<nobr>Mar 28, 2008</nobr>

ERIC Urges Appeals Court to Affirm Ruling that San Francisco Ordinance is Preempted by ERISA

Washington, D.C. -- ERIC and the National Business Group on Health (NBGH) today jointly urged the Ninth Circuit Court of Appeals to affirm the judgment of a district court ruling (Golden Gate Restaurant Association v. City and County of San Francisco) that the San Francisco's Health Security Ordinance is preempted by the Employee Retirement Income Security Act (ERISA). The joint amicus brief was filed March 28, 2008.

The U.S. District Court for the Northern District of California in December 2007 ruled that ERISA preempted the City's Ordinance, but the City filed an appeal and sought an emergency stay of the ruling, which was granted by the Ninth Circuit on January 9, 2008.

The Ordinance requires employers who meet a certain employee threshold to spend at least $1.17 or $1.76 (depending on the size of the workforce) on employee health benefits per worker, per hour. The district court found that the Ordinance violated ERISA's preemption clause because the mandate had an impermissible connection with employee benefit plans and interfered with employer autonomy over whether and how to provide employee health coverage. The district court also held that the obligation the Ordinance imposes on employers to keep records of health care expenditures further undermines the intent of ERISA.

For multi-state employers, ERISA preemption is essential. Under ERISA, multi-state employers are able to offer a single, coordinated package of employee health care benefits to all eligible employees, regardless of where they live or work. The brief warns that any change in the law relating to ERISA-governed plans could "substantially alter the employee-benefit landscape for millions of Americans who rely on ERISA-governed plans for their health care needs."

"Unless it is preempted by ERISA, the San Francisco ordinance will prevent employers from providing uniform health benefits to their employees nationwide and would substantially increase the cost of providing health care coverage at time that coverage is already reeling under double-digit inflation. As a result, many employers would be force to reduce or eliminate benefits for employees and their families or pass on increased costs."

The brief argues that, "[t]he Ordinance conflicts with several important federal policies furthered by ERISA and would create an administrative nightmare for large multi-jurisdictional employers, like ERIC and NBGH's members, who would have no choice but to create separate accounting systems for the various jurisdictions in which their employees work." "Indeed, the threat of conflicting state and local regulation was one of the prime reasons for the enactment of ERISA in the first place."

ERIC and NBGH further contend that the "cost of complying with the resulting patchwork quilt of state and local health care laws will be borne by both employers and employees." "The higher administrative costs imposed on multi-jurisdictional plans will inevitably reduce the health care benefits that such plans provide and/or increase the costs borne by employees (and by the government programs that provide access to other health care services)."

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202)789-1400
Fax: (202)789-1120
tgodbout@eric.org
www.eric.org

Text Files:

ERIC-NBGH Amicus Brief

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