Wal-Mart bill debated

As appeals court hears case, Md. politicians look to other ways to expand health care

December 01, 2006|By Matthew Dolan and Andrew A. Green | Matthew Dolan and Andrew A. Green,Sun reporters

RICHMOND, Va. -- Attorneys for the state argued before a federal appeals court yesterday to preserve Maryland's first-in-the-nation statute to force Wal-Mart Stores Inc. to spend more on employee benefits, but lawmakers in Annapolis have already begun looking for other ways to expand health care access.

Maryland's bill, known as the Fair Share Health Care Act, drew national attention a year ago amid intensifying pressure for the giant retailer to change its business practices. But the measure was struck down in July by a lower-court judge on the grounds that it ran afoul of a federal law that promotes uniform treatment of employees.

Yesterday's arguments here in front of a three-judge panel of the Court of Appeals for the 4th Circuit drew intense interest from national business groups, labor unions and health care groups who clashed over whether states should be able to require large employers to provide a minimum level of insurance, an idea that advocates initially predicted would sweep the nation.

Labor unions and other organizations are still pushing to impose higher standards on Wal-Mart - one advocacy group has just launched a coast-to-coast advertising campaign against the retailer - but Maryland appears unlikely to make a second attempt at its landmark law if its appeal is unsuccessful.

"We're moving in different directions," said Del. Peter A. Hammen, a Baltimore Democrat who is chairman of the Health and Government Operations Committee. "We are working beyond the Wal-Mart bill to ensure greater access."

The Maryland law required 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. It was set to take effect Jan. 1, 2007. Of the four companies that size operating in the state, only Wal-Mart matched the criteria set out in the law, leading the company to charge that it had been singled out unfairly.

While unions and liberal groups cheered the measure, the bill sparked fears among businesses that government would soon force smaller employers to provide health care.

Shortly after the Maryland General Assembly overrode Gov. Robert L. Ehrlich Jr.'s veto of the measure in January, the Retail Industry Leaders Association, a trade group that counts Wal-Mart among its members, sued to block it.

Most of the judges' inquiries yesterday focused on two issues: Does federal law allow for the kind of legislation passed by Maryland? And if it does, did the state legislature act appropriately targeting Wal-Mart in a general effort to try to recoup some of the millions of dollars in health care costs spent on those who don't have insurance?

Assistant Maryland Attorney General Steven Sullivan argued that Wal-Mart, like any other employer, had an option under the new law to pay a tax to the state, estimated at $6 million a year, in lieu of additional health care payments for employees.

That alternative meant the Maryland statute would not conflict with federal law, the state's lawyers argued. Attorneys for the retail trade group countered that the choice was a false one, arguing that no rational employer would ever pay the state a tax rather than spend more on health care for its own employees.

"That's really a Hobson's choice," said the group's attorney William J. Kilberg, adding that the company would in fact have only one real option - to increase health care spending.

It was unclear which way the judges were leaning on the law's fate. Judge Paul V. Niemeyer, head of the panel, expressed skepticism that the Maryland law did not violate federal legislation protecting employers from a nationwide patchwork of local laws on health care benefits.

But his colleague, Judge M. Blane Michael, asked Wal-Mart's lawyer why the state shouldn't be able to try to make the company pay for a part of its employees' trips to the emergency room instead of foisting those costs onto Maryland taxpayers.

In his closing comments, Kilberg predicted that if the Maryland law were to stand, a rash of states and localities would follow the same path, creating a patchwork of similar laws around the country.

Amid the legal uncertainty, a wave of similar laws predicted by national labor unions never came to pass. Instead, attention has been focused on different approaches to expanding access that have been attempted in other states, notably Massachusetts, which enacted a near-universal coverage program that received bipartisan support.

Some advocates and legislators say that if the law is struck down, they will push for a new version correcting any deficiencies the courts find.

But it's unclear whether the coalition that backed the bill the first time can be resurrected.

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