Michigan will no longer financially support adoption and foster care agencies that refuse to work with same-sex couples and LGBTQ individuals because of religious beliefs under the terms of a settlement of a lawsuit negotiated by Attorney General Dana Nessel.

The settlement, which was announced Friday, sets up a battle with the Republican-led Legislature, which passed a law in 2015 that allows adoptions agencies to refuse to work with members of the LGBTQ community.

The terms of the settlement require that the Michigan Department of Health and Human Services agrees to maintain nondiscriminatory provisions in its foster care and adoption agency contracts. It also calls for the department to enforce the nondiscrimination provisions by terminating contracts with agencies that either discriminate against same-sex couples or LGBTQ individuals who would otherwise qualify to become foster or adoptive parents or that refer them to other agencies.

In exchange for the policy, the plaintiffs in the case — Kristy and Dana Dumont of Lansing and Erin and Rebecca Busk-Sutton of Detroit — have agreed to dismiss their claims and pay their own attorney fees and costs.

“We are so happy that for same-sex couples in Michigan who are interested in fostering or adopting, opening their hearts and homes to a child no longer comes with the risk of being subjected to the discrimination we experienced," the Dumonts said in a statement released by the American Civil Liberties Union (ACLU), which filed the case on behalf of the couples. "We are hopeful that this will mean more families for children, especially those who have been waiting years for a family to adopt them. And we can’t wait to welcome one of those children into our family.”

In 2015, Republicans in the Michigan Legislature, voting mostly along party lines, passed a controversial bill that allows adoption and foster care agencies to cite religious convictions when refusing to work with same-sex couples who want to adopt or foster a child.

The two couples filed a lawsuit in 2017 challenging the MDHHS contract with taxpayer-funded and state-contracted foster care and adoption agencies that refused to work with same-sex couples.

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The couples said they approached St. Vincent Catholic Charities and Bethany Christian Services to adopt children the agencies had accepted through referrals from MDHHS. They said the agencies refused to work with them.

The state contracts with 59 private adoption and foster care agencies across the state and while the MDHHS wasn't able to say specifically how many don't work with same-sex couples or LGBTQ individuals, 20 of the agencies are affiliated with religious organizations.

After the settlement was announced Friday, the Michigan Catholic Conference, the Lansing-based advocacy agency that serves as the official voice of the Catholic Church in Michigan, tweeted, "The settlement announced today by the Attorney General in the Dumont/Lyon case does nothing to protect the thousands of children in foster care looking for loving homes. As such, it is highly unlikely this is the last chapter of the story."

Lori Windham, an attorney with Becket, a Washington D.C.-based law firm that works on religious freedom cases, said the settlement violates Michigan law that protects religious adoption agencies.

"The Michigan AG and the ACLU are trying to stop the state from working with faith-based adoption agencies," she said in a statement. "The result of that will be tragic. Thousands of children will be kept from finding the loving homes they deserve."

Nessel, the first lesbian to be elected to statewide office in Michigan, is most well-known for her representation of a Madison Heights same-sex couple, a case that went all the way to the U.S. Supreme Court and led to the 2015 decision that legalized same-sex marriage.

During her campaign for attorney general, standing up for the rights of the LGBTQ community was a major theme.

“Discrimination in the provision of foster care case management and adoption services is illegal, no matter the rationale,” Nessel said in a statement. “Limiting the opportunity for a child to be adopted or fostered by a loving home not only goes against the state’s goal of finding a home for every child, it is a direct violation of the contract every child-placing agency enters into with the state.”

The ACLU said the settlement was a victory for the 12,000 children in foster care in Michigan.

“Our children need every family that is willing and able to provide them with a loving home," said Leslie Cooper, deputy director of the ACLU LGBT & HIV Project. "When agencies choose to accept taxpayer dollars to provide public child welfare services, they must put the needs of the children first.”

But the settlement is sure to spark a backlash from Republicans in the Legislature, who argued that businesses, including adoption and foster care agencies, shouldn't be forced to conduct business in a way that violated their moral and religious beliefs.

Senate Majority Leader Mike Shirkey, R-Clarklake, blasted Nessel and the settlement.

“Dana Nessel has shown us that she cares little for the Constitution and even less for the vulnerable population of children in need of forever homes," he said.

"Nessel’s actions make it clear that she sought the office of attorney general to further her own personal political agenda."

He claimed that faith-based adoption agencies will have to stop operating in Michigan because of the lack of taxpayer-funded support.

State Rep. James Lower, R-Cedar Lake, said the decision proves that the Legislature was right when it passed a bill late last year that would allow lawmakers to intervene in any case brought against the state. One of the reasons behind the bill was fear that Nessel would try to undo laws passed by Republicans. That bill was vetoed by former Gov. Rick Snyder.

"I’m just disappointed. This proves our point that the attorney general is unwilling to defend the laws in this state," he said, adding that he's sure the GOP caucus will talk about how to move beyond this one settlement. "We can still request to become a party to cases, but I think this one is over."

Lower wasn't in the Legislature when the original bill passed in 2015, but he said he would have supported it.

"It made sense — the situation puts these agencies in a tough situation because they have been able to refer couples to another agency that is willing to work with same-sex couples," he said. "But now, they'll have to choose to either not to help the kids or violate their religious beliefs."

Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal.