Industry Groups Also Ask for 9th Circuit Rehearing of San Francisco Health Care Law

November 4, 2008 ( - The ERISA Industry Committee (ERIC), the National Business Group on Health (NBGH), and the American Benefits Council (ABC) have filed friend-of-the-court briefs reiterating the Golden Gate Restaurant Association's request for a full 9th U.S. Circuit Court of Appeals review of its ruling approving a San Francisco law mandating employers to provide health care coverage.

In their joint amicus brief supporting the Golden Gate Restaurant Association’s call for a full 9th U.S. Circuit Court of Appeals review (See SF Restaurant Group Asks for 9th Circuit Rehearing ), ERIC and the NBGH made the following arguments:

  • The San Francisco “play-or-pay” ordinance violates the Employee Retirement Income Security Act (ERISA) on which employers depend to voluntarily provide high-quality, affordable health benefits to their workers and dependents.
  • If allowed to stand the case would permit not only San Francisco, but thousands of other municipalities as well as states to pass a patchwork of conflicting health laws with which multistate employers would find it impossible to comply.
  • The San Francisco “play-or-pay” ordinance is likely to increase health care costs for workers and businesses and threaten the ability of employers to provide an affordable benefit.
  • The San Francisco “play-or-pay”‘ ordinance conflicts with a January 2007 4th U.S. Circuit Court of Appeals decision that Maryland’s so-called ‘Wal-Mart’ law violated ERISA (See  Judge: ERISA Trumps MD ‘Wal-Mart’ Health Care Law ).

Likewise, the ABC, in its amicus brief, said an en banc review is warranted because the 9 th Circuit’s previous decision cannot be reconciled with Supreme Court precedent and it creates a clear division between the federal appellate courts. The Council accused the appellate court of misunderstanding the 4 th Circuit’s previous decision on a Maryland health care law and not recognizing that the San Francisco ordinance creates an ERISA welfare plan and is therefore preempted by the federal law.

Finally, ABC contended in its brief that the 9 th Circuit’s previous decision “undermines Congress’ intent to embrace preemption to promote the efficient operation of multi-state health plans.”

The Council’s brief is here .

According to a news report from BNA, the U.S. Department of Labor argued in its amicus brief that the three-judge 9 th Circuit panel's previous decision in Golden Gate Restaurant Association v. San Francisco inadequately addressed 9 th Circuit precedents and mischaracterized the secretary of labor's position.

The DoL said the panel viewed the secretary as arguing that the San Francisco law's city-payment option is itself an ERISA plan; however, according to the Department the Secretary never made this argument, but argued that when an employer chooses that option, the employer establishes an ERISA plan in the same way that an employer's payment to an insurer establishes a plan based on the 9th Circuit's previous ruling in Qualls v. Blue Cross of California.

The panel did not address the Qualls ruling which conflicted with its ruling in the San Francisco case, the DoL said, according to BNA.

The DoL also argued in its brief that the panel failed to apply the U.S. Supreme Court's test for determining when a state law interferes with uniform plan administration requiring an assessment of the potential for conflict if other state or local governments enact similar laws, as well as an assessment of the potential burdens the state law will place on employers in their capacity as plan sponsors. The Department pointed out that the secretary took the position that permitting San Francisco to enforce the health care spending requirements would create an "obvious potential for conflict with pay-or-play laws that other jurisdictions have enacted or have considered," and impose an impermissible burden on plan sponsors.

"Even if the administrative burden imposed by a single law may be tolerable, the cumulative burden could be staggering and runs directly counter to ERISA's goal of encouraging employers, who may operate nationally, voluntarily to provide uniform employee benefits under the legal framework provided by a federal scheme with intentionally broad preemptive force," the brief said, according to BNA.