ANNAPOLIS – A national retailers association filed suit in federal court Tuesday, challenging a Maryland law that requires Wal-Mart to spend more on health care for its employees.
Maryland became the first state to enact such a law when Democrats in the General Assembly overrode Republican Gov. Robert L. Ehrlich’s veto of the Fair Share Health Care Plan after hours of contentious partisan debate on Jan. 12.
The law forces corporations with more than 10,000 workers in Maryland to spend at least 8 percent of their payroll on employee health benefits, or pay the difference into the state’s Medicaid fund.
Wal-Mart Stores, Inc. is the only such employer in the state of that size that does not already meet the 8 percent minimum.
The suit was filed in the U.S. District Court in Baltimore by the Retail Industry Leaders Association, which represents more than 400 retailers and manufacturers nationwide.
“We all agree that access to health care is vital, but these spending mandates will drive away business and discourage job creation,” Brad Anderson, RILA chairman and vice chairman and CEO of Best Buy Co., Inc., said in a written statement. “They’re simply unlawful and unwise.”
Maryland Attorney General J. Joseph Curran Jr. has previously released two written opinions in which he stated that the law is constitutional.
Tuesday evening, Curran reiterated that opinion and said he wasn’t surprised that the new law is being challenged. “We will be defending the position that the bill is constitutional,” he said. “The matter is in court, where we thought it would end up in the first place.”
Dan Fogleman, a Wal-Mart spokesman, echoed RILA chairman Anderson.
“We share the RILA’s opinion that employee benefit plans are regulated by federal law, not the state,” he said. “Legislation like that in Maryland is simply bad public policy.”
The bill was lobbied heavily by both sides before Ehrlich’s veto was overridden and continues to be a point of contention in this politically charged election year.
“It underscores what everyone outside the Maryland General Assembly has known for a year – that the Wal-Mart bill is terrible public policy,” said Henry P. Fawell, Ehrlich’s spokesman.
Other opponents of the bill concurred with Fawell’s assessment, claiming that the legislation is in violation of the national Employee Retirement Income Security Act. The RILA also asserts that the law violates the equal protection clause of the U.S. Constitution because it subjects specific companies to “arbitrary treatment.”
Earlier this year, three days before the Assembly overrode the veto, Curran addressed the legal questions in an extensive legal opinion sent to the speaker of the House of Delegates, Michael E. Busch, D-Anne Arundel, and concluded that the two laws were not in conflict.
But William R. Burns, director of communications for the Maryland Chamber of Commerce, called the Wal-Mart bill “ripe for the challenge” and said he expected the case to be “cut and dry.”
Groups that lobbied in favor of the Wal-Mart bill were also confident, saying that the suit will prove to be fruitless.
“This is a responsible piece of legislation that the people of Maryland probably support,” said Paul Blank, campaign director for Wake Up Wal-Mart, an online watchdog of the mega-retailer.
Tom Hucker, executive director of Progressive Maryland, said that the suit was a “last-ditch effort” designed to intimidate other states that are considering similar health care legislation. “If these people spent as much on employee health insurance as they did on lawyers, we wouldn’t have this problem,” he said.