Appeals court hears Fair Share law arguments

RICHMOND, Va.--A federal appeals court Thursday heard oral arguments on a lower court ruling earlier this year that struck down a Maryland law mandating large employers to spend at least a certain percentage of payroll on health insurance coverage.

In July, U.S. District Court Judge Frederick Motz ruled that the Maryland law--passed after the Legislature overturned a gubernatorial veto--violated a provision in the Employee Retirement Income Security Act that pre-empts state laws and rules that relate to employee benefit plans (BI, July 24). The state of Maryland appealed to the 4th U.S. Circuit Court of Appeals.

The Maryland law stipulated that employers with at least 10,000 employees in the state spend an amount equal to at least 8% of payroll on health insurance coverage or put the difference into a state fund that subsidizes coverage for low-income uninsured individuals.

The way the law was written, though, it only would have applied to Wal-Mart Stores Inc., the huge Bentonville, Ark.-based retailer.The law was challenged by the Arlington, Va.-based Retail Industry Leaders Assn., of which Wal-Mart is a member. The RILA urged the appeals court to uphold Judge Motz's ruling.

"Congress enacted ERISA, in part, to create uniformity in national health benefit plans. A patchwork of state and local health benefit mandates would only serve as a strong disincentive for employers to offer health coverage," said Stephen Cannon, RILA's outside general counsel.

While similar measures--dubbed "Fair Share" by backer AFL-CIO--were introduced in about two dozen states this year, the other measures all died.