- The Washington Times - Friday, June 23, 2006

BALTIMORE — A retail trade group challenged Maryland’s new employer health care law in court yesterday, arguing that it contradicts federal law and explicitly targets Wal-Mart.

The Retail Industry Leaders Association (RILA), a trade organization whose members include Wal-Mart, Target and many other big-box companies, filed the suit in U.S. District Court in Maryland.

The Maryland law, which passed the state legislature over Republican Gov. Robert L. Ehrlich Jr.’s veto in April, dictates that employers with more than 10,000 employees in the state have to contribute the equivalent of 8 percent of their payroll to health care costs. The employer can pass those funds to employees or pay it in the form of a tax that goes to the state’s health care fund.

Only four companies in the state employ that many people — Johns Hopkins University, Northrop Grumman, Giant Food and Wal-Mart. All but Wal-Mart meet the spending requirements in the law, which goes into effect Jan. 1.

Wal-Mart spends between 7 percent and 8 percent of its payroll on health care, said RILA attorney Eugene Scalia, who is the son of U.S. Supreme Court Justice Antonin Scalia.

One percent of its payroll represents about $2.7 million, said Maryland Assistant Attorney General Margaret Ann Nolan.

“This law is highly discriminatory,” Mr. Scalia said, citing the constitutional right to equal protection. During General Assembly debate, the bill was often labeled “the anti-Wal-Mart bill.”

The company faces a $250,000 fine if it doesn’t comply with the law.

Maryland Assistant Attorney General Gary W. Kuc argued that the law is “one small step to addressing a very large problem” of Medicaid costs.

On another point, the state argued that the retail organization cannot file the suit because the trade group is not the potentially injured party, which is Wal-Mart. The retailer is not a plaintiff.

RILA President Sandy Kennedy said the group sued because the law could affect all retailers if it is expanded to include smaller companies.

“We’re seeing [similar legislation] in other states,” she said after the court proceedings.

In his argument, Mr. Kuc said the law may have been designed to be expanded.

The way the law is set up, for-profit companies must spend 8 percent of their payroll on health care costs, while nonprofits have to pay 6 percent, he said.

“If it’s expanded in the future to less than 10,000 [employees], nonprofits may be in a less economical position to respond to 8 percent,” he said.

Maryland is the only state to adapt health care legislation aimed at big-box stores, though others have considered it. Suffolk County in New York passed similar legislation.

Judge J. Frederick Motz did not say when he would issue a ruling. Both sides said they would appeal.

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