Retail Industry Leaders Ass'n v. Fielder

Filed: February 2, 2007

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 06-1840

(1:06-cv-00316-JFM)

RETAIL INDUSTRY LEADERS ASSOCIATION,

Plaintiff - Appellee,

versus

JAMES D. FIELDER, JR., in his official

capacity as Maryland Secretary of

Labor, Licensing, and Regulation,

Defendant - Appellant,

-------------------------

AARP; MEDICAID MATTERS,!Maryland;

MARYLAND CITIZENS' HEALTH INITIATIVE

EDUCATION FUND, INCORPORATED;

Amici Supporting Appellant,

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS LEGAL FOUNDATION; MARYLAND

CHAMBER OF COMMERCE; SECRETARY OF

LABOR; CHAMBER OF COMMERCE OF THE

UNITED STATES OF AMERICA; SOCIETY

FOR HUMAN RESOURCE MANAGEMENT; THE

HR POLICY ASSOCIATION; AMERICAN

BENEFITS COUNCIL

Amici Supporting Appellee.

_________________

No. 06-1901

1:06-cv-00316-JFM

_________________

RETAIL INDUSTRY LEADERS ASSOCIATION,

Plaintiff - Appellant,

versus

JAMES D. FIELDER, JR., in his official

capacity as Maryland Secretary of Labor,

Licensing, and Regulation,

Defendant - Appellee,

-------------------------

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS LEGAL FOUNDATION; MARYLAND

CHAMBER OF COMMERCE; SECRETARY OF LABOR;

CHAMBER OF COMMERCE OF THE UNITED STATES

OF AMERICA; SOCIETY FOR HUMAN RESOURCE

MANAGEMENT; THE HR POLICY ASSOCIATION;

AMERICAN BENEFITS COUNCIL,

Amici Supporting Appellant,

AARP; MEDICAID MATTERS,!Maryland; MARYLAND

CITIZENS' HEALTH INITIATIVE EDUCATION

FUND, INCORPORATED,

Amici Supporting Appellee,

O R D E R

Upon notification from amicus AARP that their correct legal

name is “AARP” rather than “American Association of Retired

Persons,” the court amends the opinion in this case as follows:

In the case caption for 06-1840 on page 1, “AARP” is

substituted for “American Association of Retired Persons” in the

first line of the “Amici Supporting Appellee.”

In the case caption for 06-1901 on page 2, “AARP” is

substituted for “American Association of Retired Persons” in the

first line of the “Amici Supporting Appellee.”

In line 22 of the counsel section on page 3, “AARP” is

substituted for “American Association of Retired Persons.”

For the Court - By Direction

/s/ Patricia S. Connor

____________________________

Clerk

CORRECTED OPINION

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RETAIL INDUSTRY LEADERS ASSOCIATION, 

Plaintiff-Appellee,

v.

JAMES D. FIELDER, JR., in his official

capacity as Maryland Secretary of

Labor, Licensing, and Regulation,

Defendant-Appellant.

AARP; MEDICAID



MATTERS!MARYLAND; MARYLAND

CITIZENS’ HEALTH INITIATIVE EDUCATION No. 06-1840

FUND, INCORPORATED,

Amici Supporting Appellant,

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS LEGAL FOUNDATION;

MARYLAND CHAMBER OF COMMERCE;

SECRETARY OF LABOR; CHAMBER OF

COMMERCE OF THE UNITED STATES OF

AMERICA; SOCIETY FOR HUMAN

RESOURCE MANAGEMENT; THE HR

POLICY ASSOCIATION; AMERICAN

BENEFITS COUNCIL,

Amici Supporting Appellee.



2 RETAIL INDUSTRY LEADERS v. FIELDER

RETAIL INDUSTRY LEADERS ASSOCIATION, 

Plaintiff-Appellant,

v.

JAMES D. FIELDER, JR., in his official

capacity as Maryland Secretary of

Labor, Licensing, and Regulation,

Defendant-Appellee.

NATIONAL FEDERATION OF INDEPENDENT

BUSINESS LEGAL FOUNDATION;



MARYLAND CHAMBER OF COMMERCE;

SECRETARY OF LABOR; CHAMBER OF No. 06-1901

COMMERCE OF THE UNITED STATES OF

AMERICA; SOCIETY FOR HUMAN

RESOURCE MANAGEMENT; THE HR

POLICY ASSOCIATION; AMERICAN

BENEFITS COUNCIL,

Amici Supporting Appellant,

AARP; MEDICAID

MATTERS!MARYLAND; MARYLAND

CITIZENS’ HEALTH INITIATIVE EDUCATION

FUND, INCORPORATED,

Amici Supporting Appellee.



Appeals from the United States District Court

for the District of Maryland, at Baltimore.

J. Frederick Motz, District Judge.

(1:06-cv-00316-JFM)

Argued: November 30, 2006

Decided: January 17, 2007

Counsel Section Corrected: January 23, 2007

RETAIL INDUSTRY LEADERS v. FIELDER 3

Before NIEMEYER, MICHAEL, and TRAXLER, Circuit Judges.

Affirmed by published opinion. Judge Niemeyer wrote the opinion, in

which Judge Traxler joined. Judge Michael wrote a dissenting

opinion.

COUNSEL

ARGUED: Steven Marshall Sullivan, Assistant Attorney General,

OFFICE OF THE ATTORNEY GENERAL OF MARYLAND,

Baltimore, Maryland, for James D. Fielder, Jr., in his official capacity as

Maryland Secretary of Labor, Licensing, and Regulation. William

Jeffrey Kilberg, GIBSON, DUNN & CRUTCHER, L.L.P., Washing-

ton, D.C., for Retail Industry Leaders Association. Timothy David

Hauser, Associate Solicitor, UNITED STATES DEPARTMENT OF

LABOR, Office of the Solicitor, Washington, D.C., for Amici

Supporting Retail Industry Leaders Association. ON BRIEF: J. Joseph

Curran, Jr., Attorney General of Maryland, Margaret Ann Nolan, As-

sistant Attorney General, Gary W. Kuc, Assistant Attorney General, Carl

N. Zacarias, Staff Attorney, OFFICE OF THE ATTORNEY GENERAL

OF MARYLAND, Baltimore, Maryland; Robert A. Zarnoch, Assistant

Attorney General, Kathryn M. Rowe, OFFICE OF THE ATTORNEY

GENERAL OF MARYLAND, Annapolis, Mary-land, for James D.

Fielder, Jr., in his official capacity as Maryland Secretary of Labor, Li-

censing, and Regulation. W. Stephen Cannon, Todd Anderson,

CONSTANTINE CANNON, P.C., Washington, D.C.; Eugene Scalia,

Paul Blankenstein, William M. Jay, GIBSON, DUNN & CRUTCHER,

L.L.P., Washington, D.C., for Retail Industry Leaders Association. Mary

Ellen Signorille, Jay E. Sushelsky, AARP FOUNDATION; Melvin

Radowitz, AARP, Washington, D.C., for AARP, Amicus Supporting

James D. Fielder, Jr., in his official capacity as Maryland Secretary of

Labor, Licensing, and Regulation. Steven D. Schwinn, Professor, UNI-

VERSITY OF MARYLAND SCHOOL OF LAW, Baltimore,

Maryland, for Medicaid Matters!Maryland, Amicus Supporting James

D. Fielder, Jr., in his official capacity as Maryland Secretary of Labor,

4 RETAIL INDUSTRY LEADERS v. FIELDER

Licensing, and Regulation. Suzanne Sangree, PUBLIC JUSTICE

CENTER, Baltimore, Maryland; Michael A. Pretl, Salisbury, Mary-

land, for Maryland Citizens’ Health Initiative Education Fund, Incor-

porated, Amicus Supporting James D. Fielder, Jr., in his official

capacity as Maryland Secretary of Labor, Licensing, and Regulation.

Karen R. Harned, Elizabeth A. Gaudio, NFIB LEGAL FOUNDA-

TION, Washington, D.C.; Leslie Robert Stellman, HODES, ULMAN,

PESSIN & KATZ, P.A., Towson, Maryland, for National Federation

of Independent Business Legal Foundation, Amicus Supporting Retail

Industry Leaders Association. Richard L. Hackman, SMITH &

DOWNEY, P.A., Baltimore, Maryland, for Maryland Chamber of

Commerce, Amicus Supporting Retail Industry Leaders Association.

Howard M. Radzely, Solicitor of Labor, Karen L. Handorf, Counsel

for Appellate and Special Litigation, James Craig, Senior Attorney,

UNITED STATES DEPARTMENT OF LABOR, Office of the Solic-

itor, Plan Benefits Security Division, Washington, D.C., for Secretary

of Labor, Amicus Supporting Retail Industry Leaders Association.

