State asks dismissal of suit over Wal-Mart

Challenge says states can't require benefits

June 24, 2006|By MATTHEW DOLAN | MATTHEW DOLAN,SUN REPORTER

A courtroom challenge to a Maryland law requiring Wal-Mart Stores Inc. to increase spending for employee health care should be tossed out because the legislation gives the retail giant several alternatives, including setting up first-aid stations or creating health savings accounts for workers, lawyers for the state said yesterday.

In February, a retail trade group filed suit on behalf of the discounter to strike down the so- called Wal-Mart law passed earlier this year by the General Assembly, saying federal rules don't allow states to specify companies' benefits.

The legislation, the first of its kind in the nation, demands that companies with more than 10,000 workers spend at least 8 percent of their payroll for employee health care or make up the difference in an equivalent payment to the state.

Of companies that size, only Wal-Mart appears to cross the law's threshold, leading to Wal-Mart's charge of singular discrimination.

In federal court in Baltimore yesterday, Assistant Attorney General Gary W. Kuc told U.S. District Judge J. Frederick Motz that the lawsuit should be thrown out because the law was a worthy attempt to offset the state's spiraling Medicaid costs for providing health care to the poor.

Motz expressed skepticism that Wal-Mart's compliance with the law would significantly lower Medicaid costs. But Kuc said the legislation served as "one small step to address a very big problem."

"We're all paying elevated rates for people who don't have health insurance," Kuc said.

Other government lawyers said the injunction sought by the Retail Industry Leaders Association, a Virginia-based organization that filed suit on behalf of Wal-Mart and other members, was premature because the law does not go into effect until January.

In the original complaint, the retail association argued that Maryland's Fair Share Health Act is illegal under the Employee Retirement Income Security Act of 1974, known as ERISA. The General Assembly overrode Gov. Robert L. Ehrlich Jr.'s veto of the measure.

"It's unprecedented," association attorney Eugene Scalia told Motz yesterday.

Scalia said allowing the law to stay on the books would encourage other states and localities to pass a patchwork of health care requirements in violation of ERISA, which was designed in part to make sure that large employers are subject to uniform standards.

In court yesterday, the state's Office of the Attorney General attempted to have the case thrown out before trial.

Motz did not rule on the issue yesterday, saying he will issue an expedited decision in the case soon.

matthew.dolan@baltsun.com

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