DoL Wades into San Francisco Health Plan Controversy

April 4, 2008 ( - The U.S. Department of Labor (DoL) has waded into the court case involving the controversial San Francisco Health Care Security Ordinance (HCSO) arguing that federal law pre-empts the local statute's spending mandate.

According to a BNA report, DoL lawyers put forward that assertion in a friend of the court brief filed in an appeal pending before the 9 th  U.S Circuit Court of Appeals involving a long-standing battle by the Golden Gate Restaurant Association against the health coverage law. U.S. District Judge Jeffrey S. White of the U.S. District Court for the Northern District of California agreed with the local employer trade group and blocked the city from enforcing the ordinance (See San Francisco Appeals Ruling on Health Care Ordinance ), but the 9 th  Circuit later lifted White’s order (See Appellate Court Clears Roadblock to SF Health Care Law ).

The law forces covered employers to make what it calls “reasonable” health care expenditures on behalf of their employees. For example, a covered medium-sized employer (20 to 99 employees) must dedicate $1.17 per hour per covered employee for health care coverage while a large employer (100 or more employees) must pay $1.76 per hour.

The DoL attorneys argued, in their friend of the court brief asking for the White injunction to be reinstated, that the spending mandates in the San Francisco bill are legally trumped by the Employee Retirement Income Security Act (ERISA).

“While the Department does not denigrate the seriousness of the problems the HCSO attempts to address, ERISA does not permit a state or local government to address health care problems the way the HCSO does, i.e. , by imposing ongoing obligations on employers to make prescribed minimum levels of health care expenditures for their employees,” the DoL said. In addition, the DoL contended, the San Francisco law exposes employers and plan sponsors to potentially conflicting requirements among jurisdictions, which is prohibited by ERISA.

The case is Golden Gate Restaurant Association v. San Francisco,   9th Cir., No. 07-17370. A copy of the DoL brief is available  here .