Wal-Mart, Other Retailers Challenge MD Health Care Law

June 23, 2006 (PLANSPONSOR.com) - An association of large retailers went to a Baltimore federal judge to complain about a Maryland law they say unfairly targets Wal-Mart.

In the latest of a string of controversies surrounding Maryland’s new law that requires large companies to spend more on health care, the Retail Industry Leaders Association, which includes Wal-Mart, recently went to court to argue that only the federal government can regulate private companies’ health spending, according to the Associated Press.   Eugene Scalia, son of US Supreme Court Justice Antonin Scalia, is representing the retailers.

Maryland ‘s Fair Share Health Care Act, dubbed the “Wal-Mart Bill,” requires that large companies put at least 8% of their total payroll in health care – or pay the difference in taxes. According to the AP, the act is worded so that only Wal-Mart would be affected. The law is scheduled to go into effect in January, if the court does not intervene.

Maryland ‘s annual Medicaid bill stands at about $4.6 billion, according to the AP, and state budget writers came up with the Wal-Mart law to deter companies from adding employees to public pensions.

If Wal-Mart does not comply with the act and provide better benefits, the state said the company can pay a penalty, estimated at $6 million, according to the AP. The state also said Wal-Mart can set up health clinics instead of increasing health care. However, the US District Judge J. Frederick Motz, who heard the argument, said the state’s idea of compliance does not pass his “silliness test” ;he said the thought it silly that the state assumed Wal-Mart would meet the requirements by setting up first-aid clinics.   Motz has no deadline in which to issue the ruling.

In January, Maryland’s Senate voted to require certain employers to spend more on employee health care, despite the governor’s veto (See  Veto of ‘Wal-Mart Bill’ Overridden in MD Senate and  Maryland Governor Vetoes Wal-Mart Health Spending Bill ).The Fair Share Health Care Act requires companies with at least 10,000 employees to pay at least 8% of its payroll toward health care on health care – or pay the difference into a state low-income health insurance fund. 

Tthe Maryland Chamber of Commerce declared that the ‘Wal-Mart Bill’ is pre-empted by a provision of the Employee Retirement Income Security Act (ERISA). See Maryland ‘Wal-Mart Bill’ Preempted by ERISA .

Other states have followed Maryland’s health-care reform lead. West Virginia considered a bill in January to force employers with 10,000 or more workers to spent at least 8% of payroll on their workers’ health care coverage costs (See  West Virginia Legislators Ponder ‘Wal-Mart Bill’ ).

Also in January, Wisconsin Governor Jim Doyle accused the corporate giant of shifting its employee health care responsibilities to the state’s taxpayers (See  Doyle Accuses Wal-Mart of Health Care ‘Dumping’ ). Doyle called for legislation to penalize employers $250,000 per incident for “dumping” in his speech to introduce a new health care proposal.

In February, Kentucky lawmakers called for the state legislature to approve a bill that would require companies with more than 25,000 employees to spend at least 10% of their payroll on employee health insurance (See  Kentucky Moves Closer To Adopting ‘Wal-Mart Bill’ ).