Thursday, July 20, 2006

More on Overturned Maryland Wal-Mart Bill

MarylandWalmart_1_8Section_img01_2_3Now that I have had the chance to read the Maryland Wal-Mart Bill decision in-depth (the Bill would have required Wal-Mart to spend an amount equal to at least 8% of its Maryland payroll on health care benefits for its Maryland employees), I wanted to supplement my previous post with these additional comments about the decision in RILA v. Fielder, No. 06-316 (D. Md., July 19, 2006).

First, I think the importance of these types of play-or-play state health care insurance law is underscored by the fact that this case was only filed about five months ago and there is already a decision. Clearly, this case was fast-tracked because it it due to go into effect this January and there is general agreement that the 4th Circuit should have the chance to review the district court's decision before then.

Second, although this case is primarily interesting to me because of its ERISA preemption discussion, there is also a very thorough discussion about whether industry groups like RILA can bring lawsuits on behalf of members like Wal-Mart.  The court, applying appropriate constitutional and prudential standing doctrine, found that standing did in fact exist (and also that the case is ripe for adjudication).

Third, there is also an interesting discussion on whether the Maryland law places an impermissible payroll tax on Wal-Mart in violation of the Tax Injunction Act.  This is clearly not my area of the law, but the distinction appears to come down on the fact that the law is a regulatory fee and not a tax, and therefore permissible.

Fourth, and finally (although there is also an equal protection argument at the end of the case), getting to the ERISA preemption part of the decision, the court recognizes under the Egelhoff decision that preemption under ERISA is expansive.  This is a somewhat curious place to start an ERISA preemption analysis since the general trend in ERISA preemption cases under cases like Travelers has been to narrow ERISA preemption, especially in situations dealing with traditional areas of state concern.  In other words, I am wondering if the court purposefully begins its analysis with the pre-Travelers view of ERISA preemption in order more easily to arrive at its result.

In this regard, the case states: "A short description of the statutes involved in Travelers, DeBuono, and Dillingham is sufficient to demonstrate that they lie at the periphery of ERISA analysis, not (as does the Fair Share Act) at its core."  In some of the most important language of the case, the court finds:

The Fair Share Act stands in stark contrast to the statutes challenged in Travelers,
Dillingham, and DeBuono. The Act is not merely tangentially related to ERISA plans but is focused upon them. Indeed, as the legislative history makes clear, the Fair Share Act is targeted directly at the ERISA plan of a particular employer. Moreover, the economic effect of the Fair Share Act upon Wal-Mart’s ERISA plan could not be more direct: it would require Wal-Mart to increase its health care benefits for Maryland employees and to administer its plan in such a fashion as to ensure that the statutory spending required by the Act is met. Thus, the Act violates ERISA’s fundamental purpose of permitting multi-state employers to maintain nationwide health and welfare plans, providing uniform nationwide benefits and permitting uniform national administration.

Fifth, is the Maryland law really focused on ERISA plans?  Some would argue that the law does not directly interfere with Wal-Mart's health care plan, but only requires it to spend a given amount of money on health care regardless of whether it has such a plan or not.  My sense is that this dispute lies at the heart of this controversy over Fair Share laws.

BTW, there was no additional savings clause/deemer clause analysis I presume because the Maryland law is clearly not directed to an entity engaging in insurance and does not substantially affect the risk pooling arrangements.

PS

https://lawprofessors.typepad.com/laborprof_blog/2006/07/more_on_overtur.html

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» District Court Opines That ERISA Preempts Maryland Fair Share Health Care Fund Act: Notable Quotes from The ERISA Blog
The Retail Industry Leaders Association won a victory last week when a federal district court ruled that Maryland's Fair Share Health Care Fund Act was preempted by ERISA. Access the opinion here: Retail Industry Leaders Association v. James D. Fielder... [Read More]

Tracked on Jul 22, 2006 5:26:41 PM

» RILA v. Fielder strikes down Fair Share Health Car from newsrack
Labor law professor Paul Secunda ("Workplace Prof Blog") identifies the same key passage re ERISA and comments, "...is the Maryland law really focused on ERISA plans? Some would argue that the law does not directly interfere with Wal-Mart's health ca... [Read More]

Tracked on Jul 25, 2006 12:58:05 PM

Comments

Paul,

Nice analysis. I also liked JGrenier's post which highlighted key language (and linked to your post).

I would say yes, the MD law was in fact directed at ("focused on") ERISA plans, for the reasons the court stated: no sane company, given a choice, would pay the same amount money to not-employees rather than to employees, other things being equal. It is therefore mandatory, and therefore requires a certain level of benefits. All else follows from this view.

The contrary view exalts the form over the substance.

Re. Egelhoff- it's been a while since I read it. Did it overrule Travelers, or just modify the current test? Is the result wrong, or was it just a matter of eliding? To analogize, using the Lemon Test is never per se reversible error, no matter how much the court prefers O'Connor's endorsement test. But they can still come out the other way on a de novo review of the law.

Posted by: Eh Nonymous | Jul 23, 2006 5:11:09 AM

Why would "no sane company pay out to not-employees?" It's simpler, and costs the same amount.

Posted by: Thomas Nephew | Jul 25, 2006 12:54:02 PM

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