"If they are teaching in a medical school, they are a government actor," Smith said. "Restricting their behavior and their presentation under the Ethical and Religious Directives is problematic."
The university is researching the legal issues raised in the Americans United letter, said medical school spokesman Robert Cullick.
Seton runs the publicly owned University Medical Center Brackenridge in Austin, the oldest public hospital in Texas. With the creation of the new medical school, Seton will run and own the $295 million replacement teaching hospital, which is scheduled to open in 2017. It will be the main training facility for the university's new Dell Medical School.
UT Southwestern, the university's medical school in Dallas, and the UT Medical Branch at Galveston already send students to train at the hospital in Austin.
Medical students are not employees, so do not sign contracts. But the employment contracts for faculty and residents do not allow them to engage in abortions, in vitro fertilization or promote or condone contraception, for example.
"Married couples and the medical staff who counsel them" are to receive "instruction both about the Church's teaching on responsible parenthood and in methods of natural family planning," the Catholic directives say.
There are ways to work around the strictures, however.
Faculty members and residents work off the Seton clock, for another employer, to do procedures at other facilities that are not permitted by the church, said Greg Hartman, Seton's president of external affairs.
University and Seton officials expect those relationships to continue.
Discussions of the forbidden procedures are allowed in Seton facilities.
"By the ethics of medicine, all the options need to be given" to the patient, said John Gianopoulous, Seton vice president for women's health and president and CEO of perinatal programs and services. And if Seton employees are not working in Seton facilities, "they can do what their conscience dictates," he said.