SF Officials: Leave Our Health-Coverage Mandate Alone

December 5, 2008 (PLANSPONSOR.com) - San Francisco officials trying to defend their ordinance mandating employers to contribute to certain employees' health care costs have asked a federal appellate court not to rehear a challenge to the law.

Lawyers for the city and county of San Francisco made that request to the 9 th  U.S. Circuit Court of Appeals after lawyers representing groups fighting the health care mandate law asked the court to once again hear their pleas – this time with more than the normal three-judge panel (See SF Restaurant Group Asks for 9th Circuit Rehearing ).

The city request to the court insists that lawyers on the other side have “manufacture(d) a conflict” between federal appellate courts about the extent to which ERISA would pre-empt the San Francisco law.

The legal brief filed by San Francisco officials also mocks the notion suggested by the health mandate challengers that allowing the law to stand would improperly encourage other local governments to follow suit – calling the argument “overblown” and “highly unlikely.”    The challengers had insisted that a patchwork of local health care mandates would go against the notion that ERISA should provide a uniform national regulatory framework, and contended that “dozens” of “pay or play” or “fair share” laws have already been proposed around the country.

The court on September 30 ruled that federal law did not preempt the pay-or-play provisions of San Francisco’s Health Care Security Ordinance because they have no connection with and do not make reference to plans governed by the Employee Retirement Income Security Act (ERISA) (See Appellate Court Declares San Fran Health Law not ERISA Pre-Empted ). A federal judge in San Francisco had ruled earlier that the law would not stand because it was pre-empted by ERISA (See San Francisco Appeals Ruling on Health Care Ordinance ).

The ordinance at issue is part of a larger program designed to provide health care for low-to-moderate-income city residents. The Golden Gate Restaurant Association (GGRA) challenged the provision mandating the employer payments on behalf of covered employees to existing ERISA plans, new ERISA plans, or the city.

The 9th Circuit panel held that federal law did not preempt the San Francisco ordinance because the latter did not “bind” ERISA plan administrators to a particular choice of rules governing a plan, nor did it “require any employer to provide specific benefits through an existing ERISA plan or other health benefit plan.”

The San Francisco legal brief is available here .