Judge overturns Wal-Mart health care spending law in Maryland

7/19/2006

BALTIMORE A federal judge today overturned a Maryland law that would have required Wal-Mart Stores Inc. to spend more on employee health care, arguing the retail giant faces threatened injury from the law s spending requirement.

The state law would have required large employers to spend at least 8 percent of payroll on health care or pay the difference in taxes. Only Wal-Mart would have been affected by the law.

U.S. District Judge J. Frederick Motz concluded that the law would have hurt Wal-Mart by requiring it to track and allocate benefits for its Maryland employees in a different way from how it keeps track of employee benefits in other states. Motz wrote that the law imposes legally cognizable injury upon Wal-Mart.

The Retail Industry Leaders Association, of which Wal-Mart is a member, filed the lawsuit contesting the legislation. The group contended the law unfairly targeted the world s largest retailer.

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

Lawyers for the state argued before Motz that the so-called Wal-Mart law wasn t an illegal mandate. They said Wal-Mart was free to pay the penalty estimated at $6 million a year instead of providing better benefits. As another alternative, the retailer could also have set up health clinics for its employees.

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

In Maryland, where state budget writers were looking for ways to rein in a $4.6 billion annual Medicaid tab, the Wal-Mart law was seen as a way to encourage companies to keep employees off public rolls. It became law last winter when the Democratic legislature overrode a 2005 veto by Republican Gov. Robert Ehrlich.

Wal-Mart shares rose 96 cents, or 2.2 percent, to $44.13 in early afternoon trading on the New York Stock Exchange.

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