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Maryland Legislature

Md. Passes Rules on Wal-Mart Insurance

Bill Obligates Firms On Health Spending

By John Wagner and Michael Barbaro
Washington Post Staff Writers
Wednesday, April 6, 2005; Page A01

Maryland lawmakers yesterday approved legislation that would effectively require Wal-Mart to boost spending on health care, a direct legislative thrust against a corporate giant that is already on the defensive on many fronts nationwide.

"We're looking for responsible businesses to ante up . . . and provide adequate health care," said Sen. Thomas M. Middleton (D-Charles), the Finance Committee chairman, as the Senate approved the measure with a majority wide enough to survive an anticipated veto. A similar bill has cleared the House of Delegates, and legislators expect to reconcile their differences easily.

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Lawmakers said they did not set out to single out Wal-Mart when they drafted a bill requiring organizations with more than 10,000 employees to spend at least 8 percent of their payroll on health benefits -- or put the money directly into the state's health program for the poor.

But as debate raged in the Senate yesterday, it was clear that the giant retailer, which has 15,000 workers in Maryland, was the only company that would be affected.

"This is crossing a bridge," said Sen. E.J. Pipkin (Queen Anne's), who joined the Senate's other Republicans in voting against the bill. "Annapolis is telling private business in the private marketplace what to do."

Wal-Mart officials, likewise, condemned the General Assembly's effort as an unneeded intrusion. "We think that this sets a bad precedent by singling out one employer when it's a much bigger issue," said Nate Hurst, a government relations manager at Wal-Mart.

The retailer already is dealing with a spate of bad publicity, including increasingly intense criticism of its labor practices and a series of lawsuits. In the past month, the company agreed to pay $11 million to settle claims that one of its cleaning contractors hired illegal immigrants, and Vice Chairman Thomas M. Coughlin resigned after an internal probe questioned his use of as much as $500,000 in company funds.

The company is also battling a sex discrimination complaint filed by current and former female employees.

Along with tarnishing the folksy image fostered by founder Sam Walton, that sort of publicity could hurt the company's ability to add stores and could lead other states to pursue legislation similar to that advancing in Maryland, company officials said.

Despite its more than 5,000 stores and $285 billion in sales worldwide, Wal-Mart's future is closely tied to continued expansion. In the past year, the retailer has lost battles to build stores in Inglewood, Calif., Chicago and New York City. At the same time, dozens of local governments -- including Calvert, Prince William and Montgomery counties in the Washington region -- have passed zoning rules making it difficult for Wal-Mart to pursue its plans.

To battle back, the company has launched an unprecedented public relations campaign -- with advertisements in such publications as the New York Review of Books and face-to-face meetings with students, environmentalists and members of the Congressional Black Caucus -- aimed at tempering the company's skinflint reputation.

This week, the company hosted more than 50 print journalists from the United States, Japan and Britain at its Bentonville, Ark., headquarters.

Company officials said yesterday that they have let their critics, including labor unions, set an agenda that has focused legislative and regulatory attention on the company.

"We did a disservice to our employees and shareholders" by not speaking up, Wal-Mart chief executive H. Lee Scott Jr. said.

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