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Maryland Abandons ‘Fair Share’ Health Care Fight

April 17, 2007
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Maryland is giving up on its effort to require Wal-Mart Stores Inc. to spend more money on employees’ health insurance benefits.

Maryland Attorney General Douglas Gansler said Monday, April 16, that the state will not seek U.S. Supreme Court review of an appeals court decision earlier this year—upholding a lower court ruling—that the federal Employee Retirement Income Security Act pre-empted the Maryland law.

“The reason we are not seeking review is not because we think the law is unconstitutional. What the courts found was that the law was pre-empted by a very broad federal law called ERISA. We believe that seeking further review would not be successful,” Gansler said in a statement.

The decision by Gansler puts to an end a controversy that began in 2005 when the Maryland Legislature passed a bill, dubbed “Fair Share” by backer the AFL-CIO, to require employers with at least 10,000 employees in the state to spend at least 8 percent of payroll to provide health insurance benefits or to pay the difference into a state fund covering the low-income uninsured.

The way the bill was written, though, it would have only applied to Wal-Mart, the giant Bentonville, Arkansas-based retailer.

The measure became a model for similar bills that were introduced in about two dozen states last year.

But the Maryland measure, challenged by the Retail Industry Leaders Association, an Arlington, Virginia-based trade group of which Wal-Mart is a member, received its first blow when U.S. District Judge J. Frederick Motz said in July that the law was pre-empted by ERISA. Motz said the law violated the fundamental purpose of ERISA pre-emption: to permit multistate employers to maintain nationwide health care plans with uniform benefits.

That ruling chilled the interest of other states in enacting similar bills, with most of those proposals never moving past the committee stage. California legislators passed a Fair Share bill, but Gov. Arnold Schwarzenegger vetoed it.

The second and last legal blow came in January when the 4th U.S. Circuit Court of Appeals affirmed Motz’s decision. The appeals court said Congress made pre-emption a part of ERISA to minimize the administrative and financial burden of employers in complying with varying state benefit laws and rules.

“Were we to approve Maryland’s enactment solely for its noble purpose, we would be leading a charge against the fundamental policy of ERISA and surely other states and local governments would follow,” the appeals court ruled.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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