Effective January 1, 2008, San Francisco enacted an ordinance that requires private employers with twenty or more employees to make minimum health-care expenditures on behalf of their employees, such as paying employees’ health insurance premiums and contributing to their health savings accounts. The Golden Gate Restaurant Association challenged the ordinance in federal court on the basis that the employer mandates are preempted by the Employee Retirement Income Security Act (ERISA). The federal district court granted an injunction, holding that San Francisco’s ordinance is preempted because it has an impermissible connection with employee benefit plans and its expenditure requirements make unlawful reference to employee benefit plans. The Ninth Circuit granted a stay, allowing the city to enforce its ordinance while the issue was on appeal. The NAM filed an amicus brief arguing that the minimum health-care spending requirement conflicts with long-settled federal law that governs employee benefits, but the Ninth Circuit reversed. See our summary here.
The case was appealed to the Supreme Court, and the NAM supported the appeal on 7/7/09 with an amicus brief. We argued that (1) the ordinance required an employer to establish or maintain an employee welfare benefit plan within the meaning of ERISA and is therefore preempted, (2) the Ninth Circuit's decision directly conflicted with the Fourth Circuit's ruling in a similar Maryland health payments case and the conflict should be resolved, and (3) resolving this issue was particularly urgent in light of the impending comprehensive health care reform that was being debated in Congress.
The Court declined to hear this appeal on June 28, 2010. It is expected that there will be additional litigation over similar state and local health care mandates in the future, and that the Supreme Court will address the conflict in the circuits sooner or later.