Judge Overturns Wal-Mart Health Care Law

Wal mart CEO Lee Scott responds to questions during an radio interview with Rev. Al Sharpton Wednesday July 19, 2006 in New York. In a rare live radio appearance, Scott staunchly defended his company's labor relations and health care policies while taking telephone calls that included one from the head of a union-backed group campaigning against the nation's largest employer. (AP Photo/Frank Franklin II) (Frank Franklin Ii - AP)

RILA President Sandy Kennedy said the ruling sent a message that employer health plans are governed by federal law and "not a patchwork of state and local laws."

"It also is a clear message that similar bills under consideration in other states and municipalities violate federal law as well," Kennedy said.

Other states have considered bills similar to Maryland's law, although no other state has adopted one.

Nu Wexler, a spokesman for Wal-Mart Watch, one of Wal-Mart's most vocal union-funded critics, said the ruling doesn't change the fact that Wal-Mart's health care plan is "unaffordable and inaccessible for its employees."

"Until large employers and the federal government take action, other states will continue to seek individual solutions to the health care crises plaguing their states," Wexler said.

Wal-Mart has 53 stores and two distribution centers in Maryland and employs nearly 16,000 people in the state.

State Senate President Thomas V. Mike Miller said the law was necessary.

"What's happening in Maryland is that all citizens of the state are subsidizing Wal-Mart because we are paying for their employees when they show up at emergency rooms at hospitals," he said.

Motz pointed out that lawyers for the state had argued that the Maryland law amounted to a "payroll tax" and therefore was outside federal jurisdiction. However, the judge said the purpose of the law clearly was not to raise revenue for the state.

"To the contrary, its purpose was to force Wal-Mart to increase the level of its health care benefits," Motz wrote.

Without the court's intervention, the law would have taken effect in January.

Lawyers for the state argued that Wal-Mart was free to pay a penalty _ estimated at $6 million a year _ instead of providing better benefits. State lawyers also argued that as another alternative, the retailer could have set up clinics for its employees. Motz rejected both arguments, saying no company would make those choices rather than increase health care for its workers.

Motz owned Wal-Mart stock when the case, with RILA as the sole plaintiff, was randomly assigned to him. He said Wednesday in an interview that he sold the shares as soon as he realized Wal-Mart was involved.

"As soon as someone brought it to my attention, I immediately sold the stock," Motz said.

___

On the Net:

RILA: http://www.retail-leaders.org

Wal-Mart: http://www.walmart.com