Federal Judge Overturns Maryland Health Care Law

U.S. District Judge J. Frederick Motz on Wednesday overturned a Maryland law that would have required Wal-Mart Stores to increase spending on health care for employees, the New York Times reports (Abelson/Barbaro, New York Times, 7/20). The law, enacted on Jan. 12, 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 affected by the law. The Retail Industry Leaders Association, a retail industry group that includes Wal-Mart, in February 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 (California Healthline, 2/8).

In his decision, Motz ruled that the Maryland law "violates ERISA's fundamental purpose of permitting multistate employers to maintain nationwide health and welfare plans, providing uniform nationwide benefits and permitting uniform national administration" (New York Times, 7/20). 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.

However, Motz rejected an argument in the lawsuit that the Maryland law discriminated against Wal-Mart in violation of the equal protection clause in the 14th Amendment of the U.S. Constitution (Dolan et al., Baltimore Sun, 7/20).

According to the Times, Motz "emphasized that his ruling only applied to the Maryland law, and it was unclear exactly how the decision might affect" related laws recently enacted in Massachusetts and Vermont (New York Times, 7/20).

Wal-Mart CEO Lee Scott in an interview said, "The thing that we find encouraging is that there is going to be consistency; that the federal government is going to be the control point on health insurance and these kinds of issues, so that commerce itself, business, will be able to have one set of standards that they work against" (Witte, Chicago Tribune, 7/19).

Sandy Kennedy, president of RILA, said, "This decision is a significant victory for all businesses that offer health care to their employees." In addition, she said that the issue of health care costs "is a national issue," adding, "The solution isn't going to be on the back of one industry" (Appleby, USA Today, 7/20).

Kevin Enright, a spokesperson for the Maryland Office of the Attorney General, said the state will appeal the decision to the 4th U.S. Circuit Court of Appeals in Richmond, Va. Enright said, "Supreme Court precedent makes it clear that this law does not impermissibly impact health benefit plans. Employers may choose to pay the tax or avoid paying the tax in several ways" (Chicago Tribune, 7/19).

State Senate President Thomas Miller (D), who supports the Maryland law, called the decision a "minor setback." Miller said, "What we'll do is look at the law and find out exactly what the judge said and see if we can craft a bill that comports with his decision but (achieves) the same goal."

Gov. Robert Ehrlich (R), who vetoed the Maryland law prior to an override vote by the state Legislature, praised the decision and called the law "overreaching" and "irresponsible" (Baltimore Sun, 7/20).

NPR's "Morning Edition" on Thursday reported on the decision. The segment includes comments from Stephen Cannon, an attorney who represents Wal-Mart (Langfitt, "Morning Edition," NPR, 7/20).

The complete segment is available online in RealPlayer.