Court Smacks Down Maryland in Wal-Mart Case

The attempt to extort additional funds from Wal-Mart for employee health plans took another hit when the courts ruled the Maryland law violated a long existing federal law:

A federal appeals court ruled today that Maryland violated federal law when it required Wal-Mart Stores to increase spending on employee health insurance, in a decision that appears likely to end a bitter yearlong legal battle that pitted state legislators, organized labor and health care advocates against the nation’s largest retailer.

The 2-to-1 ruling by a panel of the United States Court of Appeals for the Fourth Circuit is a major setback — if not a fatal blow — for a nascent campaign, called “fair share,” that sought to move millions of America’s working poor off of state-sponsored insurance programs, like Medicaid, and on to employer-based plans.

Facing ballooning Medicaid costs, the Maryland state legislature last year passed a law forcing major employers to spend the equivalent of 8 percent of their payrolls on health care. But it structured the legislation so that it was aimed at only one company — Wal-Mart, which has many workers rely on Medicaid in states from Maryland to Georgia.

Encouraged by the Maryland law, the first of its kind in the nation, lawmakers in dozens of other states said they would introduce similar bills to confront spiraling Medicaid costs.

But the appeals court, upholding a lower court ruling, found that the Maryland rule violated a federal labor law intended to allow companies to create a uniform system of health benefits across the country, rather than navigate a patchwork of state-by-state requirements.

By requiring employers in Maryland to restructure insurance plans, the court found, the law “conflicts” with the intent of the federal labor law, known as the Employee Retirement Income Security Act, or ERISA.

This is good news on two fronts: #1 it strikes down an incredibly bad law in Maryland, and #2 it may serve as the basis for striking down Gov. Schwarzenegger's plan to require a certain level of employee health insurance from California's employers, including providing health care to illegal immigrants.

There's still a way to go in this court case, but it looks like Maryland's efforts to punish success will fail.