James P. Baker, Heather Reinschmidt, JONES DAY, San Francisco,

California; Willis J. Goldsmith, JONES DAY, New York, New York,

for Chamber of Commerce of the United States of America, Amicus

Supporting Retail Industry Leaders Association. Thomas M. Cristina,

OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.,

Greenville, South Carolina, for The Society for Human Resource

Management, The HR Policy Association, and American Benefits

Council, Amici Supporting Retail Industry Leaders Association.

OPINION

NIEMEYER, Circuit Judge:

On January 12, 2006, the Maryland General Assembly enacted the

Fair Share Health Care Fund Act, which requires employers with

10,000 or more Maryland employees to spend at least 8% of their

total payrolls on employees’ health insurance costs or pay the amount

their spending falls short to the State of Maryland. Resulting from a

nationwide campaign to force Wal-Mart Stores, Inc., to increase

health insurance benefits for its 16,000 Maryland employees, the

Act’s minimum spending provision was crafted to cover just Wal-

RETAIL INDUSTRY LEADERS v. FIELDER 5

Mart. The Retail Industry Leaders Association, of which Wal-Mart is

a member, brought suit against James D. Fielder, Jr., the Maryland

Secretary of Labor, Licensing, and Regulation, to declare that the Act

is preempted by the Employee Retirement Income Security Act of

1974 ("ERISA") and to enjoin the Act’s enforcement. On cross-

motions for summary judgment, the district court entered judgment

declaring that the Act is preempted by ERISA and therefore not

enforceable, and this appeal followed.

Because Maryland’s Fair Share Health Care Fund Act effectively

requires employers in Maryland covered by the Act to restructure

their employee health insurance plans, it conflicts with ERISA’s goal

of permitting uniform nationwide administration of these plans. We

conclude therefore that the Maryland Act is preempted by ERISA and

accordingly affirm.

I

Before enactment of the Fair Share Health Care Fund Act ("Fair

Share Act"), 2006 Md. Laws 1, Md. Code Ann., Lab. & Empl. §§ 8.5-

101 to -107, the Maryland General Assembly heard extensive testi-

mony about the rising costs of the Maryland Medical Assistance Pro-

gram (Medicaid and children’s health programs). It learned that

between fiscal years 2003 and 2006, annual expenditures on the Pro-

gram increased from $3.46 billion to $4.7 billion. The General

Assembly also perceived that Wal-Mart Stores, Inc., a particularly

large employer, provided its employees with a substandard level of

healthcare benefits, forcing many Wal-Mart employees to depend on

state-subsidized healthcare programs. Indeed, the Maryland Depart-

ment of Legislative Services (which has the duties of providing the

Maryland General Assembly with research, analysis, assessments, and

evaluations of legislative issues) prepared an analytical report of the

proposed Fair Share Act for the General Assembly, that discussed

only Wal-Mart’s employee benefits practices. In the background por-

tion of the report, the Department of Legislative Services wrote:

Several States, facing rapidly-increasing Medicaid costs, are

turning to the private sector to bear more of the costs. Wal-

Mart, in particular, has been the focus of several states, who

are accusing the company of providing substandard health

6 RETAIL INDUSTRY LEADERS v. FIELDER

benefits to its employees. According to the New York Times,

Wal-Mart full-time employees earn an average $1,200 a

month, or about $8 an hour.

Some states claim many Wal-Mart employees end up on

public health programs such as Medicaid. A survey by

Georgia officials found that more than 10,000 children of

Wal-Mart employees were enrolled in the state’s children’s

health insurance program (CHIP) at a cost of nearly $10

million annually. Similarly, a North Carolina hospital found

that 31% of 1,900 patients who said they were Wal-Mart

employees were enrolled in Medicaid, and an additional

16% were uninsured.

As a result, some States have turned to Wal-Mart to assume

more of the financial burden of its workers’ health care

costs. California passed a law in 2003 that will require most

employers to either provide health coverage to employees or

pay into a state insurance pool that would do so. Advocates

of the law say Wal-Mart employees cost California health

insurance programs about $32 million annually. Washington

state is exploring implementing a similar state law.

According to the [New York] Times, Wal-Mart said that its

employees are mostly insured, citing internal surveys show-

ing that 90% of workers have health coverage, often through

Medicare or family members’ policies. Wal-Mart officials

say the company provides health coverage to about 537,000,

or 45% of its total workforce. As a matter of comparison,

Costco Wholesale provides health insurance to 96% of eligi-

ble employees.

In response, the General Assembly enacted the Fair Share Act in

January 2006, to become effective January 1, 2007. The Act applies

to employers that have at least 10,000 employees in Maryland, Md.

Code Ann., Lab. & Empl. § 8.5-102, and imposes spending and

reporting requirements on such employers. The core provision pro-

vides:

An employer that is not organized as a nonprofit organiza-

tion and does not spend up to 8% of the total wages paid to

RETAIL INDUSTRY LEADERS v. FIELDER 7

employees in the State on health insurance costs shall pay

to the Secretary an amount equal to the difference between

what the employer spends for health insurance costs and an

amount equal to 8% of the total wages paid to employees in

the State.

Id. § 8.5-104(b). An employer that fails to make the required payment

is subject to a civil penalty of $250,000. Id. § 8.5-105(b).

The Act also requires a covered employer to submit an annual

report on January 1 of each year to the Secretary, in which the

employer must disclose: (1) how many employees it had for the prior

year, (2) its "health insurance costs," and (3) the percentage of com-

pensation it spent on "health insurance costs" for the "year immedi-

ately preceding the previous calendar year." Id. § 8.5-103(a)(1). The

Act defines "health insurance costs" to include expenditures on both

healthcare and health insurance to the extent that they are deductible

under § 213(d) of the Internal Revenue Code. Id. § 8.5-101.

Any payments collected by the Secretary are directed to the Fair

Share Health Care Fund, which is held by the Treasurer of the State

and accounted for by the State Comptroller like all other state funds.

Md. Code Ann., Health-Gen. § 15-142(d), (g). The funds so collected,

however, may be used only to support the Maryland Medical Assis-

tance Program, which consists of Maryland’s Medicaid and children’s

health programs. Id. § 15-142(f).

The record discloses that only four employers have at least 10,000

employees in Maryland: Johns Hopkins University, Giant Food, Nor-

throp Grumman, and Wal-Mart. The Fair Share Act subjected Johns

Hopkins, as a nonprofit organization, to a lower 6% spending thresh-

old which Johns Hopkins already satisfies. Giant Food, which

employs unionized workers, spends over the 8% threshold on health

insurance and lobbied in support of the Fair Share Act. Northrop

Grumman, a defense contractor, was subject to the minimum spend-

ing requirement in an earlier version of the Act, but the General

Assembly included an amendment that effectively excluded Northrop

Grumman. Because Northrop Grumman has many high-salaried

employees in Maryland, the General Assembly was able to exclude

it by an amendment that permits an employer, in calculating its total

8 RETAIL INDUSTRY LEADERS v. FIELDER

wages paid, to exempt compensation paid to employees in excess of

the median household income in Maryland. See Md. Code Ann., Lab.

& Empl. § 8.5-103(b)(1). The parties agree that only Wal-Mart, who

employs approximately 16,000 in Maryland, is currently subject to

the Act’s minimum spending requirements. Wal-Mart representatives

testified that it spends about 7 to 8% of its total payroll on healthcare,

falling short of the Act’s 8% threshold.

The legislative record also makes clear that legislators and affected

parties assumed that the Fair Share Act would force Wal-Mart to

increase its spending on healthcare benefits rather than to pay monies

to the State. For example, one of the Act’s sponsors, Senator Thomas

V. Mike Miller, Jr., Maryland Senate President, described the Act

during a floor debate: "It takes people who should be getting health

benefits at work off the [State’s] rolls and it requires those employers

to provide it." Floor Debate on Senate Bill 790, 2006 Leg., 421st

Sess., (Md. Jan. 12, 2006) (emphasis added).

Shortly after enactment of the Fair Share Act, the Retail Industry

Leaders Association ("RILA") commenced this action against the

Maryland Secretary of Labor, Licensing, and Regulation to declare

the Act preempted by ERISA and to enjoin the Secretary from enforc-

ing it. RILA is a trade association whose members are major compa-

nies from all segments of retailing, including Wal-Mart, as well as

many of Wal-Mart’s competitors, such as Best Buy Company, Target

Corporation, Lowe’s Companies, and IKEA. Many of these competi-

tors are represented on RILA’s board, which voted unanimously to

authorize RILA to prosecute this action.

