- The Washington Times - Wednesday, January 17, 2007

Wal-Mart Stores Inc. doesn’t have to pay additional health care costs for its Maryland employees, a federal appeals court ruled yesterday, likely killing similar legislation in other states.

The 4th U.S. Circuit Court of Appeals in Richmond upheld a U.S. District Court decision that said Maryland’s “Wal-Mart bill” violated the federal Employee Retirement Income Security Act (ERISA), a federal law that sets minimum standards for pensions and health plans.

A spokeswoman for Maryland Attorney General Douglas F. Gansler said the office is reviewing the opinion and has 14 days to ask for a rehearing in front of all members of the 4th Circuit. The opinion issued yesterday was reviewed by three members.

A year ago, the General Assembly passed the law, which said state employers of 10,000 or more employees were required to contribute at least 8 percent of their payroll to health care. Because of the size requirement and exceptions for the three other employers with that many employees in the state — Johns Hopkins University, Giant Food and Northrop Grumman — Wal-Mart was the only company affected by the law.

Democratic lawmakers who supported the bill said it was a necessary attempt to address out-of-control health care costs.

But opponents, including former Gov. Robert L. Ehrlich Jr., a Republican, who unsuccessfully vetoed the bill, said it unfairly targeted one employer.

The Retail Industry Leaders Association (RILA), an Arlington trade group that includes Wal-Mart, appealed the law and argued that it violated ERISA, which is designed to eliminate a patchwork of state and local employer health guidelines.

In July, U.S. District Judge J. Frederick Motz agreed; yesterday, the federal appeals court upheld that decision.

“Were we to approve Maryland’s enactment solely for its noble purpose, we would be leading a charge against a foundational policy of ERISA, and surely other states and local governments would follow,” Judge Paul V. Niemeyer, appointed by the first President Bush, wrote in his opinion, which Judge William B. Traxler Jr., appointed by President Clinton, joined.

Judge Niemeyer said the law was enacted to reduce Maryland Wal-Mart employees’ reliance on Medicaid, a federal program for the poor and disabled that is administered by the states.

“Not disguised was Maryland’s purpose to require Wal-Mart to change, at least in Maryland, its employee-benefit plans and how they are administered,” he wrote.

Judge M. Blane Michael, also appointed by Mr. Clinton, dissented, saying that because Wal-Mart would have a choice to boost health care spending on employees or pay a penalty to the state, it did not violate ERISA.

He called the law a “creative” response to the rising problem of covering health care costs. In Maryland, the 2006 Medicaid shortfall was estimated to be $130 million.

“The Maryland act is part of the state’s effort to deal with the mounting funding pressures,” he wrote.

Wal-Mart said yesterday it was pleased with the decision.

“Not only was this legislation widely viewed as bad public policy, the courts have confirmed that it violates the law,” spokesman Nate Hurst said. “This politically motivated legislation did nothing to control the cost of health care or improve access to health care, so it’s no wonder that legislators across the country have rejected this as bad public policy.”

The ruling is binding on federal courts in Maryland, Virginia, West Virginia, North Carolina and South Carolina and could stop other jurisdictions from trying to pass similar legislation.

“The court’s decision sends a strong message that similar bills under consideration in other states and municipalities also violate federal law,” said RILA President Sandy Kennedy.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide