Wal-Mart Health Care Law Struck Down

Excellent...

BALTIMORE (AP) -- A federal judge on Wednesday overturned a Maryland law that would have required Wal-Mart Stores Inc. to spend more on employee health care, arguing the retail giant "faces threatened injury" from the law's spending requirement.

The state law would have required large employers to spend at least 8 percent of payroll on health care or pay the difference in taxes. Only Wal-Mart would have been affected by the law.

U.S. District Judge J. Frederick Motz concluded that the law would have hurt Wal-Mart by requiring it to track and allocate benefits for its Maryland employees in a different way from how it keeps track of employee benefits in other states. Motz wrote that the law "imposes legally cognizable injury upon Wal-Mart."

The Retail Industry Leaders Association, of which Wal-Mart is a member, filed the lawsuit contesting the legislation. The group contended the law unfairly targeted the world's largest retailer.

Without the court's intervention, the law would have taken effect in January.

Here's a link to the opinion.

The media is reporting this ruling as though it were based on the simple fact that it would be too much of a burden for Wal-Mart to comply with this legislation. That is part of it - certainly the law's requirements of Wal-Mart requires the company to expend a considerable about of time and money to both comply with the law and report details to state authorities to prove that it is complying - but more importantly Judge Motz ruled that Marylands Fair Share Act was directly in violation of federal law. Namely the Employee Retirement Income Security Act, which "sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans."

From the ruling (pages 22-23):

...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.

Also from the ruling (page 19):

In determining whether a statute has a "connection with" an ERISA plan, a court must look to (1) "the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive"; and (2) "the nature of the effect of the state law on ERISA plans." Egelhoff, 532 U.S. at 147.

In regard to the first factor, the main objective of ERISA's preemption clause is "to avoid
a multiplicity of regulation in order to permit the nationally uniform administration of employee
benefit plans."

Obviously, if Wal-Mart must have a special set of employee benefit plans for Maryland that are different from the plans offered by the company in the rest of the country that violates ERISA.

This goes beyond the simple fact that Maryland's Fair Share Act represents undue burden to Wal-Mart, it means that the Maryland legislators broke the law in passing it. To me this means that attempts to pass similar legislation in other states are probably, though frankly this sort of legislation has flopped in the 33 other states where unions and other nanny-state, big-government have tried to get it passed.

We should be thankful this happened. Things like health and paying for health care are the responsibilities of the individual, not the responsibility of that individuals employer or government.