<nobr>Jul 10, 2009</nobr>

ERIC and NBGH Urge Supreme Court to Consider Petition to Overturn San Francisco Health Ordinance

Washington, D.C. -- The ERISA Industry Committee (ERIC) and the National Business Group on Health (NBGH), Washington, D.C.-based trade associations that represent America's major employers, today urged the Supreme Court to grant the petition by the Golden Gate Restaurant Association asking the Court to review the decision of the Ninth Circuit Court of Appeals in the case of the Golden Gate Restaurant Association vs. City and County of San Francisco.

In that case, the circuit court held that the city's ordinance mandating specific responsibilities of employers in providing health care coverage was not preempted by the Employee Retirement Income Security Act (ERISA).

The ERIC-NBGH brief argues, among other things, that the Ninth Circuit decision undermines ERISA's statutory requirement barring state regulation of employers' uniform employee benefits. The brief also argues that the Ninth Circuit's decision is in conflict with the Fourth Circuit's decision in Retail Industry Leaders Association v. Fielder and that the Court should resolve conflicting decisions. The Fourth Circuit held in the RILA case that a similar Maryland statute was barred by ERISA.

ERIC and NBGH argue that the Ninth Circuit's ruling -- that ERISA does not preempt local laws requiring employers to make expenditures for employee health care, or equivalent payments to a local government, at a specified level or higher -- "opens the door to a patchwork quilt of local ordinances that will prevent employers that operate and provide health care benefits in more than one state or municipality from providing uniform nationwide health care coverage for their employees."

"The court rejected thirty years of settled law, as well as the fundamental basis of the Employee Retirement Security Act of 1974," said ERIC President Mark Ugoretz. "If the decision stands, it will pull the linchpin that holds employer-provided health care coverage together," he said. "It is inconceivable that employers could provide health care coverage if they had to comply with thousands of different municipal and state laws and regulations."

The brief points out that multi-jurisdictional employers are not limited to large corporations with nationwide operations. Smaller regional and local enterprises frequently operate in multiple municipal, county, and state jurisdictions. A business based in San Francisco may employ workers in Oakland or San Jose. Likewise, an enterprise in St. Louis, Missouri, may employ workers at sites nearby in Illinois; one based in Kansas City may have workplaces in both Missouri and Kansas.

The brief also argues that the ordinance 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, administrative and other systems for the various jurisdictions in which their employees work. Employees would suffer as well, according to the brief, since every time they were transferred to another jurisdiction, their benefits and coverage would change and in many cases similarly situated workers would have different health benefits depending on where they worked and lived. "In fact, the threat of conflicting state and local regulation was one of the prime reasons for the enactment of ERISA to protect both workers and employers in the first place," said Ugoretz.

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, the brief argues.

Ugoretz said that, "For multi-state employers, national uniformity provided by ERISA 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. If the ruling is allowed to stand, multi-state employers could face thousands of ordinances from municipalities all throughout the country. This would substantially increase the cost of providing health care coverage at a time that coverage is already reeling under double-digit inflation. Such a scenario would be disastrous for employer-provide health care and ultimately would dismantle the health care system as we know it."

The brief further contends that the Ninth Circuit's decision created a conflict among the courts of appeals because its analysis cannot genuinely be reconciled with the reasoning of the Fourth Circuit, which held that ERISA preempted an employer health care spending mandate in Maryland. Nor is the Ninth Circuit decision consistent with this Court's jurisprudence applying ERISA section 514(a). "The decision of the court of appeals in this case introduces grave confusion as to the scope of ERISA preemption, which should be addressed and corrected by the Court," ERIC and NBGH argue.

Finally, the brief notes that the current Congress has begun the process of considering federal legislation aimed at expanding the availability and lowering the costs of health care in this country. Contrary to the City's assertion in its response to the Petitioner's request for a stay of the court of appeals mandate, this circumstance increases, rather than diminishes, the need for correction of the Ninth Circuit's erroneous decision, the brief argues. All the significant health care reform proposals currently under discussion are similar in at least one respect: they give credence to and depend upon the continuing participation of employers as vital sponsors of benefits providing access to health care. Enforcement of ERISA's preemption provision is essential to that goal; conversely, as the framers of ERISA recognized, a balkanized legal environment could be fatal to it.

A copy of the brief appears below.

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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

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Text Files:

ERIC-NBGH Brief

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