Maryland Wal-Mart Bill Loses Court Appeal

Published April 1, 2007

On January 17, a federal appellate court ruled Maryland’s Fair Share Health Care Fund Act–also known as the “Wal-Mart bill”–violates the Employee Retirement Income Security Act (ERISA) of 1974.

The 2-1 ruling by the U.S. Court of Appeals for the Fourth Circuit confirmed an earlier decision by a U.S. District Court for the District of Maryland. Judge William B. Traxler Jr. joined Judge Paul V. Niemeyer in the appellate court majority. Judge M. Blane Michael dissented.

The Maryland law would have required companies with 10,000 or more employees statewide to spend at least 8 percent of their payroll on health benefits or pay into a state Medicaid fund the difference between 8 percent and the percentage they actually spend on health benefits.

Wal-Mart is the only private-sector employer that would have been affected by the measure. Other companies with 10,000 or more employees statewide already meet the 8 percent threshold.

Obvious Intent

In the majority opinion, Niemeyer wrote, “Not disguised was Maryland’s purpose to require Wal-Mart to change, at least in Maryland, its employee benefit plans and how they are administered. This goal, however, clashes with ERISA’s preemption provision and ERISA’s purpose of authorizing Wal-Mart and others like it to provide uniform health benefits to its employees on a nationwide basis.”

ERISA sets minimum standards for pension plans in private industry. The law prohibits individual states from imposing health mandates on multistate employers, such as Wal-Mart, to ensure they are able to maintain uniform standards for employee benefits.

Continuing Disagreement

“This decision only confirms what we thought from the very beginning,” said Stephen Cannon, a lawyer for the Retail Industry Leaders Association (RILA), a trade group based in Arlington, Virginia, of which Wal-Mart is a member. “The intent and effect of the Fair Share Health Care Fund Act was to interfere with and create new and different obligations for health care plans within the state of Maryland.”

RILA sued the state of Maryland in February 2006 to overturn the Fair Share Health Care Fund Act. The law was passed in January 2006 over the veto of then-Gov. Robert L. Ehrlich Jr. (R).

“Today’s ruling does nothing to change the public’s desire to require large, profitable corporations like Wal-Mart to pay their fair share for health care,” said Paul Blank, campaign director for the union-backed group, in a January 17 statement.

Joy Bernstein, press secretary for Wal-Mart Watch, a similar union-supported group, agreed.

“Taxpayers in every state pick up the tab every time a business doesn’t pay its fair share for health care and pushes its employees onto these [government health care] programs,” Bernstein said. “To date, Wal-Mart has been the biggest perpetrator, and the tab is considerable. This ruling doesn’t change the fact that Wal-Mart’s health care plan is inaccessible and unaffordable for its employees.

“Until large employers and the federal government take action, other states will continue to seek individual solutions to their health care crises,” Bernstein said.

National Standards

But individual state efforts may be counterproductive, Cannon pointed out. “Congress enacted ERISA, in part, to create uniformity in national health benefit plans. Differing state and local health mandates would only increase health care costs and serve as a strong disincentive for employers to offer health coverage.”

Sandy Kennedy, president of RILA, noted in a January 17 statement, “Today’s Appeals Court Decision makes clear that employer health plans are governed by federal law, not a patchwork of state and local laws. The court’s decision sends a strong message that similar bills under consideration in other states and municipalities also violate federal law.”

Charlotte LoBuono ([email protected]) writes from New Jersey.

For more information …

The appellate court decision in Retail Industry Leaders Association v. James D. Fielder, Jr., issued on January 17 by the U.S. Court of Appeals for the Fourth Circuit, is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to and search for document #20718.

“Lawmakers Back Away from a New Wal-Mart Bill,” by Douglas Tallman, The [Annapolis] Gazette, January 25, 2007,