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Court rules Maryland coverage law preempted by ERISA

Court rules Maryland coverage law preempted by ERISA
July 21, 2006

A federal judge ruled this week that the Employment Retirement Income Security Act preempts a new Maryland law requiring companies with more than 10,000 employees to spend at least 8% of their payroll on employee health benefits or pay a penalty to the state’s health insurance program. “The decision sends a clear signal that employer health plans are governed by federal law, not a patchwork of state and local laws,” said Sandy Kennedy, president of the Retail Industry Leaders Association, which filed the lawsuit in U.S. District Court in Maryland. Maryland Gov. Robert Uhrlich Jr. and the state’s regulatory agency, which was named as defendant, also hailed the decision, which they called “an unfair mandate on one Maryland employer.” Wal-Mart was the only company that met the employee threshold and did not pay 8% towards employee health care. RILA said 30 state and local governments this year considered health spending mandates similar to the Maryland law.