The 6-1 decision Monday, the first such ruling by a state's highest court, could open the door to mandated insurance coverage of abortion, said Carol Hogan, spokeswoman for the California Catholic Conference, which represents the church's policy position in the state.
While "religious employers" such as churches are exempt from the requirement in California, the high court said Catholic Charities is no different from other businesses.
Catholic Charities had argued that it, too, should be exempt.
But the Supreme Court ruled that the charity is not a religious employer because it offers such secular services as counseling, low-income housing and immigration services to people of all faiths, without directly preaching Catholic values.
In fact, Justice Kathryn Werdegar wrote that a "significant majority" of the people served by the charity are not Catholic. The court also noted that the charity employs workers of differing religions.
The California Catholic Conference said it was disappointed with the ruling. "It shows no respect to our religious organizations," Hogan said.
Experts said the ruling could affect thousands of workers at church-backed hospitals and institutions in California and prompt other states to fashion similar laws.
California is one of 20 states to require that all company-provided health plans must include contraception coverage if the plans have prescription drug benefits.
The American Civil Liberties Union applauded the ruling and called it "a great victory for California women and reproductive freedom."
Justice Janice Rogers Brown was the lone dissenting judge. Brown wrote that the Legislature's definition of a "religious employer" is too limiting if it excludes faith-based nonprofit groups like Catholic Charities.
"Here we are dealing with an intentional, purposeful intrusion into a religious organization's expression of its religious tenets and sense of mission," Brown wrote. "The government is not accidentally or incidentally interfering with religious practice; it is doing so willfully by making a judgment about what is or is not a religion."
Versions of the law considered in Monday's ruling have been adopted in the 20 states after lawmakers concluded private employee prescription plans without contraceptive benefits discriminated against women.
Civil-rights groups, health-care companies and Catholic organizations filed extensive position papers with the court. Most wrangled over the rights of a religion to practice what it preaches and the newly acquired rights of thousands of women employed by church-affiliated groups to be insured for contraceptives.
Catholic Charities has 183 full-time employees and had a $76 million budget in California in 2002. It does not demand that its workers be Catholic or share the church's philosophy.
The 20 states that require private-sector insurance coverage for prescription contraceptives are Arizona, California, Connecticut, Delaware, Iowa, Georgia, Hawaii, Maine, Maryland, Massachusetts, Missouri, Nevada, New Hampshire, New Mexico, New York, North Carolina, Rhode Island, Texas, Vermont and Washington.
By Paul Elias