RILA’s complaint alleged that the Fair Share Act was preempted

by ERISA, 29 U.S.C. § 1144. It also alleged that the Fair Share Act

violated the Equal Protection Clause of the Fourteenth Amendment to

the United States Constitution and the "special law" prohibition of the

Maryland Constitution, art. III, § 33.

Shortly after filing its complaint, RILA filed a motion for summary

judgment on its ERISA-preemption claim and its equal-protection

claim. In response, the Secretary filed a motion to dismiss RILA’s

complaint for lack of jurisdiction, arguing (1) that RILA lacked stand-

ing; (2) that its claims were not ripe; and (3) that its complaint was

RETAIL INDUSTRY LEADERS v. FIELDER 9

barred by the Tax Injunction Act, 28 U.S.C. § 1341, which prohibits

federal courts in most cases from enjoining, suspending, or restraining

a State’s collection of taxes. In the alternative, the Secretary filed a

cross-motion for summary judgment addressing all three of RILA’s

claims.

The district court rejected the Secretary’s jurisdictional arguments

and concluded that ERISA preempted the Fair Share Act because the

Act effectively mandated that employers spend a minimum amount

on healthcare benefit plans. The court also found that the Fair Share

Act did not violate the Equal Protection Clause because the Act’s

classifications were not irrational. Each party appealed, challenging

the rulings adverse to it.

II

We address first the Secretary’s jurisdictional challenges based on

standing, ripeness, and the Tax Injunction Act.

A

While RILA does not assert injury to itself, it claims "associational

standing" to enforce the rights of its members. See Hunt v. Washing-

ton State Apple Advertising Comm’n, 432 U.S. 333, 345 (1977)

(authorizing the standing of an association when (a) its members

would otherwise have standing1 to sue in their own right; (b) the inter-

ests it seeks to protect are germane to the organization’s purpose; and

(c) neither the claim asserted nor the relief requested requires the par-

ticipation of individual members in the lawsuit"). Associational stand-

ing may exist even when just one of the association’s members would

have standing. See Warth v. Seldin, 422 U.S. 490, 511 (1975)

(explaining that an "association must allege that its members, or any

one of them, are suffering immediate or threatened injury" (emphasis

added)).

1

The well-known criteria for standing are that the plaintiff must allege

an (1) injury in fact (2) that is fairly traceable to the defendant’s conduct

and (3) that is likely to be redressed by a favorable decision. Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Allen v. Wright, 468

U.S. 737, 751 (1984).

10 RETAIL INDUSTRY LEADERS v. FIELDER

The Secretary argues first that no member of RILA has standing to

sue in its own right because the injuries claimed in this case are not

sufficiently imminent. He notes that the Fair Share Act is not yet

effective and that he has not yet promulgated regulations implement-

ing the Act.

To be sure, the alleged injury must, for standing purposes, be "con-

crete and particularized" and "actual or imminent, not conjectural or

hypothetical." Lujan, 504 U.S. at 560. But "one does not have to

await the consummation of threatened injury to obtain preventative

relief. If the injury is certainly impending, that is enough." Friends of

the Earth, Inc. v. Gaston Cooper Recycling Corp., 204 F.3d 149, 160

(4th Cir. 2000) (quoting Babbitt v. United Farm Workers Nat’l Union,

442 U.S. 289, 298 (1979)).

In this case, if Wal-Mart’s injury is not actual, it is certainly

impending. First, RILA alleges, and the district court concluded, that

Wal-Mart’s healthcare spending falls below 8% of its total wages.

Accordingly, Wal-Mart faces the imminent injury of being forced

either to increase its healthcare spending by January 1, 2007, or to

make a payment to the Secretary. Second, the Fair Share Act’s report-

ing requirements impose administrative burdens on Wal-Mart even

now. According to Wal-Mart’s Director of United States Benefits

Design, Wal-Mart presently administers its healthcare plans on a

nationwide basis and does not specifically track its expenditures for

Maryland employees. Thus, the Act will force Wal-Mart to alter its

internal accounting practices to acquire the information required for

the report that is due on January 1, 2007, and to incur expenses now

in preparing and filing it with the Secretary. Finally, the Act’s mini-

mum spending provision will hamper Wal-Mart’s ability to adminis-

ter its employee benefit plans in a uniform manner across the nation.

See N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers

Ins. Co., 514 U.S. 645, 658-59 (1999) (describing uniform plan

administration as a benefit that ERISA gives to employers).

The Secretary also argues, focusing only on the 8% threshold

spending requirement, that Wal-Mart’s alleged injury is merely "hy-

pothetical" because it is not certain that Wal-Mart’s healthcare expen-

ditures fall below 8%. To make this argument, the Secretary lifted out

of context a fragment from the testimony of a Wal-Mart representa-

RETAIL INDUSTRY LEADERS v. FIELDER 11

tive given before a legislative committee that Wal-Mart’s healthcare

spending "could be at 10 or 12 percent, but we don’t know." In the

next breath, however, the representative stated, "Based off the defini-

tions under this bill, we took plenty of time — Lisa Woods spent

plenty of time researching the different areas of law . . . we believe

we do fall at 7 or 8%." At least four Wal-Mart representatives testi-

fied before a legislative committee or by affidavit that Wal-Mart

spends below 8% of its total payroll on healthcare. If the Secretary

seriously does not believe that Wal-Mart spends below 8% on health-

care benefits, then he second-guesses the General Assembly which

focused on this fact as the reason to enact the Fair Share Act in the

first place.

Seeking to undermine RILA’s satisfaction of another element nec-

essary for associational standing, the Secretary contends that the

nature of RILA’s suit requires that at least one of its members, Wal-

Mart, participate in the lawsuit, thus destroying the basis for RILA’s

associational standing. See Hunt, 432 U.S. at 435. This argument is

somewhat peculiar because the Secretary has maintained that the Act

is not special legislation directed at Wal-Mart. Even so, based on the

nature of the action actually filed and the relief sought, we see little,

if any, need for Wal-Mart or any other RILA member to present indi-

vidualized proof. RILA’s two challenges to the Fair Share Act — pre-

emption under ERISA and violation of the Equal Protection Clause

— require the court to make judgments regarding the nature and oper-

ation of the Act generally and require no findings of fact regarding

the specific operations of Wal-Mart or other RILA members. While

the Secretary may wish to challenge the suggestion that Wal-Mart’s

healthcare spending fails to satisfy the 8% threshold, such a challenge

would still not address the other injuries in fact sustained by Wal-

Mart, as we discussed above. Nor does the relief requested depend

upon proofs particular to individual members. Unlike a suit for money

damages, which would require examination of each member’s unique

injury, this action seeks a declaratory judgment and injunctive relief,

the type of relief for which associational standing was originally rec-

ognized. See Warth, 422 U.S. at 515.

Finally, the Secretary argues that associational standing is not

appropriate because various RILA members supposedly have con-

flicting interests. See Md. Highways Contractors Ass’n, Inc. v. Mary-

12 RETAIL INDUSTRY LEADERS v. FIELDER

land, 933 F.2d 1246, 1252-53 (4th Cir. 1991). In Maryland Highways

Contractors, an association of contractors challenged a Maryland pro-

gram that preferred businesses owned primarily by minorities in

awarding state procurement contracts. Id. at 1248. We explained that

associational standing was not appropriate "when conflicts of interest

among members of the association require that the members must join

the suit individually in order to protect their own interests." Id. at

1252. That case, however, is readily distinguishable from this one.

While RILA members do compete in the marketplace, they uniformly

endorsed the present litigation. RILA’s board includes representatives

from numerous competitors of Wal-Mart, including Best Buy Com-

pany, IKEA, and Target Corporation, and the board voted unani-

mously to prosecute this action. Unlike Maryland Highways

Contractors, id. (noting that no minority-owned businesses were rep-

resented on the association’s board and that the board did not inform

its membership of the suit), this case presents no hint that RILA’s

board authorized this suit without the knowledge or support of any

RILA member or faction.

At bottom, the prudential considerations of the Hunt test for associ-

ational standing do not counsel against permitting RILA to bring this

suit, and we reject the Secretary’s challenge on that ground.

B

For reasons similar to those advanced to challenge RILA’s stand-

ing, the Secretary contends that RILA’s claims are not ripe for

review. He argues that because Wal-Mart is not certain to suffer

injury under the Fair Share Act, RILA’s action is not ripe. See Pacific

Gas & Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n,

461 U.S. 190, 200 (1983) (noting the purpose of the ripeness doctrine

is "to prevent the courts, through avoidance of premature adjudica-

tion, from entangling themselves in abstract disagreements over

administrative policies").

