California, Fair Share Acts and Preemption: Have We Learned Anything At All?

I’ve got a few things lined up this week to talk about, running from long term disability benefits litigation to avoiding ERISA litigation to subprime mortgages, but first I am going to veer off of my planned course to pass along and comment on a pair of interesting posts that showed up in my in-box today. They are both on the subject of California’s interest in trying to enact a fair share type statute imposing employer mandates and requiring the provision of health insurance, and you can find them here and here. I have talked before about the fact that California, like other state and local governments who tread this path, are likely walking right smack into the buzz saw of ERISA preemption, and much like the legislature of Maryland did in enacting its fair share act that was struck down by the courts, appear to be simply sticking their heads in the sand when it comes to this issue. That’s really the point of the two posts, which ask why the state government in California is moving in this direction without anyone even addressing this issue or trying to resolve it preemptively, before enacting a law that parallels laws that have been struck down from coast to coast (see this post here and here, for instance) as preempted. I asked the question before about the Maryland statute, the so-called Wal-Mart act, as to how the Maryland legislature could have gone down this road without having considered the ERISA preemption problem in advance, and these posts suggest that California is doing the same. Perhaps I need to create a category over on the left side of this blog titled “those who ignore the past are condemned to repeat it,” for the sole purpose of covering the seemingly endless examples in the area of health insurance of one state after another repeating the earlier mistakes of other state governments.

One of the posts on California’s efforts in this regard, namely this one here, suggests that some elements of the state government effort believe that the state can craft a statute that will not run afoul of ERISA or be preempted by ERISA. I am pretty skeptical that this is anything more than whistling past the graveyard. The closest I can come to an example of a state fair share type act that has not yet been found preempted is the Massachusetts health care reform act, and in my view, the only reason that hasn’t been declared preempted yet is that its burdens on employers are sufficiently limited at this point that no one has been motivated to challenge it in court. If anyone thinks that the entire business community (who, in the clever words of the New Yorker, have been unofficially deputized to carry the costs of health insurance in this country) would take a pass on this as well and allow a bellwether state like California to enact such a statute without it being challenged, I’ve got a bridge in Brooklyn that I’d like to sell you.
Written By:George Wallace On December 27, 2007 3:24 PM

Your predictions that California employer mandates will run smack into the ERISA preemption buzzsaw are already coming true.

The City of San Francisco was ahead of state lawmakers in imposing an employer mandate. Yesterday, U.S. District Court Judge Jeffrey White invalidated the requirement relying on -- what else? -- the exclusivity of ERISA.

The Sacramento Bee's political blogger Daniel Weintraub reports here (http://www.sacbee.com/static/weblogs/capitol_alert/insider/archives/009750.html) [registration required], noting the problems this ruling poses for the statewide mandate proposals, and the SF Chronicle reports on the ruling here (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/27/BA5AU50F2.DTL).

Interestingly, neither report mentions ERISA by name, with the Chronicle only referring vaguely to "a 1974 federal law that prohibits state and local governments from regulating employees' benefits."