Fourth Circuit Invalidates MD's "Wal-Mart Act"

The Fourth Circuit just released its decision in Retail Industry Leaders Assn. v. Fielder. In a 2-1 decision written by Judge Niemeyer, with Judge Michael dissenting, the Court held that Maryland's Fair Share Health Care Fund Act is preempted by ERISA.

The Act was enacted last year as part of a nationwide campaign to force Wal-Mart to increase health insurance benefits for its employees. The Act forces employers with 10,000 or more Maryland employees to spend at least 8% of their total payrolls on employees' health insurance costs or, failing that, to pay to the State of Maryland the amount their spending falls short.

The Fourth Circuit held that the Act is preempted by ERISA, because it effectively requires employers in Maryland covered by the Act to restructure their employee health insurance plans, thus conflicting with ERISA's goal of permitting uniform nationwide administration of these plans.

Judge Michael's dissent essentially concluded that there's no necessary impact on ERISA plans, because the Act gives employers the option to pay an assessment to the State of Maryland -- which the State can use to support its Medicaid program -- in lieu of increasing spending on employee health insurance.