizing abortions.
The 3-0 panel decision addressed issues that the U.S. Supreme Court did not take up in June 2012, when by a 5-4 vote it upheld most of the healthcare law known as "Obamacare."
In that case, the court upheld the individual mandate requiring people to buy insurance or pay a tax. It said the mandate was a valid exercise of Congress' taxing power, though it exceeded Congress' power under the Commerce Clause.
Mathew Staver, the dean of Liberty's law school, said in a phone interview that the university plans to appeal the decision to the Supreme Court this month.
"It goes against the principle that the Supreme Court laid down that Congress cannot force individuals to buy an unwanted product," he said. "We believe the same principle applies to employers. If we win on the employer mandate, then the mandate would be gone for religious and non-religious employers."
The U.S. Department of Justice, which defended the law at the 4th Circuit, was not immediately available for comment.
Dozens of groups and individuals supported either Liberty or the federal government during the appeals process.
Liberty, based in Lynchburg, Virginia, was founded by the late U.S. evangelist Jerry Falwell. It had filed its lawsuit shortly after Obama signed the healthcare law in 2010.
EMPLOYER MANDATE NOT A "MONSTER"
In its decision, the 4th Circuit said the employer mandate does not require employers to buy a product they do not want, saying that employers are free to and often do self-insure.
It also said Congress had a rational basis for the mandate because it substantially affects how easily workers can move from state to state. The court also rejected the argument that the mandate imposes a penalty rather than a tax.
"The employer mandate is no monster; rather, it is simply another example of Congress's longstanding authority to regulate employee compensation offered and paid for by employers in interstate commerce," the panel said.
In finding that the law did not violate the right to freely exercise religion, the 4th Circuit said the law let individuals and employers use plans that do not cover abortion services except in cases of rape or incest or to protect a mother's life.
Circuit Judges Diana Gribbon Motz, Andre Davis and James Wynn, all appointed by Democratic presidents, co-wrote the decision. Most federal appeals court decisions are written by one judge or are unsigned.
"It is unusual," Staver said. "I think there was tension among the panel in terms of the direction it wanted to go, and it needed a joint decision to get a consensus."
The 4th Circuit had in 2011 dismissed Liberty's case, saying it lacked jurisdiction, but was ordered by the Supreme Court to revisit the matter.
Before the Supreme Court sent the case back, the Obama administration said Liberty's lawsuit lacked merit, but that it had no objection to letting the appeals court consider it.
Obamacare has spawned many other lawsuits. More than 60 oppose a requirement that employers provide birth control coverage, according to the Becket Fund for Religious Liberty, a nonprofit law firm.
The case is Liberty University Inc et al v. Lew et al, 4th U.S. Circuit Court of Appeals, No. 10-2347.
(Reporting by Jonathan Stempel in New York; Editing by Paul Simao and Jim Loney)