Of State Laboratories and Legislative Alloys: How "Fair Share" Laws Can Be Written to Avoid ERISA Preemption and Influence Private Sector Health Care Reform in America

Article excerpt

TABLE OF CONTENTS

INTRODUCTION
I. THE MARYLAND FAIR SHARE ACT
   A. The Law and Its Background
II. EMPLOYMENT RETIREMENT INCOME SECURITY
   ACT OF 1974 (ERISA)
   A. The Law and Its Background
   B. Early Supreme Court Interpretation of ERISA
      1. Health Benefit Mandates
   C. The New Paradigm: The Travelers, Dillingham, and De Buono Trilogy
      1. Travelers
      2. Dillingham
      3. De Buono
III. RETAIL INDUSTRY LEADERS ASSOCIATION V. FIELDER
   A. Tax Injunction Act
   B. ERISA Preemption
   C. The Fourth Circuit Court of Appeals' Decision
IV. MODIFICATIONS FOR FUTURE
   "FAIR SHARE" LEGISLATION
V. APPROACH #1: REWRITE THE LAW AS A MEDICAID TAX,
   NOT A REGULATORY MANDATE
   A. Statutory Language and Medicaid
      Financing Purpose
   B. Legislative Record and Collection of the Tax
   C. Reduce the Shortfall Tax
VI. APPROACH #2: MINIMUM WAGE AND "TOTAL PACKAGE" BENEFITS
   A. Employer Size-specific Minimum Wages
   B. Additional Options for Employers To Meet
      Minimal Expenditures
      1. Clinics and Health Savings Accounts
      2. "Total Package" Statutes
VII. REPORTING REQUIREMENTS AND UNIFORM
   PLAN ADMINISTRATION
CONCLUSION

INTRODUCTION

   To stay experimentation in things social and economic is a grave
   responsibility. Denial of the right to experiment may be fraught
   with serious consequences to the Nation. It is one of the happy
   incidents of the federal system that a single courageous State may,
   if its citizens choose, serve as a laboratory.... (1)

Justice Brandeis's famous dissent in New State Ice Co. v. Liebmann remains apt today, particularly when viewed through the prism of America's developing health care crisis. As health care costs rapidly rise, (2) state and federal deficits increase, (3) and the uninsured rolls swell, (4) the importance of finding new avenues for public and private funding of health care assistance becomes increasingly salient.

In keeping with long-standing tenets of federalism, in recent years several states have taken the lead in trying to solve some of health care's impending difficulties. (5) One prevailing notion has been to use "pay or play" legislation (6) to shift some of the burden of financing health insurance to the private sector through America's competitive, efficient, and highly imaginative capitalist economy. (7)

One such state is Maryland, whose General Assembly passed a statute (8) in January 2006 requiring all for-profit, non-governmental employers with more than 10,000 employees in the state to spend at least 8 percent of total payroll wages on health insurance costs for employees. (9) Any noncompliant employer that fell under the purview of the "Fair Share Health Care Fund Act" ("Fair Share Act" or "FSA" or "the Act") was required to pay the state the difference between the percentage of their health care expenditures and the 8 percent rate required by the law. (10) Any revenues collected from the assessment were to be deposited into a special fund that would be used to supplement the State's Medicaid program. (11)

FSA opponents, primarily in the retail and commerce communities, dubbed the Act the "Wal-Mart Law" because the three other instate employers to which the law could apply were exempted for reasons explained below. (12) The Retail Industry Leaders Association challenged the Fair Share Act in federal court, alleging that the Act was preempted by federal law. (13) A federal district court held that the Maryland Fair Share Act was preempted by the federal Employment Retirement Income Security Act of 1974 (ERISA), (14) and the court's decision was upheld on a 2-1 ruling by the Fourth Circuit Court of Appeals in early 2007. (15)

This Note examines Maryland's preempted statute and the United States District Court case that granted its opponents declaratory relief. After reviewing the Fair Share Act, the federal ERISA statute, (16) and the significant changes in Supreme Court jurisprudence concerning ERISA preemption in the past decade, this Note will offer new approaches through which states can modify the analytical framework outlined by the Fair Share Act to achieve improvements in the state financing of Medicaid through large private employers. …