In a decision that could set the stage for a test of the supremacy of a longstanding federal labor law, a panel of federal judges found Tuesday that San Francisco had the right to charge employers to help pay for its universal health care plan, the first in the nation.

The ruling, by a three-judge panel of the United States Court of Appeals for the Ninth Circuit, affirms a January decision by the same panel that required all but the smallest businesses in the city to contribute to employees’ health care costs or pay a fee to help the city provide care.  San Francisco officials hailed the decision as a major victory for its plan, called Healthy San Francisco, to provide health care for some 73,000 uninsured residents.

The question is whether the San Francisco law, passed by the Board of Supervisors in 2006, violates ERISA, which is meant to guarantee uniformity and minimum standards among local, state and federal benefit plans.  Other federal courts have found that similar state or local laws requiring employer contributions violated ERISA, including a Maryland law that was struck down by an appeals court in 2007. In December 2007, a district judge had stopped the San Francisco plan, saying it conflicted with the federal law.

But Judge William A. Fletcher of the Ninth Circuit, joined by Judges Alfred T. Goodwin and Stephen Reinhardt, said their task was to decide whether the law’s fee violated ERISA, not whether the law itself was a good one. “We hold that it does not,” Judge Fletcher wrote.

Opponents of such “pay or play” plans said the impact of the court’s decision could be widespread. “This decision opens the floodgates to every state and locality seeking to develop its own version of health reform, creating an impossible environment for major employers,” said James A. Klein, the president of the American Benefits Council in Washington, which lobbies for corporate providers of benefits.

Daniel Scherotter, the president of the Golden Gate Restaurant Association, which filed suit against the fee, said the group would probably appeal to the full circuit court or the United States Supreme Court.  “This is the first decision ever in an ERISA case going in that direction,” Mr. Scherotter said. “I think if you ask anyone, even Dennis Herrera, they would think that he would lose.”

The 9^th Circuit is rewriting plainly written law. No employer mandate has ever withstood a federal court challenge until now.

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This entry was posted by Adam V. Russo on Friday, October 3rd, 2008 at 10:19 am and is filed under 9th, California, ERISA. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.