SAN FRANCISCO (Legal Newsline)-The 9th U.S. Circuit Court of Appeals, famous for its liberal, ground-breaking legal decisions, is at it again.

The three-person panel ruled Tuesday that San Francisco had the right to charge employers to help pay for its universal health care plan, the first of its kind in the nation.

The decision likely sets the stage for a legal challenge to a 1974 federal law, the Employee Retirement Income Security Act, which was designed to guarantee uniformity and minimum standards among local, state and federal benefit plans.

San Francisco's Board of Supervisors enacted its Healthy San Francisco plan in 2006 to provide comprehensive health care for roughly 73,000 uninsured residents. Critics have said the plan violates the 1974 federal law, but the 9th U.S. Circuit disagreed in its decision Tuesday.

"We're very gratified," City Attorney Dennis Herrera said following the ruling. "We think our arguments are right on the law, and we really provided a road map as to how states and localities can provide comprehensive health care coverage."

Other federal courts have found that similar state or local laws requiring employer contributions violated the federal law. A Maryland law was struck down on appeal in 2007, and in December a district judge stopped the San Francisco plan for similar reasons.

The Ninth Circuit disagreed with those rulings, stating that San Francisco's health plan does not violate the federal law.

Following the ruling, Daniel Scherotter, president of the Golden Gate Restaurant Association -- the organization that filed the suit against the city -- said it is likely to appeal, possibly to the U.S. Supreme Court.

But Mayor Gavin Newsom, himself an owner of many restaurants, said the plan would become a model for the rest of the nation, despite some extra burden it places on employers.

"By thinking outside of the box," Newsom told The New York Times, "every city and state in this country can provide health care if they are willing to challenge the conventional wisdom."

The Healthy San Francisco plan requires that company's with more than 20 employees contribute $1.17 to $1.76 per employee per hour to pay for the city's health care plan. The money can be paid into health savings accounts, employer provided insurance, reimbursements directly to the employee or contributions to the Healthy San Francisco.