Human Capital & Careers

Appeals Court Upholds Wal-Mart Ruling

Last July, a lower court decided that a Maryland law targeting Wal-Mart's health-care spending was ''invalid under ERISA.''
Stephen TaubJanuary 18, 2007

A three-judge panel of the U.S. Court of Appeals for the Fourth Circuit has upheld a lower-court decision to strike down a Maryland law that targeted Wal-Mart’s health-care spending.

Under the Maryland Fair Share Health Care Fund Act, a company that employed more than 10,000 workers in the state would be required to spend at least 8 percent of its payroll on employee health benefits or to contribute to the state’s insurance program for the poor. Wal-Mart, which employs about 17,000 Marylanders, is only large company in the state that does not also meet the 8 percent threshold.

Last July, U.S. District Judge J. Frederick Motz ruled that the new law “imposes legally cognizable injury upon Wal-Mart,” according to an Associated Press account at the time. Motz also reportedly wrote that the Maryland law is “pre-empted in accordance with long established Supreme Court law that state laws which impose health or welfare mandates on employers are invalid under ERISA.”

The appeals-court decision also cited conflicts with the Employment Retirement Income Security Act of 1974, as the federal law is more fully known. For the majority, Judge Paul V. Niemeyer wrote that “this is precisely the regulatory balkanization that Congress sought to avoid by enacting ERISA’s preemption provision,” reported the Washington Post. Judge William B. Traxler Jr. joined Niemeyer in his decision.

In a dissent, Judge M. Blane Michael wrote that the law “is a permissible response to the problem” of escalating Medicaid costs, reported the Baltimore Sun. Indeed, critics of Wal-Mart have long asserted that the retail giant’s health-care benefits are skimpy, thus forcing some employees to rely on state-funded plans.

The Sun added that Douglas F. Gansler, Maryland’s attorney general, can ask the entire Fourth Circuit Appeals Court to review the panel’s decision. Gansler has 14 days to make his request.