A ripeness review consists of inquiries into "the fitness of the

issues for judicial decision" and "the hardship to the parties of with-

holding court consideration." Pacific Gas & Elec., 461 U.S. at 201.

An issue is not fit for review if "it rests upon contingent future events

that may not occur as anticipated, or indeed may not occur at all."

RETAIL INDUSTRY LEADERS v. FIELDER 13

Texas v. United States, 523 U.S. 296, 300 (1998). But if an issue is

"predominantly legal," not depending upon the potential occurrence

of factual events, it is more likely to be found ripe. Pacific Gas &

Elec., 461 U.S. at 201.

As we have explained, Wal-Mart will very likely incur liability to

the State under the Act’s minimum spending provision and is cer-

tainly subject to the reporting requirements. Accordingly, it must alter

its internal accounting procedures and healthcare spending now to

comply with the Act. The Secretary’s argument that the issues are

unripe because the regulations under the Act have not been promul-

gated do not change this. Regulations could not alter the Act’s provi-

sions, which clearly establish the healthcare spending and reporting

requirements that RILA claims are invalid. In addition, this appeal

presents purely legal questions that, because of their certain applica-

bility to Wal-Mart, are ripe for review. Accordingly, we also reject

the Secretary’s ripeness challenge.

C

Finally, the Secretary contends that this litigation is barred by the

Tax Injunction Act, 28 U.S.C. § 1341. He characterizes the Fair Share

Act as a state law that imposes a tax on employers. The district court

disagreed and concluded that the Fair Share Act constitutes a "health-

care regulation," rather than a "tax." We agree with the district court.

The Tax Injunction Act prohibits district courts from enjoining,

suspending, or restraining the assessment, levy, or collection of any

tax under state law where, as the Act provides, "a plain, speedy and

efficient remedy may be had in the courts of such State." 28 U.S.C.

§ 1341. Because the Tax Injunction Act is meant to prevent taxpayers

from "disrupting state government finances," Hibbs v. Winn, 542 U.S.

88, 104 (2004), its applicability depends primarily on whether a given

measure serves "revenue raising purposes" rather than "regulatory or

punitive purposes." See Valero Terrestrial Corp. v. Caffrey, 205 F.3d

130, 134 (4th Cir. 2000). The less a measure serves as a revenue-

raising provision, the less likely it is protected by the Tax Injunction

Act. See Hager v. City of W. Peoria, 84 F.3d 865, 870-72 (7th Cir.

1996) (finding the Tax Injunction Act did not bar review of a provi-

14 RETAIL INDUSTRY LEADERS v. FIELDER

sion because "the ordinances were passed to control certain activities,

not to raise revenues").

While the Valero court provided various inquiries to help deter-

mine whether a charge imposed by state law is a tax, i.e., primarily

a revenue-raising measure, or a fee or penalty, see Valero, 205 F.3d

at 134 ("(1) What entity imposes the charge; (2) what population is

subject to the charge; and (3) what purposes are served by the use of

the monies obtained by the charge" ), we can readily conclude, with-

out a seriatim analysis, that the Fair Share Act is not a tax provision.

There is overriding evidence that the Fair Share Act’s primary pur-

pose is to regulate employers’ healthcare spending, not to raise reve-

nue. This becomes especially demonstrable in light of the

improbability that the Act will generate any revenue. Wal-Mart’s

Director of Benefits Design testified that Wal-Mart would increase its

healthcare spending rather than make payments to the State, denying

the State any revenue from the measure. The circumstances surround-

ing the Act’s enactment confirms that this is precisely the result that

the General Assembly intended. Particularly persuasive is the Depart-

ment of Legislative Services’ description of the Act in which it stated,

"To the extent large employers do not spend at least 6% or 8% on

health insurance costs as required, Fair Share Health Care special

fund’s revenues could increase from employers paying the difference

between the required and actual amounts spent on health insurance"

(emphasis added). Thus, the official description of the Act as pre-

sented to the General Assembly represented that it mandated that

employers provide a certain level of benefits, and only if they violated

that mandate would the State collect monies. Such a mechanism is a

quintessential fee or penalty, not a tax.

The Secretary argues to the contrary by pointing to the fact that the

Fair Share Act itself declares its purpose to establish "the Fair Share

Health Care Fund" and that "the purpose of the Fund is to support the

operations of the [Maryland Medical Assistance] Program." 2006 Md.

Law 1. This superficial characterization, however, does not determine

the Act’s actual purpose and effect; its content and context do. We

conclude that the Fair Share Act cannot be properly characterized as

a "tax" provision as that term is used in the Tax Injunction Act.

RETAIL INDUSTRY LEADERS v. FIELDER 15

In sum, we hold that RILA has standing; that RILA’s claim is ripe

for adjudication; and that RILA’s complaint is not barred by the Tax

Injunction Act.

III

On the merits of whether ERISA preempts the Fair Share Act, the

Secretary contends that the district court misunderstood the nature

and effect of the Fair Share Act, erroneously finding that the Act

mandates an employer’s provision of healthcare benefits and therefore

"relates to" ERISA plans. The Secretary offers a different character-

ization of the Fair Share Act — one with which ERISA is not con-

cerned. He describes the Act as "part of the State’s comprehensive

scheme for planning, providing, and financing health care for its citi-

zens." In his view, the Act imposes a payroll tax on covered employ-

ers and offers them a credit against that tax for their healthcare

spending. The revenue from this tax funds a Fair Share Health Care

Fund, which is used to offset the costs of Maryland’s Medical Assis-

tance Program.

To resolve the question whether ERISA preempts the Fair Share

Act, we consider first the scope of ERISA’s preemption provision, 29

U.S.C. § 1144(a), and then the nature and effect of the Fair Share Act

to determine whether it falls within the scope of ERISA’s preemption.

A

ERISA establishes comprehensive federal regulation of employers’

provision of benefits to their employees. It does not mandate that

employers provide specific employee benefits but leaves them free,

"for any reason at any time, to adopt, modify, or terminate welfare

plans." Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78

(1995). Instead, ERISA regulates the employee benefit plans that an

employer chooses to establish, setting "various uniform standards,

including rules concerning reporting, disclosure, and fiduciary

responsibility." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91 (1983).

The vast majority of healthcare benefits that an employer extends

to its employees qualify as an "employee welfare benefit plan," which

ERISA defines broadly as:

16 RETAIL INDUSTRY LEADERS v. FIELDER

any plan, fund, or program which . . . was established or is

maintained for the purpose of providing for its participants

or their beneficiaries, through the purchase of insurance or

otherwise, . . . medical, surgical, or hospital care or bene-

fits, or benefits in the event of sickness, accident, disability,

death or unemployment, or vacation benefits, apprenticeship

or other training programs, or day care centers, scholarship

funds, or prepaid legal services . . . .

29 U.S.C. § 1002(1) (emphasis added). While an employer’s one-time

grant of some benefit that requires no administrative scheme does not

constitute an ERISA "plan," a grant of a benefit that occurs periodi-

cally and requires the employer to maintain some ongoing administra-

tive support generally constitutes a "plan." See Fort Halifax Packing

Co. v. Coyne, 482 U.S. 1, 12 (1987) (finding that a one-time sever-

ance payment upon a plant closing did not constitute an ERISA

"plan" because it did not require a "scheme" of ongoing administra-

tion); Elmore v. Cone Mills Corp., 23 F.3d 855, 861 (4th Cir. 1994)

(en banc) (explaining that even an employer’s informal provision of

benefits may be a "plan"); cf. Massachusetts v. Morash, 490 U.S. 107,

115-16 (1989) (finding that ordinary vacation benefits, paid out of an

employer’s general assets like wages rather than out of a dedicated

fund, do not qualify as an "employee benefit plan"). Because the defi-

nition of an ERISA "plan" is so expansive, nearly any systematic pro-

vision of healthcare benefits to employees constitutes a plan.

The primary objective of ERISA was to "provide a uniform regula-

tory regime over employee benefit plans." Aetna Health Inc. v.

Davila, 542 U.S. 200, 208 (2004); see also Shaw, 463 U.S. at 98-100

(reviewing the legislative history of ERISA’s preemption provision).

To accomplish this objective, § 514(a) of ERISA broadly preempts

"any and all State laws insofar as they may now or hereafter relate

to any employee benefit plan" covered by ERISA. 29 U.S.C.

§ 1144(a) (emphasis added). This preemption provision aims "to min-

imize the administrative and financial burden of complying with con-

flicting directives among States or between States and the Federal

Government" and to reduce "the tailoring of plans and employer con-

duct to the peculiarities of the law of each jurisdiction." Ingersoll-

Rand Co. v. McClendon, 498 U.S. 133, 142 (1990).

