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'Wal-Mart Bill' Assailed Before Judge

By Ylan Q. Mui
Washington Post Staff Writer
Saturday, June 24, 2006

A U.S. district judge in Baltimore yesterday heard arguments over the validity of Maryland's controversial law requiring large companies -- namely Wal-Mart -- to spend at least 8 percent of their payroll on health benefits.

At issue was whether the state legislation is preempted by the federal Employee Retirement Income Security Act, which sets minimum standards for private companies' voluntary pension and health plans. The state law was enacted earlier this year despite a veto attempt by Gov. Robert L. Ehrlich Jr.

The Maryland law applies to four companies with at least 10,000 employees in Maryland: Northrop Grumman Corp., Giant Food LLC, Johns Hopkins University and Wal-Mart Stores Inc. But all except Wal-Mart were exempted from the law or have already met its provisions, resulting in the nickname "Wal-Mart bill" as the legislature deliberated over it.

The Retail Industry Leaders Association, which filed the legal challenge and counts Wal-Mart among its members, said the law unfairly targets the world's largest retailer. The association also argued that the law restricts the way businesses provide health benefits for their employees.

"This law is highly discriminatory," said Eugene Scalia, the group's attorney and son of U.S. Supreme Court Justice Antonin Scalia.

Judge J. Frederick Motz shot back: "In cases where people have been targeted, they've generally been vulnerable."

State Assistant Attorney General Gary W. Kuc denied that the legislation was intended to single out Wal-Mart. He also noted that the law gives companies the option of paying into a state insurance plan for the poor or setting up first-aid clinics for employees instead of increasing health benefits.

The state also questioned whether the retail association had standing to challenge the law, which does not take effect until Jan. 1. But association President Sandra L. Kennedy said that the law has the potential to affect all of the retailers the group represents.

"I think it's an industry issue," she said.

Motz said he would consider the possible national implications of his ruling, which could help determine how much power local governments have in setting health and economic policy.

The case is being watched closely by Suffolk County in New York, which is considering legislation similar to Maryland's, and Massachusetts, which recently passed a universal health-care bill.

Vincent DeMarco, president of Maryland Citizens' Health Initiative, an advocacy group that pushed for the Maryland bill, said overturning it would "prevent other states from doing what needs to be done on this issue."

Motz indicated that he would rule soon but gave no timeline for his decision.

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