March 10, 2009
For additional information:
Jason Hammersla
(202) 253-5458 (cell)

Council 'disappointed' by Ninth Circuit court denial of rehearing in San Francisco health care case

Local health care ordinance threatens to erode federal employee benefits law

WASHINGTON, D.C. — The U.S. Ninth Circuit Court of Appeals decision allowing the San Francisco health care law to stand represents an ongoing threat to employer-sponsored benefit plans," said Paul Dennett, American Benefits Council senior vice president, health care reform, regarding the court's ruling in Golden Gate Restaurant Association v. City and County of San Francisco. "The sweeping local ordinance directly contradicts the Employee Retirement Income Security Act of 1974 (ERISA) — which provides companies with essential federal framework for providing health benefits."

The San Francisco employer spending requirements, which became effective January 9, 2008, mandate businesses with 20 or more workers make a required level of health care expenditures on behalf of covered workers. A private employer with 20-99 employees and a nonprofit organization with 50 or more employees would make expenditures of $1.17 per hour on behalf of each covered employee. A private employer with 100 or more employees would make health care expenditures of $1.76 per hour. Compliance with the spending requirements would also require covered employers to maintain ongoing recordkeeping systems to track eligibility, enrollment and fee payments. Given the potential conflict of the 9th Circuit decision with RILA v. Fielder, a 2007 decision of the U.S. 4th Circuit Court which held Maryland's "Fair Share Act" preempted under ERISA, this case may eventually be appealed to the U.S. Supreme Court.

"The 'pay or play' mandate at the center of the San Francisco case directly threatens continuation of these plans nationally, particularly for large, multi-state companies that rely on a uniform set of rules," Dennett said. "ERISA was established to prevent every state and locality from imposing their own version of health reform and creating an untenable environment for major employers. We strongly believe that Congress needs to adopt comprehensive health reform and believe that ERISA sound framework provides a well-tested and solid foundation for encouraging the continuation of employer-sponsored health coverage, which provides essential health and financial security for the 130 million Americans who are covered under employer-sponsored health benefit plans."

For more information, or to arrange an interview with Council staff, please contact Jason Hammersla, Council director of communications, at or by phone at 202-289-6700 (office) or (202) 253-5458 (cell).

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Councils member's represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.