A Catholic adoption agency sued Michigan, claiming it can't be forced to place children in LGBTQ homes.

St. Vincent Catholic Charities, one of 90 agencies receiving state funds to place children from troubled homes with new families, wants to challenge a settlement with the state, according to Detroit's CBS affiliate.

The Becket Fund for Religious Liberty filed a federal lawsuit on the agency's behalf.

"The state's decision to exclude certain agencies and certain very successful agencies like St. Vincent simply because of their religious beliefs causes unnecessary harm to the countless kids they're serving now and could be serving in the future merely because the attorney general doesn't like what St. Vincent believes and has believed for over 75 years," Nick Reaves, Becket Fund attorney, told the news station.

The lawsuit alleges Democratic state Attorney General Dana Nessel is violating the agency's First Amendment Rights and failing to comply with the federal Religious Freedom Restoration Act.

But state officials say the law never has allowed an agency doing the work of the state to deny services to anybody based on organization leaders' personal beliefs.

"Upon accepting a referral, the law does not provide an agency with discretion to refuse to provide the accepted child or individual with state-contracted foster care case management or adoption services that conflict with its sincerely held religious beliefs," said Kelly Rossman-McKinney, a spokesperson for Nessel's office.

A 2015 law in Michigan says private adoption agencies do not have to provide services that conflict with their political beliefs. But that doesn't entitle them to taxpayer resources. A settlement with the state makes clear any organization taking public dollars must not discriminate against LGBTQ individuals.

Two straight parents who have adopted five children through St. Vincent also signed on as co-plaintiffs in the lawsuit. Mother Melissa Buck told the CBS affiliate the agency saved her children from physical abuse, hunger, and neglect. But she said the state denying the organization the ability to discriminate against LGBTQ foster parents means other children "won't be as lucky."

St. Vincent and other faith-based adoption agencies in Michigan have said they will close rather than adopt policies in violation of religious beliefs.