Wal-Mart to court: nix Maryland’s employee health benefit law

Wal-Mart and other retailers challenged Maryland’s new law requiring Wal-Mart to spend more on employee health care, arguing before a Baltimore judge recently that only the federal government may dictate health spending by private companies.

Maryland’s law requiring large employers to spend at least eight percent of payroll on health care or pay the difference in taxes is worded so that only Wal-Mart Stores Inc. would be affected.

The Retail Industry Leaders Association, which includes Wal-Mart, argued that the law unfairly targets the world’s largest retailer. Barring court intervention, the law takes effect in January.

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 veto the year before by Republican Gov. Robert Ehrlich.

U.S. District Judge J. Frederick Motz asked Wal-Mart lawyers whether throwing out the law would be a signal to states that they can’t experiment with ways to control health care costs. Eugene Scalia, lawyer for the retailers, said the law was unlikely to do anything but force Wal-Mart to spend more on health care.

“This law is highly discriminatory,” argued Scalia, who is the son of U.S. Supreme Court Justice Antonin Scalia. “This was intended and crafted to affect just one company.”

Gary Kuc, assistant attorney general, defended the law as legitimate, citing the state’s interest in reducing uninsured residents. “We’re all paying elevated rates for people who don’t have health insurance,” Kuc said. He said Wal-Mart is free to pay a penalty instead of providing better benefits — an estimated $6 million a year by state estimates.

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