By Terry Baynes and Jonathan Stempel
(Reuters) - The Supreme Court on Monday cleared the way for a Christian college to pursue a religion-based challenge against part of President Barack Obama's healthcare reform, which it claims forces taxpayers and employers to subsidize abortions and contraception.
Liberty University, based in Lynchburg, Virginia, may now also argue that Congress exceeded its power by requiring big employers to provide healthcare coverage to workers, though legal experts said the argument faces an uphill battle in court.
In June, the Supreme Court by a 5-4 vote upheld most of the healthcare reform, but left open a possibility for groups or individuals to challenge how the law is applied.
Monday's order allows for oral argument to proceed in the 4th U.S. Circuit Court of Appeals in Richmond, Virginia.
Liberty University filed one of the first private lawsuits against the overhaul, on the day Obama signed the law in 2010.
It claimed that forcing individual taxpayers and employers to subsidize abortions and contraception impeded the free exercise of religion under the First Amendment to the U.S. Constitution.
The Supreme Court decision in June did not address the employer mandate or the religious freedom claims, according to the university.
Ilya Somin, a law professor at George Mason University in Virginia, said the challenge to the employer mandate would be a "tough sell" based on the June decision, which let Congress require people to buy health insurance under its power to tax.
"If you look at the way Chief Justice John Roberts upheld the individual mandate, and made it a tax, there is considerable reluctance on his part to strike down a major portion of this law," Somin said.
In September 2011, the 4th Circuit had said it lacked jurisdiction because challenging the mandates would have violated the federal Anti-Injunction Act's ban on lawsuits seeking to halt collection of a tax.
The Supreme Court in June formally declined to review Liberty's appeal. But the university later said that because the 4th Circuit was wrong to decide it lacked jurisdiction, its decision should be thrown out, and a new lawsuit should proceed.
In October, the Obama administration said the university's claims lacked merit, but Solicitor General Donald Verrilli in a court filing said that "under the circumstances of this case, (the government defendants) do not oppose further proceedings in the court of appeals to resolve them."
Liberty Counsel, a law firm that represents the university, said Monday's order could pave the way for the case to return to the Supreme Court in 2013.
"Congress exceeded its power by forcing every employer to provide federally mandated insurance," Liberty Counsel lawyer Mathew Staver said in a statement. "But even more shocking is the abortion mandate, which collides with religious freedom and the rights of conscience."
The U.S. Department of Justice declined to comment.
More than 40 other lawsuits are challenging a mandate that group health plans provide coverage for emergency contraceptives, according to the Becket Fund for Religious Liberty. At least two federal judges have temporarily blocked the requirement from being enforced against the religious owners of a family business.
The case is Liberty University et al v. Geithner et al, U.S. Supreme Court, No. 11-438.
(Reporting by Jonathan Stempel in Washington and Terry Baynes in New York; Editing by Howard Goller and Cynthia Osterman)