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Life Health > Health Insurance > Life Insurance Strategies

Employer Group Challenges Health Mandate

By Matt Brady

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A retail trade group has gone to federal court to challenge a new Maryland law that could require large employers to spend a minimum amount on health benefits.

The Retail Industry Leaders Association, Arlington, Va., filed suit against the law Tuesday in the U.S. District Court in Baltimore.

The law, sometimes called the “Fair Share” bill or the “Wal-Mart” bill, would require employers with more than 10,000 employees in the state to spend a minimum of 8% of company payroll on employee health care costs, either by buying private insurance coverage or by paying into a state fund.

Gov. Robert Ehrlich, R-Md., vetoed the legislation, arguing that it violates federal law and would hurt business in the state, but the Democrat-controlled legislature voted to override the veto in January.

Although Wal-Mart Stores Inc., Bentonville, Ark., is one of several companies with more than 10,000 employees in Maryland, it is the only one that does not already meet the 8% spending threshold.

“We all agree that access to health care is vital, but these spending mandates will drive away business and discourage job creation,” says Brad Anderson, chairman of the RILA and vice chairman of Best Buy Company Inc., Minneapolis. “They’re simply unlawful and unwise.”

In its complaint, the RILA argues that the Maryland law runs counter to the federal Employee Retirement Income Security Act and should be nullified by the federal statute.

“Over the past 3 decades, the Supreme Court of the United States has held repeatedly that ERISA, not state and local laws, regulates employer health plans,” says Steve Cannon, outside general counsel to RILA. “Now that the legislative process has played out in Maryland and Suffolk County, it is time to challenge these newly enacted health plan mandates in the courts.”

The RILA also filed suit against a similar law enacted in Suffolk County, N.Y., in the U.S. District Court in Brooklyn, N.Y.

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