RETAIL INDUSTRY LEADERS v. FIELDER 17

The language of ERISA’s preemption provision — covering all

laws that "relate to" an ERISA plan — is "clearly expansive." Travel-

ers, 514 U.S. at 655. The Supreme Court has focused judicial analysis

by explaining that a state law "relates to" an ERISA plan "if it has a

connection with or reference to such a plan." Shaw, 463 U.S. at 97.

But even these terms, "taken to extend to the furthest stretch of [their]

indeterminacy," would have preemption "never run its course." Trav-

elers, 514 U.S. at 655. Accordingly, we do not rely on "uncritical lit-

eralism" but attempt to ascertain whether Congress would have

expected the Fair Share Act to be preempted. See id. at 656; Califor-

nia Div. of Labor Standards Enforcement v. Dillingham Constr., 519

U.S. 316, 325 (1997). To make this determination, we look "to the

objectives of the ERISA statute" as well as "to the nature of the effect

of the state law on ERISA plans," Dillingham, 519 U.S. at 325, recog-

nizing that ERISA is not presumed to supplant state law, especially

in cases involving "fields of traditional state regulation," which

include "the regulation of matters of health and safety," De Buono v.

NYSA-ILA Med. & Clinical Servs. Fund, 520 U.S. 806, 814 n.8 (1997)

(citation and quotation marks omitted).

Through application of these principles, the Supreme Court has

held that not all state healthcare regulations are equal for purposes of

ERISA preemption. States continue to enjoy wide latitude to regulate

healthcare providers. See, e.g., De Buono, 520 U.S. at 815-16

(upholding a state tax on gross receipts for patient services at hospi-

tals, residential healthcare facilities, and diagnostic and treatment cen-

ters); Travelers, 514 U.S. at 658-59 (upholding a state mandate that

hospitals charge certain insurers at higher rates than Blue Cross &

Blue Shield). And ERISA explicitly saves state regulations of insur-

ance companies from preemption. See 29 U.S.C. § 1144(b)(2)(A);

Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739-47 (1985).

But unlike laws that regulate healthcare providers and insurance com-

panies, "state laws that mandate[ ] employee benefit structures or their

administration" are preempted by ERISA. Travelers, 514 U.S. at 658.

Such state-imposed regulation of employers’ provision of employee

benefits conflict with ERISA’s goal of establishing uniform, nation-

wide regulation of employee benefit plans. Id. at 657-58.

Thus, in Shaw, the Supreme Court held that ERISA preempted a

New York law requiring employers to structure their employee bene-

18 RETAIL INDUSTRY LEADERS v. FIELDER

fit plans to provide the same benefits for pregnancy-regulated disabil-

ities as for other disabilities. 463 U.S. at 97. A multi-state employer

could only comply with New York’s mandate by varying its benefits

for New York employees or by varying its benefits for all employees.

See Travelers, 514 U.S. at 657 (construing Shaw). In either event, the

New York law would interfere with the employer’s ability to adminis-

ter its ERISA plans uniformly on a nationwide basis. Id.

In line with Shaw, courts have readily and routinely found preemp-

tion of state laws that act directly upon an employee benefit plan or

effectively require it to establish a particular ERISA-governed bene-

fit. See, e.g., Metro. Life, 471 U.S. at 739 (concluding that a Massa-

chusetts law "related to" ERISA plans where it required an employer

healthcare fund that provided hospital expense benefits also to cover

mental health expenses); American Med. Sec., Inc. v. Bartlett, 111

F.3d 358, 360 (4th Cir. 1997) (striking down a Maryland statute that

had the "purpose and effect" of "forc[ing] state-mandated health bene-

fits on self-funded ERISA plans"). Likewise, Shaw dictates that

ERISA preempt state laws that directly regulate employers’ contribu-

tions to or structuring of their plans. See, e.g., Local Union 598 v. J.A.

Jones Constr. Co., 846 F.2d 1213, 1218 (9th Cir. 1988), aff’d mem.,

488 U.S. 881 (1988) (striking a state law that mandated minimum

contributions to an apprenticeship training fund); Stone & Webster

Engineering Corp. v. Ilsley, 690 F.2d 323, 328-29 (2d Cir. 1982),

aff’d mem., 463 U.S. 1220 (1983) (striking a Connecticut law that

required an employer to provide health and life insurance to a former

employee receiving workers’ compensation).

A state law that directly regulates the structuring or administration

of an ERISA plan is not saved by inclusion of a means for opting out

of its requirements. See Egelhoff v. Egelhoff, 532 U.S. 141, 150-51

(2001). In Egelhoff, the Court held that ERISA preempted a Washing-

ton statute that voided the designation of a spouse as a beneficiary of

a nonprobate asset, including ERISA-governed life insurance policies.

Id. at 142-43. Its effect was to require plan administrators to "pay

benefits to the beneficiaries chosen by state laws, rather than to those

identified in the plan documents." Id. at 147. Even though the statute

permitted employers to opt out of the law with specific plan language,

the Court struck the law down under ERISA’s preemption provision

because it still mandated that plan administrators "either follow

RETAIL INDUSTRY LEADERS v. FIELDER 19

Washington’s beneficiary designation scheme or alter the terms of

their plans so as to indicate that they will not follow it." Id. at 150.

Additionally, a proliferation of laws like Washington’s would have

undermined ERISA’s objective of sparing plan administrators the task

of monitoring the laws of all 50 States and modifying their plan docu-

ments accordingly. Id. at 150-51.

In sum, a state law has an impermissible "connection with"2 an

ERISA plan if it directly regulates or effectively mandates some ele-

ment of the structure or administration of employers’ ERISA plans.

On the other hand, a state law that creates only indirect economic

incentives that affect but do not bind the choices of employers or their

ERISA plans is generally not preempted. See Travelers, 514 U.S. at

658. In deciding which of these principles is applicable, we assess the

effect of a state law on the ability of ERISA plans to be administered

uniformly nationwide. Even if a state law provides a route by which

ERISA plans can avoid the state law’s requirements, taking that route

might still be too disruptive of uniform plan administration to avoid

preemption. See Egelhoff, 532 U.S. at 151.

B

We now consider the nature and effect of the Fair Share Act to

determine whether it falls within ERISA’s preemption. At its heart,

2

A state law is preempted also if it contains a "reference to" an ERISA

plan, the alternative characterization referred to in Shaw for finding that

it "relates to" an ERISA plan. Shaw, 463 U.S. at 97. The district court

did not reach this issue because it found that preemption through the Fair

Share Act’s "connection with" ERISA plans. Because of our ruling in

this opinion, we likewise do not reach the question. But we note that this

standard applies more narrowly to preempt state law, examining the text

of the statute to determine whether its own terms bring ERISA plans

under its operation. See Dillingham, 519 U.S. at 325 (explaining that a

state law contains a "reference to" an ERISA plan if it "acts immediately

and exclusively upon ERISA plans" or if "the existence of ERISA plans

is essential to the law’s operation"); see also District of Columbia v.

Greater Washington Bd. of Trade, 506 U.S. 125, 128 (1992) (invalidat-

ing a law that required an employer "who provides health insurance cov-

erage for an employee" to provide the equivalent insurance while the

employee was receiving workers compensation benefits).

20 RETAIL INDUSTRY LEADERS v. FIELDER

the Fair Share Act requires every employer of 10,000 or more Mary-

land employees to pay to the State an amount that equals the differ-

ence between what the employer spends on "health insurance costs"

(which includes any costs "to provide health benefits") and 8% of its

payroll. Md. Code Ann., Lab. & Empl. §§ 8.5-101, 8.5-104. As Wal-

Mart noted by way of affidavit, it would not pay the State a sum of

money that it could instead spend on its employees’ healthcare. This

would be the decision of any reasonable employer. Healthcare bene-

fits are a part of the total package of employee compensation an

employer gives in consideration for an employee’s services. An

employer would gain from increasing the compensation it offers

employees through improved retention and performance of present

employees and the ability to attract more and better new employees.

In contrast, an employer would gain nothing in consideration of pay-

ing a greater sum of money to the State. Indeed, it might suffer from

lower employee morale and increased public condemnation.

In effect, the only rational choice employers have under the Fair

Share Act is to structure their ERISA healthcare benefit plans so as

to meet the minimum spending threshold.3 The Act thus falls squarely

under Shaw’s prohibition of state mandates on how employers struc-

ture their ERISA plans. See Shaw, 463 U.S. at 96-97. Because the

Fair Share Act effectively mandates that employers structure their

employee healthcare plans to provide a certain level of benefits, the

Act has an obvious "connection with" employee benefit plans and so

is preempted by ERISA.

