Judge: ERISA Trumps MD 'Wal-Mart' Health Care Law

July 19, 2006 (PLANSPONSOR.com) - A federal judge threw out a controversial Maryland law on Wednesday that regulated the amount of health coverage Wal-Mart had to provide to employees in the state. He ruled instead that a federal benefits law would overide the state measure in any event.

US District Judge J. Frederick Motz asserted in his ruling issued Wednesday afternoon inBaltimore that the matters dealt with in the Maryland law actually are already more properly handled by the federal Employee Retirement Income Security Act (ERISA), according to news reports. Motz’s ruling supported a key argument advanced by the challengers of the bill, the Retail Industry Leaders Association (RILA), a trade group representing Wal-Mart and 400 other large companies (See Wal-Mart, Other Retailers Challenge MD Health Care Law ).

“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,” Motz wrote.

Labor groups had hoped theMaryland law would be a model for other states trying to pressure large employers to ramp up health coverage to lower-income employees (See Garden State Joins Chorus of State Health Mandate Proposals ). The Motz ruling came in a bill that had survived a veto by Republican Governor Robert Ehrlich in January (See Maryland Governor Vetoes Wal-Mart Health Spending Bill ). The measure required companies with more than 10,000 employees to spend at least 8% of their payroll on health benefits. While the law only applied to Wal-Mart in practical terms, it was generally aimed at large employers.

On Wednesday, Wal-Mart praised the ruling and said it is trying to offer more affordable health care to its employees.

“This law did nothing to control the cost of health care or improve access to health care, so it’s no wonder that legislators in 28 other states rejected this as bad public policy,” the company said in a statement.

Wal-Mart noted that it now provides health care coverage to children of part-time employees, and it has reduced the waiting time for part-time workers to qualify for insurance (See  Wal-Mart Broadens Health Benefits, To Trim Down Drug Co-Pay ).

Wal-Mart critics expressed disappointment in the ruling.

“This decision does not change the fact that Wal-Mart doesn’t provide company health care to over half of its workers,” said Paul Blank, a spokesman for activist group Wake-Up Wal-Mart. “The district court’s decision, unfortunately, ignores legal and public support for requiring large, profitable corporations to pay their fair share for health care.”

RILA also filed a lawsuit to overturn a similar health benefits law passed inSuffolk County, New York. The trade group has lobbied against attempts by 30 state and local governments to impose a mandate for employee health benefits.

Wednesday’s ruling is here .