Retail Industry Leaders Ass' v. Fielder
| Decision Date | 17 January 2007 |
| Docket Number | No. 06-1840.,No. 06-1901.,06-1840.,06-1901. |
| Citation | 475 F.3d 180 |
| Parties | RETAIL INDUSTRY LEADERS ASSOCIATION, Plaintiff-Appellee, v. James D. FIELDER, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation, Defendant-Appellant. American Association of Retired Persons; Medicaid Matters!Maryland; Maryland Citizens' Health Initiative Education Fund, Incorporated, Amici Supporting Appellant, National Federation of Independent Business Legal Foundation; Maryland Chamber of Commerce; Secretary of Labor; Chamber of Commerce of the United States of America; Society for Human Resource Management; The HR Policy Association; American Benefits Council, Amici Supporting Appellee. Retail Industry Leaders Association, Plaintiff-Appellant, v. James D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation, Defendant-Appellee. National Federation of Independent Business Legal Foundation; Maryland Chamber of Commerce; Secretary of Labor; Chamber of Commerce of the united States of America; Society for Human Resource Management; The HR Policy Association; American Benefits Council, Amici Supporting Appellant, American Association of Retired Persons; Medicaid Matters!Maryland; Maryland Citizens' Health Initiative Education Fund, Incorporated, Amici Supporting Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Steven Marshall Sullivan, Assistant Attorney General, Office of the Attorney General of Maryland, Baltimore, Maryland, for James D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation. William Jeffrey Kilberg, Gibson, Dunn & Crutcher, L.L.P., Washington, D.C., for Retail Industry Leaders Association. Timothy David Hauser, Associate Solicitor, United States Department of Labor, Office of the Solicitor, Washington, D.C., for Amici Supporting Retail Industry Leaders Association.
ON BRIEF:
J. Joseph Curran, Jr., Attorney General of Maryland, Margaret Ann Nolan, Assistant Attorney General, Gary W. Kuc, Assistant Attorney General, Carl N. Zacarias, Staff Attorney, Office of the Attorney General of Maryland, Baltimore, Maryland; Robert A. Zarnoch, Assistant Attorney General, Kathryn M. Rowe, Office of the Attorney General of Maryland, Annapolis, Maryland, for James D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation. W. Stephen Cannon, Todd Anderson, Constantine Cannon, P.C., Washington, D.C.; Eugene Scalia, Paul Blankenstein, William M. Jay, Gibson, Dunn & Crutcher, L.L.P., Washington, D.C., for Retail Industry Leaders Association. Mary Ellen Signorille, Jay E. Sushelsky, AARP Foundation; Melvin Radowitz, AARP, Washington, D.C., for American Association of Retired Persons, Amicus Supporting James D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation. Steven D. Schwinn, Professor, University of Maryland School of Law, Baltimore, Maryland, for Medicaid Matters!Maryland, Amicus Supporting James D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation. Suzanne Sangree, Public Justice Center, Baltimore, Maryland; Michael A. Pretl, Salisbury, Maryland, for Maryland Citizens' Health Initiative Education Fund, Incorporated, Amicus Supporting James D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Licensing, and Regulation. Karen R. Harned, Elizabeth A. Gaudio, NFIB Legal Foundation, Washington, D.C.; Leslie Robert Stellman, Hodes, Ulman, Pessin & Katz, P.A., Towson, Maryland, for National Federation of Independent Business Legal Foundation, Amicus Supporting Retail Industry Leaders Association. Richard L. Hackman, Smith & Downey, P.A., Baltimore, Maryland, for Maryland Chamber of Commerce, Amicus Supporting Retail Industry Leaders Association. Howard
M. Radzely, Solicitor of Labor, Karen L. Handorf, Counsel for Appellate and Special Litigation, James Craig, Senior Attorney, United States Department of Labor, Office of the Solicitor, Plan Benefits Security Division, Washington, D.C., for Secretary of Labor, Amicus Supporting Retail Industry Leaders Association. James P. Baker, Heather Reinschmidt, Jones Day, San Francisco, California; Willis J. Goldsmith, Jones Day, New York, New York, for Chamber of Commerce of the United States of America, Amicus Supporting Retail Industry Leaders Association. Thomas M. Cristina, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Greenville, South Carolina, for The Society for Human Resource Management, The HR Policy Association, and American Benefits Council, Amici Supporting Retail Industry Leaders Association.
Before NIEMEYER, MICHAEL, and TRAXLER, Circuit Judges.