This view of the Fair Share Act is reinforced by the position of the

State of Maryland itself. The Maryland General Assembly intended

the Act to have precisely this effect. As we noted in Part I, the context

for enactment of the Act, including the Department of Legislative

3

Theoretically, a covered employer whose healthcare spending for

employees falls short of the 8% minimum could, by other steps, avoid

regulation without restructuring or altering the administration of its

ERISA plans. It could move plants from the State to bring its employee

number under 10,000; it could reduce wages to increase the proportion

of its payroll devoted to healthcare spending; it could violate the Act and

incur a civil penalty; or it could leave the State altogether. But not even

the Secretary advances these arguments.

RETAIL INDUSTRY LEADERS v. FIELDER 21

Services’ official description of it, shows that legislators and inter-

ested parties uniformly understood the Act as requiring Wal-Mart to

increase its healthcare spending. If this is not the Act’s effect, one

would have to conclude, which we do not, that the Maryland legisla-

ture misunderstood the nature of the bill that it carefully drafted and

debated. For these reasons, the amount that the Act prescribes for

payment to the State is actually a fee or a penalty that gives the

employer an irresistible incentive to provide its employees with a

greater level of health benefits.

It is a stretch to claim, as the Secretary does, that the Fair Share Act

is a revenue statute of general application. When it was enacted, the

General Assembly knew that it applied, and indeed intended that it

apply, to one employer in Maryland — Wal-Mart. The General

Assembly designed the statute to avoid applying the 8% level to

Johns Hopkins University; it knew that Giant Food was unionized and

already was providing more than 8%; and it amended the statute to

avoid including Northrop Grumman. Even as the statute is written, the

category of employers employing 10,000 employees in Maryland

includes only four persons in Maryland and therefore could hardly be

intended to function as a revenue act of general application.

While the Secretary argues that the Fair Share Act is designed to

collect funds for medical care under the Maryland Medical Assistance

Program, the core provision of the Act aims at requiring covered

employers to provide medical benefits to employees. The effect of

this provision will force employers to structure their recordkeeping

and healthcare benefit spending to comply with the Fair Share Act.

Functioning in that manner, the Act would disrupt employers’ uni-

form administration of employee benefit plans on a nationwide basis.

As Wal-Mart officials averred, Wal-Mart does not presently allocate

its contributions to ERISA plans or other healthcare spending by

State, and so the Fair Share Act would require it to segregate a sepa-

rate pool of expenditures for Maryland employees.

This problem would not likely be confined to Maryland. As a result

of similar efforts elsewhere to pressure Wal-Mart to increase its

healthcare spending, other States and local governments have adopted

or are considering healthcare spending mandates that would clash

with the Fair Share Act. For example, two New York counties

22 RETAIL INDUSTRY LEADERS v. FIELDER

recently adopted provisions to require Wal-Mart to spend an amount

on healthcare to be determined annually by an administrative agency.

See N.Y.C. Admin. Code § 22-506(c)(2); Suffolk County, N.Y., Reg.

Local Laws § 325-3. Similar legislation under consideration in Min-

nesota calculates total wages, from which an employer’s minimum

spending level is determined, with reference to Minnesota’s median

household income. See H.F. 3143, 84th Leg. Sess. (Minn. 2006). If

permitted to stand, these laws would force Wal-Mart to tailor its

healthcare benefit plans to each specific State, and even to specific

cities and counties. This is precisely the regulatory balkanization that

Congress sought to avoid by enacting ERISA’s preemption provision.

See Shaw, 463 U.S. at 98-100.

The Secretary argues that the Act is not mandatory and therefore

does not, for preemption purposes, have a "connection with"

employee benefit plans because it gives employers two options to

avoid increasing benefits to employees. An employer can, under the

Fair Share Act, (1) increase healthcare spending on employees in

ways that do not qualify as ERISA plans; or (2) refuse to increase

benefits to employees and pay the State the amount by which the

employer’s spending falls short of 8%. Because employers have these

choices, the Secretary argues, the Fair Share Act does not preclude

Wal-Mart from continuing its uniform administration of ERISA plans

nationwide. He maintains that the Fair Share Act is more akin to the

laws upheld in Travelers, 514 U.S. at 658-59, and Dillingham, 519

U.S. at 319, which merely created economic incentives that affected

employers’ choices while not effectively dictating their choice. This

argument fails for several reasons.

First, the laws involved in Travelers and Dillingham are inapposite

because they dealt with regulations that only indirectly regulated

ERISA plans. In Travelers, a New York law required hospitals to add

a surcharge to the fees they demanded from most insurance compa-

nies, but the law exempted Blue Cross and Blue Shield from having

to pay the surcharge. Travelers, 514 U.S. at 658-59. The effect of the

law was to make Blue Cross and Blue Shield a cheaper and more

attractive option for ERISA-covered healthcare plans to purchase.

The Supreme Court upheld the law because it did not act directly

upon employers or their plans but merely created "an indirect eco-

nomic influence" on plans. Id. at 659. The New York law did not

RETAIL INDUSTRY LEADERS v. FIELDER 23

"bind plan administrators to any particular choice." Id. Nor did this

incentive to choose Blue Cross/Blue Shield "preclude uniform admin-

istrative practice" on a nationwide basis. Id. The Court acknowledged,

however, that a state law could produce such "acute, albeit indirect,

economic effects . . . as to force an ERISA plan to adopt a certain

scheme of substantive coverage or effectively restrict its choice of

insurers" and therefore be preempted by ERISA. Id. at 668. In short,

while the state law in Travelers directly regulated hospitals’ charges

to insurance companies, it only indirectly affected the prices ERISA

plans would pay for insurance policies.

Likewise, in Dillingham, a California law directly regulated wages

that contractors paid to apprentices on public construction projects,

which only indirectly affected ERISA-covered apprenticeship pro-

grams’ incentives to obtain state certification. 519 U.S. at 332-34. The

law permitted contractors to pay apprentices a lower-than-prevailing

wage if the apprentices participated in a state-certified apprentice pro-

gram. Id. at 319-20. The effect of the law was to create an indirect

incentive for ERISA-governed programs to obtain state certification.

Id. at 332-33. This incentive, the Court concluded, was not so strong

that it effectively eliminated the programs’ choice as to whether to

seek state certification. Id. Noncertified apprentice programs were

still free to supply apprentices for private projects at no disadvantage

and to supply apprentices for public projects with just a slight disad-

vantage. Id. at 332. Accordingly, the Court upheld the prevailing

wage law as more akin to the law in Travelers than to the law in

Shaw. Id. at 334.

In contrast, to Travelers and Dillingham, the Fair Share Act

directly regulates employers’ structuring of their employee health

benefit plans. This tighter causal link between the regulation and

employers’ ERISA plans makes the Fair Share Act much more analo-

gous to the regulations at issue in Shaw and Egelhoff, both of which

were found to be preempted by ERISA.

Second, the choices given in the Fair Share Act, on which the Sec-

retary relies to argue that the Act is not a mandate on employers, are

not meaningful alternatives by which an employer can increase its

healthcare spending to comply with the Fair Share Act without affect-

ing its ERISA plans. It is true that an employer could maintain on-site

24 RETAIL INDUSTRY LEADERS v. FIELDER

medical clinics, the expenditures for which would qualify as "health

insurance costs" under the Fair Share Act because they are deductible

under § 213(d) of the Internal Revenue Code. 26 U.S.C. § 213(d);

Md. Code Ann., Lab. & Empl. § 8.5-101. At the same time, such

expenditures would not amount to the establishment of an "employee

welfare benefit plan" under ERISA. See 29 C.F.R. § 2510.3-1(c)(2).

The ERISA regulation, however, defines non-ERISA clinics quite

narrowly as "the maintenance on the premises of an employer of facil-

ities for the treatment of minor injuries or illness or rendering first aid

in case of accidents occurring during working hours." Id. And the

Department of Labor strictly interprets the regulation not to cover a

facility that treats members of employees’ families or more than

"minor injuries." See Labor Dep’t Op. No. 83-35A, 1983 WL 22520

(1983). Thus, qualifying clinics could not provide more than simple,

circumscribed care that would not involve substantial expenditures.

They simply would not be a serious means by which employers could

increase healthcare spending to comply with the Fair Share Act.

