‘Son of Wal-Mart’ bill dies in House committee

Business groups submit filings in federal suit against state law that targets Wal-Mart

Thursday, March 23, 2006

ANNAPOLIS — A House of Delegates committee has killed a proposal that would have required more companies to fall under a controversial health benefits law.

As passed, the Fair Share Health Care Act affects only Wal-Mart, requiring the world’s largest retailer to spend more on insurance coverage for its Maryland employees.

The Retail Industry Leaders Association filed suit last month to prevent the state from enforcing the law. Last week, two business groups filed friend-of-the-court briefs, supporting the RILA suit.

The National Federation of Independent Business and the Maryland Chamber of Commerce agree with RILA the 1974 Employee Retirement Investment Security Act, or ERISA, pre-empts the state measure.

Under the Fair Share Act, companies with at least 10,000 employees must spend at least 8 percent of its payroll on employee health benefits or pay the difference to the state.

Although several Maryland companies have more than 10,000 employees, only Wal-Mart fails to meet the 8 percent threshold. In fact, the act was dubbed the ‘‘Wal-Mart bill” as it was coursing through the legislature.

The 2005 General Assembly passed the measure, which was vetoed by Gov. Robert L. Ehrlich Jr. (R). Lawmakers overturned the veto on Jan. 12. RILA filed its suit in February.

If the law survives the court challenge, it will take effect Jan. 1, 2007.

Congress passed ERISA to prevent national companies from dealing with different benefit regulations as operations cross state lines.

‘‘ERISA exists to create one single, comprehensive regulatory scheme for employer-provided benefits, rather than a tangle of state laws,” said Kathleen T. Snyder, the Maryland chamber president, said in a statement.

In their announcements of their filings, both NFIB and the chamber cited the introduction of a bill in this year’s General Assembly session. The 2006 bill, nicknamed by detractors as the ‘‘son of the Wal-Mart bill,” covers companies with fewer than 10,000 employees that do not spend at least 4.5 percent of their payrolls on health benefits.

‘‘This has always been about forcing small-business owners to provide health insurance,” said Karen Harned, executive director of NFIB’s Legal Foundation, in a statement.

That motivation would have dire consequences, Harned said, because businesses do not provide health insurance because they cannot afford to. Mandating a level of health coverage would hurt job growth and violate federal law, she said.

‘‘If the court does not find the Maryland law to be in violation of ERISA law, the survival of small-business across the country will be in jeopardy,” Harned said.

Opponents have said the Fair Share Act discriminated against Wal-Mart.

By focusing on the 2006 bill, the organizations have proven a key point from supporters that it’s a part of providing health care for all, said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative. DeMarco was a key figure pushing lawmakers to pass the Fair Share Act.

The House Health and Government Operations Committee shot down the 2006 legislation on Friday with a 13-9 vote.

Two Montgomery County delegates — Adrienne A. Mandel (D-Dist. 19) of Silver Spring and Gareth E. Murray (D-Dist. 20) of Silver Spring — supported the measure. Kumar P. Barve (D-Dist. 17) of Gaithersburg opposed it. Marilyn R. Goldwater (D-Dist. 16) of Bethesda was excused from the voting session.

Before lawmakers overturned the Ehrlich veto, state Attorney General J. Joseph Curran Jr. (D) argued the Wal-Mart legislation does not violate ERISA and it does not violate the Constitution’s equal protection clause.

‘‘We have full confidence in the attorney general’s opinion that the Fair Share Law does not violate ERISA,” DeMarco said. ‘‘The AG’s opinion is very strong on that, and we think the courts will affirm it.”

Reportedly, more than 30 states have bills similar to the Maryland measure in their legislatures. None has passed.

RILA, headquartered in Arlington, Va., filed its suit in U.S. District Court in Baltimore. RILA’s members include more than 400 retailers, including Wal-Mart, which have more than $1.4 trillion in sales.