Affirmed by published opinion. Judge NIEMEYER wrote the opinion, in which Judge TRAXLER joined. Judge MICHAEL wrote a dissenting opinion.
On January 12, 2006, the Maryland General Assembly enacted the Fair Share Health Care Fund Act, which requires employers with 10,000 or more Maryland employees to spend at least 8% of their total payrolls on employees' health insurance costs or pay the amount their spending falls short to the State of Maryland. Resulting from a nationwide campaign to force Wal-Mart Stores, Inc., to increase health insurance benefits for its 16,000 Maryland employees, the Act's minimum spending provision was crafted to cover just Wal-Mart. The Retail Industry Leaders Association, of which Wal-Mart is a member, brought suit against James D. Fielder, Jr., the Maryland Secretary of Labor, Licensing, and Regulation, to declare that the Act is preempted by the Employee Retirement Income Security Act of 1974 ("ERISA") and to enjoin the Act's enforcement. On cross-motions for summary judgment, the district court entered judgment declaring that the Act is preempted by ERISA and therefore not enforceable, and this appeal followed.
Because Maryland's Fair Share Health Care Fund Act effectively requires employers in Maryland covered by the Act to restructure their employee health insurance plans, it conflicts with ERISA's goal of permitting uniform nationwide administration of these plans. We conclude therefore that the Maryland Act is preempted by ERISA and accordingly affirm.
Before enactment of the Fair Share Health Care Fund Act ("Fair Share Act"), 2006 Md. Laws 1, Md.Code Ann., Lab. & Empl. §§ 8.5-101 to -107, the Maryland General Assembly heard extensive testimony about the rising costs of the Maryland Medical Assistance Program (Medicaid and children's health programs). It learned that between fiscal years 2003 and 2006, annual expenditures on the Program increased from $3.46 billion to $4.7 billion. The General Assembly also perceived that Wal-Mart Stores, Inc., a particularly large employer, provided its employees with a substandard level of healthcare benefits, forcing many Wal-Mart employees to depend on state-subsidized healthcare programs. Indeed, the Maryland Department of Legislative Services (which has the duties of providing the Maryland General Assembly with research, analysis, assessments, and evaluations of legislative issues) prepared an analytical report of the proposed Fair Share Act for the General Assembly, that discussed only Wal-Mart's employee benefits practices. In the background portion of the report, the Department of Legislative Services wrote:
Several States, facing rapidly-increasing Medicaid costs, are turning to the private sector to bear more of the costs. Wal-Mart, in particular, has been the focus of several states, who are accusing the company of providing substandard health benefits to its employees. According to the New York Times, Wal-Mart full-time employees earn an average $1,200 a month, or about $8 an hour.
Some states claim many Wal-Mart employees end up on public health programs such as Medicaid. A survey by Georgia officials found that more than 10,000 children of Wal-Mart employees were enrolled in the state's children's health insurance program (CHIP) at a cost of nearly $10 million annually. Similarly, a North Carolina hospital found that 31% of 1,900 patients who said they were Wal-Mart employees were enrolled in Medicaid, and an additional 16% were uninsured.
As a result, some States have turned to Wal-Mart to assume more of the financial burden of its workers' health care costs. California passed a law in 2003 that will require most employers to either provide health coverage to employees or pay into a state insurance pool that would do so. Advocates of the law say Wal-Mart employees cost California health insurance programs about $32 million annually. Washington state is exploring implementing a similar state law.
According to the [New York] Times, Wal-Mart said that its employees are mostly insured, citing internal surveys showing that 90% of workers have health coverage, often through Medicare or family members' policies. Wal-Mart officials say the company provides health coverage to about 537,000, or 45% of its total workforce. As a matter of comparison, Costco Wholesale provides health insurance to 96% of eligible employees.
In response, the General Assembly enacted the Fair Share Act in January 2006, to become effective January 1, 2007. The Act applies to employers that have at least 10,000 employees in Maryland, Md.Code Ann., Lab. & Empl. § 8.5-102, and imposes spending and reporting requirements on such employers. The core provision provides:
An employer that is not organized as a nonprofit organization and does not spend up to 8% of the total wages paid to employees in the State on health insurance costs shall pay to the Secretary an amount equal to the difference between what the employer spends for health insurance costs and an amount equal to 8% of the total wages paid to employees in the State.
Id. § 8.5-104(b). An employer that fails to make the required payment is subject to a civil penalty of...
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