In addition to on-site medical clinics, employers could, under the

Fair Share Act, contribute to employees’ Health Savings Accounts as

a means of non-ERISA healthcare spending. Under federal tax law,

eligible individuals may establish and make pretax contributions to a

Health Savings Account and then use those monies to pay or reim-

burse medical expenses. See 26 U.S.C. § 223. Employers’ contribu-

tions to employees’ Health Savings Accounts qualify as healthcare

spending for purposes of the Fair Share Act. See Md. Code Ann., Lab.

& Empl. § 8.5-101(d)(2). This option of contributing to Health Sav-

ings Accounts, however, is available under only limited conditions,

which undermine the impact of this option. For example, only if an

individual is covered under a high deductible health plan and no other

more comprehensive health plan is he eligible to establish a Health

Savings Account. See 26 U.S.C. § 223(c)(1). This undoubtedly

reduces greatly the pool of Wal-Mart employees who would be eligi-

ble to establish Health Savings Accounts. In addition, for an employ-

er’s contribution to a Health Savings Account to be exempt from

ERISA, the Health Savings Account must be established voluntarily

by the employee. See U.S. Dep’t of Labor, Employee Benefits Sec.

Admin., Field Assistance Bulletin 2004-1. This would likely shrink

further the potential for Health Savings Accounts contributions as

RETAIL INDUSTRY LEADERS v. FIELDER 25

many employees would not undertake to establish Health Savings

Accounts.

More importantly, even if on-site medical clinics and contributions

to Health Savings Accounts were a meaningful avenue by which Wal-

Mart could incur non-ERISA healthcare spending, we would still con-

clude that the Fair Share Act had an impermissible "connection with"

ERISA plans. The undeniable fact is that the vast majority of any

employer’s healthcare spending occurs through ERISA plans. Thus,

the primary subjects of the Fair Share Act are ERISA plans, and any

attempt to comply with the Act would have direct effects on the

employer’s ERISA plans. If Wal-Mart were to attempt to utilize non-

ERISA health spending options to satisfy the Fair Share Act, it would

need to coordinate those spending efforts with its existing ERISA

plans. For example, an individual would be eligible to establish a

Health Savings Account only if he is enrolled in a high deductible

health plan. See 29 U.S.C. § 223(c)(1). In order for Wal-Mart to make

widespread contributions to Health Savings Accounts, it would have

to alter its package of ERISA health insurance plans to encourage its

employees to enroll in one of its high deductible health plans. From

the employer’s perspective, the categories of ERISA and non-ERISA

healthcare spending would not be isolated, unrelated costs. Decisions

regarding one would affect the other and thereby violate ERISA’s

preemption provision.

Further, the Fair Share Act and a proliferation of similar laws in

other jurisdictions would force Wal-Mart or any employer like it to

monitor these varying laws and manipulate its healthcare spending to

comply with them, whether by increasing contributions to its ERISA

plans or navigating the narrow regulatory channel between the Fair

Share Act’s definition of healthcare spending and ERISA’s definition

of an employee benefit plan. In this way, the Fair Share Act is directly

analogous to the Washington State statute in Egelhoff, 532 U.S. at

147-48, that revoked a spouse’s beneficiary designation upon divorce.

Even though the Washington statute included an opt-out provision,

the Court held the law to be preempted because it required plan

administrators to "maintain a familiarity with the laws of all 50 States

so that they can update their plans as necessary to satisfy the opt-out

requirements of other, similar statutes." Id. at 151. The Fair Share Act

likewise would deny Wal-Mart the uniform nationwide administration

26 RETAIL INDUSTRY LEADERS v. FIELDER

of its healthcare plans by requiring it to keep an eye on conflicting

state and local minimum spending requirements and adjust its health-

care spending accordingly.

Perhaps recognizing the insufficiency of a non-ERISA healthcare

spending option, the Secretary relies most heavily on its argument

that the Fair Share Act gives employers the choice of paying the State

rather than altering their healthcare spending. The Secretary contends

that, in certain circumstances, it would be rational for an employer to

choose to do so. It conceives that an employer, whose healthcare

spending comes close to the 8% threshold, may find it more cost-

effective to pay the State the required amount rather than incur the

costs of altering the administration of its healthcare plans. The exis-

tence of this stylized scenario, however, does nothing to refute the

fact that in most scenarios, the Act would cause an employer to alter

the administration of its healthcare plans. Indeed, identifying the nar-

row conditions under which the Act would not force an employer to

increase its spending on healthcare plans only reinforces the conclu-

sion that the overwhelming effect of the Act is to mandate spending

increases. This conclusion is further supported by the fact that Wal-

Mart representatives averred that Wal-Mart would in fact increase

healthcare spending rather than pay the State.

In short, the Fair Share Act leaves employers no reasonable choices

except to change how they structure their employee benefit plans.

Because the Act directly regulates employers’ provision of health-

care benefits, it has a "connection with" covered employers’ ERISA

plans and accordingly is preempted by ERISA.

IV

On its cross-appeal, RILA contends that the district court erred in

finding that the Fair Share Act does not violate the Equal Protection

Clause. Because we have concluded that the Fair Share Act is pre-

empted by ERISA, we need not consider RILA’s equal-protection

claim.

V

The Maryland General Assembly, in furtherance of its effort to

require Wal-Mart to spend more money on employee health benefits

RETAIL INDUSTRY LEADERS v. FIELDER 27

and thus reduce Wal-Mart’s employees’ reliance on Medicaid,

enacted the Fair Share Act. Not disguised was Maryland’s purpose to

require Wal-Mart to change, at least in Maryland, its employee bene-

fit plans and how they are administered. This goal, however, directly

clashes with ERISA’s preemption provision and ERISA’s purpose of

authorizing Wal-Mart and others like it to provide uniform health

benefits to its employees on a nationwide basis.

Were we to approve Maryland’s enactment solely for its noble pur-

pose, we would be leading a charge against the foundational policy

of ERISA, and surely other States and local governments would fol-

low. As sensitive as we are to the right of Maryland and other States

to enact laws of their own choosing, we are also bound to enforce

ERISA as the "supreme Law of the Land." U.S. Const. art. VI.

The judgment of the district court is

AFFIRMED.

MICHAEL, Circuit Judge, dissenting:

Maryland, like most states, is wrestling with explosive growth in

the cost of Medicaid. Innovative ideas for solving the funding crisis

are required, and the federal government, as the co-sponsor of Medic-

aid, has consistently called upon the states to function as laboratories

for developing workable solutions. In response to this call and its own

funding predicament, Maryland enacted the Fair Share Health Care

Fund Act (Maryland Act or Act) in 2006 to require very large

employers, such as Wal-Mart Stores, Inc., to assume greater responsi-

bility for employee health insurance costs that are now shunted to

Medicaid. I respectfully dissent from the majority’s opinion that the

Maryland Act is preempted by ERISA. The Act offers a covered

employer the option to pay an assessment into a state fund that will

support Maryland’s Medicaid program. Thus, the Act offers a means

of compliance that does not impact ERISA plans, and it is not pre-

empted.

I.

"Medicaid is a means-tested entitlement program financed by the

states and federal government" that provides medical care for about

28 RETAIL INDUSTRY LEADERS v. FIELDER

60 million Americans, a number made up of low-income adults and

their dependent children. Nat’l Governors Ass’n & Nat’l Ass’n of

State Budget Officers, The Fiscal Survey of States 4 (2006). Medicaid

was originally intended to provide help to the most vulnerable rather

than to a broader population of the working poor and their families.

In short, Congress intended for the Medicaid program to serve only

as the "payer of last resort." See S. Rep. No. 99-146, at 312-13 (1985),

as reprinted in 1986 U.S.C.C.A.N. 42, 279-80. Over time, however,

Medicaid has become the payer of first resort for a large percentage

of patients. In 2006 state and federal Medicaid spending totaled an

estimated $320 billion. Medicaid — the fastest-growing expense for

many states — dominates the state budgeting process around the

country. Program expenditures currently make up about twenty-two

percent of total state spending annually, and these outlays are pro-

jected to grow at a rate of eight percent over the next decade. Already,

between one-quarter and one-third of the states have experienced sig-

nificant shortfalls in their annual Medicaid appropriations, suggesting

that those with lower incomes are being pushed to Medicaid at an

unexpected (and alarming) rate.

