Insurance law, one would have thought, could not be further from the culture wars and sensitive issues of religious liberty.

That is no longer the case. On March 1, the California Supreme Court ruled that a Catholic charity was required to provide prescription contraceptives as part of its employees' insurance coverage despite Church teachings that prohibit it from doing so.

The case is sure to send shock waves through the nation. The decision opens up a new front in the battle over religion in public life: an attempt to define who qualifies as “religious” so they can be defined out of public life.

Coming on the heels of the U.S. Supreme Court decision in Locke v. Davey, which ruled that a state could legitimately deny a public scholarship benefit to someone who would use it to study religion, this case clouds the future of religious liberty for both individuals and institutions.

Catholic Charities of Sacramento sued the California Department of Insurance and other state agencies for a declaration that the Women's Contraception Equity Act was unconstitutional.

The act, which became law in 1999, provides that employee insurance policies that cover prescription drugs must include coverage for prescription contraceptives. Catholic Charities operates hospitals and other charities according to Catholic religious principles. As part of its understanding of the moral and religious obligations of an employer, Catholic Charities provides prescription drug coverage to its employees, not all of whom are Catholic.

Because the act would require Catholic Charities to provide prescription contraceptive coverage in violation of Catholic teaching, Catholic Charities claimed the statute violated the First Amendment and the California constitution because it involved the state in Church affairs and excessively “entangled” the state in religion.

The California Supreme Court, with only one dissenter, disagreed.

Despite acknowledging that “[c]ertainly the [Women's Contraception Equity Act] conflicts with Catholic Charities' religious beliefs,” the court ruled that the law applied to all institutions and did not target just religious institutions. Therefore, the act did not violate the First Amendment or the state constitution despite the burdens the act places upon institutions whose religious beliefs prevent them from providing prescription contraceptive coverage.

The key to the future importance of the case lies in a small loophole for “religious employers.” A “religious employer” is exempt from the Women's Contraception Equity Act's requirements if it can show it “primarily employs persons who share the religious tenets of the entity,” has as its purpose the “inculcation of religious values” and “serves primarily persons who share [its] religious tenets.”

This language is so restrictive that Catholic Charities had no choice but to agree it was not exempt from the statute. (There is some evidence this narrow language was chosen in part due to anti-Catholic prejudice and from an effort to drive Catholic institutions from the health care industry.) Indeed, the exemption is so restrictive that it would exclude almost all social-service institutions of every religion.

In ruling that the act is constitutional, the California court has given lawmakers free reign to define “religious employer” so as to restrict them in areas of public life beyond health care. Statutes such as the Women's Contraception Equity Act and analogues in other states such as New York (where a state court upheld an almost identical bill last year) drive right into forbidden constitutional territory because they force the state to determine which parts of a religious entity are “religious” and which are simply “charitable.”

The circumscribed role for religious institutions endorsed by the California court differs sharply from the way Catholics understand the relationship between faith and life.

Part of any Catholic organization's primary mission is the spreading of the Gospel for the salvation of all people. This mission has a strong intellectual component, but it is also inextricably tied to charity and other work, which by necessity means serving people of other faiths through institutions such as Catholic Charities. By ruling that California is allowed to determine the extent to which a charity's work is “primarily” religious, the court has essentially cast into doubt the ability of any institution to act according to its religious beliefs.

The Catholic Charities case has an even more profound lesson.

It demonstrates the dangers for religious institutions in attempting to accommodate secular categories. In its brief, Catholic Charities conceded that its purpose was “not the direct inculcation of religious values” but rather “to offer social services to the general public that promote a just, compassionate society that supports the dignity of individuals and families.”

The court seized on this language to show that Catholic Charities was not “Catholic” enough under the statute. Indeed, the court defined Catholic Charities as a “nonprofit benefit corporation” rather than a religious charity. By explicitly separating its religious existence from its charitable work, Catholic Charities gave the court an opening to deny it constitutional protection.

The California Supreme Court has sent a message that Catholic institutions should now reconsider how they portray themselves to the public and how they describe their services. Merely having “Catholic” in the name is no longer enough to ensure religious liberty.

Gerald J. Russello, a lawyer, lives in Brooklyn, New York. He is the editor of Christianity and European Culture: Selections from the Work of Christopher Dawson.