Health Reform WK-EDGE ERIC appeals Seattle employer health care mandate decision
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Friday, September 18, 2020

ERIC appeals Seattle employer health care mandate decision

By Tulay Turan, J.D.

The ERISA Industry Committee (ERIC) has filed an appeal to the Ninth Circuit to overturn a lower court’s dismissal of its challenge to Seattle’s health care mandate.

In March, the U.S. District Court for the Western District of Washington dismissed ERIC’s amended complaint against the City (the City repealed the ordinance that had been the subject of ERIC’s initial complaint). ERIC’s appeal argues that the court was wrong in dismissing the case because it mistakenly relied on the outdated Golden Gate Restaurant Association (546 F.3d 639 (9th Cir. 2008)) case, rather than looking to recent Supreme Court precedent. According to ERIC, its lawsuit against Seattle reflects a critical example of preemption by ERISA. That law preempts state mandates on employer-sponsored health benefits, like the mandate imposed by SMC 14.28. Congress included an express preemption provision that states: ERISA "shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan."

"ERIC appreciates the City of Seattle’s efforts to ensure workers have health coverage, but it cannot do so by ignoring federal law and imposing mandates on employers that already offer federally-regulated health benefits to their employees," said Annette Guarisco Fildes, president and CEO, ERIC. "Companies affected by Seattle’s health ordinance already provide health benefits to their workers in Seattle in compliance with federal law. The ordinance would require those companies to amend their federally regulated health plan, a mandate that violates federal ERISA law. We are taking this case to the Ninth Circuit so it will reverse the district court’s decision, ending the Ninth Circuit’s deviation from the Supreme Court and other courts’ recognition that ERISA preempts state and local laws that seek to mandate the substance, value, or structure of employer-sponsored health benefits."

The Seattle ordinance requires large hotel employers and employers of ancillary hotel businesses, such as restaurants within hotels, parking services, etc., to make health care payments to or on behalf of employees. Employers have three options to comply:

  1. Provide direct monthly payments to the employees in amounts ranging from $420 to $1,260 per employee;
  2. Enroll the employees in group health insurance sponsored by the employer, where the employer’s premium expenditure matches or exceeds the amount set in the ordinance; or
  3. Cover the employees in the employer’s self-funded health plan, so that the average per-capita monthly expenditures for the individuals matches or exceeds the amount in the ordinance.

The requirement that hotel employers make direct payments to employees or provide coverage under their group health plans has an impermissible reference to and connection with an ERISA plan. It is therefore preempted by federal ERISA law, according to ERIC. "Large multistate employers, like ERIC member companies, rely on ERISA to uniformly administer their employee benefit plans to their nationwide workforces. The court must protect ERISA and employers’ ability to provide benefits to hundreds of millions of Americans."

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