Decision To Overturn Maryland Health Care Law Upheld

A three-judge panel of the Maryland Court of Appeals for the 4th Circuit on Wednesday in a 2-1 decision upheld a lower court decision to overturn a state law that would have required Wal-Mart Stores to increase spending on health care for employees, the Baltimore Sun reports (Dolan et al., Baltimore Sun, 1/18). The law, enacted on Jan. 12, 2006, would have required employers in Maryland with 10,000 or more employees to spend at least 8% of payroll costs on health care or contribute to a state fund for the uninsured.

Wal-Mart was the only employer in Maryland that the law would have affected. The Retail Industry Leaders Association, a retail industry group that includes Wal-Mart, in February 2006 filed a lawsuit in U.S. District Court in Baltimore over allegations that the Maryland law violates the federal Employee Retirement Income Security Act, among other allegations.

In July 2006, Judge J. Frederick Motz ruled that the Maryland law violated ERISA, which has a "fundamental purpose of permitting multistate employers to maintain nationwide health and welfare plans, providing uniform nationwide benefits and permitting uniform national administration." He also ruled that the Maryland law injured Wal-Mart because the company would have had to report to the state information on payroll and health care spending, a requirement imposed on no other companies in the state (California Healthline, 7/20/06).

Maryland appealed the decision to the 4th Circuit court.

In the 4th Circuit court decision, Judge Paul Niemeyer wrote, "In short, the Fair Share Act leaves employers no reasonable choices except to change how they structure their employee benefit plans." Niemeyer added that the Maryland law violated ERISA (Baltimore Sun, 1/18). The decision is binding for federal courts in Maryland, Virginia, West Virginia, North Carolina and South Carolina (Van Voris, Bloomberg/Arkansas Democrat-Gazette, 1/18).

Maryland has 14 days to appeal the decision to the full 4th Circuit court.

Sandra Kennedy, president of RILA, said, "The court has ... sent a strong message at states looking at similar bills: these violate federal law" (Barbaro, New York Times, 1/18).

Wal-Mart spokesperson Nate Hurst said, "Not only was this legislation widely viewed as bad public policy, the courts have confirmed that it violates the law. 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."

Maryland House of Delegates Speaker Michael Busch said that state lawmakers enacted the law to prompt Wal-Mart to "be a good corporate citizen and provide the same health care benefits that all of the other big corporations do." He added that, although the law never took effect, "I do think Wal-Mart has changed its behavior since all of this has taken place" (Baltimore Sun, 1/18).

Paul Blank, campaign director for WakeUpWalMart, said, "The overwhelming majority of the public wants to require large profitable corporations to pay their fair share for health care. This form may not work, but lawmakers will work on new ways to accomplish the same thing."

Naomi Walker -- director of state legislative programs at AFL-CIO, which lobbied for the Maryland law -- said, "We have to go back to the drawing board," adding, "State level health care reform is still possible, but it's not going to be the Maryland model" (New York Times, 1/18).

According to Bloomberg/Arkansas Democrat-Gazette, the 4th Circuit court decision might "discourage other states that have considered passing laws similar to Maryland's" (Bloomberg/Arkansas Democrat-Gazette, 1/18).