Maryland's Fair Share in Health Care Act and ERISA Resources

• In response to a lawsuit filed by the Retail Industry Leaders Association (RILA) on July 19, 2006, U.S. District Judge J. Frederick Motz struck down Maryland 's "Fair-Share" Act, declaring that the measure was pre-empted by ERISA and was therefore invalid.
• The ruling affirmed that since the passage of the Employment Retirement Income Security Act (ERISA) in 1974 the regulation of employee benefits resides with the federal government.

•  Background

• On January 12, 2006, the Maryland General Assembly over-rode Governor Robert Ehrlich's (R) veto of a bill, passed during the 2005 legislative session, requiring private-sector for-profit employers with 10,000 or more employees in the state to spend at least eight percent of their payroll (or six percent in the case of a nonprofit employer) on health care.
• Employers that fell below the required level would have to pay the difference between their health insurance expenses and the percentage threshold into a new Fair Share Health Care Fund, which would direct the funds into the state's Medicaid program.
• Maryland became the first state to require an employer to spend a defined percentage on health care for its employees.
• In February 2006, RILA filed suit in the U.S. District Court for the District of Maryland seeking to invalidate Maryland 's Fair Share in Health Care Act.
• In question was whether Maryland 's Fair Share in Health Care Act (S.B. 790/ H.B 1284), was a regulatory burden pre-empted by ERISA or whether the legislation imposed a payroll tax.
• Read the full opinion: United States District Court s Ruling.
• Get background on the Fair Share Health Care Fund Act, 2005: Presentation to SCI Summer Workshop for State Officials.

•  ERISA

• Created to establish uniform federal standards to protect private employee pension plans from fraud and mismanagement.
• Covers most other types of employee benefits plans, including health plans.
• Several provisions preempt state laws and complicate state efforts to make health care coverage more broadly available.
• The courts' interpretation of ERISA and the cases that have come before the courts have changed over the years.

State Coverage Initiatives (SCI) ERISA Resources

Over the past several years SCI has worked with, Patricia Butler, J.D., Dr.P.H, a leading national authority on ERISA and its implications for states.

New publications from SCI and NASHP explores the implications for state health care access initiatives of the recent federal court decision finding and the subsequent Federal Court of Appeals decision that ERISA preempts Maryland 's "Fair Share Act." ERISA Implications for State Health Care Access Initiatives: Impact of the Maryland "Fair Share Act" Court Decision (November 2006) and ERISA Update: Federal Court of Appeals Agrees (February 2007) discusses in detail:

• ERISA preemption principles;
• The Maryland law and RILA vs. Fielder court decision;
• Implications for state health care access initiatives involving employers in financing;
• Arguments that may be raised to challenge and defend such state programs.

These publications, written by Patricia Butler, JD, DrPH, are part of a continuing series of policy papers on ERISA published by the Robert Wood Johnson Foundation's State Coverage Initiatives program, housed at AcademyHealth, and the National Academy of State Health Policy.