The increase in Medicaid spending is caused in part by the decline

in employer-sponsored health insurance. In Maryland’s words, Med-

icaid "has been transformed into a corporate subsidy, with taxpayer-

funded employee health care an integral component of [many] an

employer’s benefits program." Reply Br. of Appellant at 4. Wal-Mart,

which is subject to the Maryland Act, is cited as a company that

abuses the Medicaid program. "Wal-Mart has more employees and

dependents on subsidized Medicaid or similar programs than any

other company nationwide." J.A. 321. A Georgia survey "found that

more than 10,000 children of Wal-Mart employees were enrolled in

the state’s children’s health insurance program . . . at a cost of nearly

$10 million annually." J.A. 89. Similarly, a study by a North Carolina

hospital found that thirty-one percent of Wal-Mart employees were

enrolled in Medicaid and an additional sixteen percent were unin-

sured. In an internal company memo of fairly recent origin, Wal-Mart

acknowledged that "[t]wenty-seven percent of [its employees’] chil-

dren are on [Medicaid]," and an additional nineteen percent are unin-

sured. J.A. 321.

RETAIL INDUSTRY LEADERS v. FIELDER 29

II.

Maryland has its own Medicaid funding crisis. The state’s Medical

Assistance (Medicaid and children’s health) Program now consumes

about seventeen percent of the state general fund, and it is one of the

fastest growing components of the budget. Maryland’s 2007 Medical

Assistance expenditures are expected to total $4.7 billion. Over the

next five years the state’s Medicaid costs are projected to grow at a

rate that exceeds growth in general fund revenues by about three per-

cent. Increasing enrollment in the program is a contributing factor.

Enrollment growth is being spurred by the continuing rise in the num-

ber of children qualifying for Medicaid due to low family income. As

employers drop or fail to offer affordable family health care coverage,

more and more children of low income employees are forced into

Medicaid or other taxpayer-funded insurance. Rising health care costs

and the increase in the number of uninsured residents of all ages are

also factors that accelerate the growth in Maryland’s Medicaid bud-

get. Even though many of the uninsured may not qualify for Medic-

aid, they nevertheless drive up Medicaid costs under Maryland’s "all-

payor" system. The all-payor system requires those who pay their

hospital bills in Maryland to subsidize the cost of hospital care ren-

dered to uninsured patients. The costs of treating those who cannot

pay are added into the state-approved rates charged to those who can

pay through insurance or other means. See Md. Code Ann. Health-

Gen. §§ 19-211, 214, 219. The all-payor rates rise as the number of

uninsured persons increases. Medicaid, as a significant purchaser of

medical care in Maryland, is thus forced to bear an ever greater bur-

den as the number of patients without employer-backed health insur-

ance increases.

Maryland’s annual Medicaid obligations are exceeding legislative

appropriations by enormous sums. The shortfall in 2006 was esti-

mated to be around $130 million. The state has made up the deficit

in part by transferring money from other programs. Such stopgap

measures, however, are becoming less sustainable with each passing

month. To deal with the crisis, Maryland, like many other states, has

sought new ways to constrain health care costs and generate addi-

tional revenue for its Medicaid program.

The Maryland Act is part of the state’s effort to deal with the

mounting funding pressures. The Act establishes the Fair Share

30 RETAIL INDUSTRY LEADERS v. FIELDER

Health Care Fund to "support the operations of the [Maryland Medi-

cal Assistance] Program." Md. Code Ann. Health-Gen. § 15-142(c).

The fund will receive revenue from assessments on large employers

that fail to meet the Act’s spending requirements for health insurance.

Id. § 15-142(e). The Act requires each employer with 10,000 or more

employees in Maryland to submit an annual report specifying its

Maryland employee number, the amount it spent on health insurance

in Maryland, and the percentage of payroll it spent on health insur-

ance in the state. Md. Code Ann. Lab. & Empl. § 8.5-103. Currently,

four employers in Maryland are subject to the Act. A for-profit

employer, of which there are three, must spend eight percent or more

of total wages on health insurance or pay the difference to the Secre-

tary of Labor, Licensing, and Regulation. Id. § 8.5-104(b). Health

insurance costs include all tax deductible spending on employee

health insurance or health care allowed by the Internal Revenue Code.

Id. § 8.5-101(d). Nothing in the Act demonstrates an intent to restrict

its application solely to Wal-Mart.

The Act instructs the Secretary to place any revenue collected in

a special fund to defray the costs of Maryland’s Medicaid program.

Md. Code Ann. Health-Gen. § 15-142. In this way, the Act will sup-

port the state’s Medical Assistance Program either by directly defray-

ing Medicaid costs or by prompting covered employers to spend more

on employee health insurance.

III.

I agree with the majority that the claims asserted by the Retail

Industry Leaders Association (RILA) are justiciable, but not for all of

the same reasons. RILA has associational standing to sue because it

alleges that one of its members, Wal-Mart, faces the imminent injury

of being forced to comply with the Act’s reporting requirements and

either to pay an assessment or to increase its spending on employee

health insurance. This allegation is sufficient to satisfy the injury ele-

ment necessary for standing. There is thus no need to rely on RILA’s

argument that the Act will injure Wal-Mart by impeding its ability to

administer its employee benefit plans in a uniform fashion. The Act

will not cause such an injury, as I explain later on.

My conclusion that this action is not barred by the Tax Injunction

Act also rests on different reasons. The majority is wrong to charac-

RETAIL INDUSTRY LEADERS v. FIELDER 31

terize the Act’s stated revenue raising purpose as superficial. The Act

legitimately anticipates a potential revenue stream, despite making

available an alternative mode of compliance that does not generate

revenue. The Act’s revenue raising component is directly connected

to the regulatory purpose of assessing employers that rely dispropor-

tionately on state-subsidized programs to provide health care for their

employees.

"To determine whether a particular charge is a ‘fee’ or a ‘tax,’ the

general inquiry is to assess whether the charge is for revenue raising

purposes, making it a ‘tax,’ or for regulatory or punitive purposes,

making it a ‘fee.’" Valero Terrestrial Corp. v. Caffrey, 205 F.3d 130,

134 (4th Cir. 2000). An assessment is more likely to be a fee than a

tax if it is imposed by an administrative agency, it is aimed at a small

group rather than the public at large, and any revenue collected is

placed in a special fund dedicated to the purposes of the regulation.

Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800 (4th Cir.

1997).

In this case the Act was passed by the legislature and has revenue

raising potential. Other indicators suggest, however, that the Act’s

assessment scheme is more in the nature of a regulatory fee than a tax.

The Act applies to a very small group — only four employers. The

assessment may generate revenue, but its primary purpose is punitive

in nature. It assesses employers that provide substandard health bene-

fits or none at all. Any revenue collected serves to recoup costs

incurred by the state due to such behavior; collections are not depos-

ited in the general fund. The regulatory purpose is further evidenced

by the Act’s creation of a special fund administered by the Secretary

of Labor, Licensing, and Regulation and dedicated to defraying the

state’s Medicaid costs. These characteristics show the significant dif-

ferences between the assessment imposed by the Act and a typical tax

imposed on a large segment of the population and used to benefit the

general public. See Valero, 205 F.3d at 135. Because the assessment

is not a tax, I therefore agree with the majority’s ultimate conclusion

that the Tax Injunction Act does not deprive the federal courts of

jurisdiction to consider this case.

IV.

I respectfully dissent on the issue of ERISA preemption because

the Act does not force a covered employer to make a choice that

32 RETAIL INDUSTRY LEADERS v. FIELDER

impacts an employee benefit plan. An employer can comply with the

Act either by paying assessments into the special fund or by increas-

ing spending on employee health insurance. The Act expresses no

preference for one method of Medicaid support or the other. As a

result, the Act is not preempted by ERISA.

ERISA supersedes "any and all State laws insofar as they . . . relate

to any employee benefit plan." 29 U.S.C. § 1144(a). State laws "relate

to" ERISA plans if they have a "connection with" or make "reference

to" such plans. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97

(1983). The Maryland Act does neither.

A state statute has an impermissible connection with an ERISA

plan when it requires the establishment of a plan, mandates particular

employee benefits, or impacts plan administration. See Fort Halifax

Packing Co. v. Coyne, 482 U.S. 1, 14 (1987) (state can require one-

time, lump sum severance payments because they would not require

the establishment or maintenance of a plan); Egelhoff v. Egelhoff, 532

U.S. 141, 147-50 (2001) (state cannot automatically revoke a benefi-

ciary designation of an ex-spouse in a plan policy); Shaw, 463 U.S.

at 97, 100 (state cannot require ERISA plans to cover pregnancy).

The Act offers a compliance option that does not require an employer

to maintain an ERISA plan, administer plans according to state-

prescribed rules, or offer a certain level of ERISA benefits. Also, the

Act does not contain an impermissible reference to ERISA plans. It

allows an employer to maintain a uniform national plan, albeit at a

cost. It is thus not the sort of law that Congress intended to preempt.

Indeed, the Act is a legitimate response to congressional expectations

that states develop creative ways to deal with the Medicaid funding

problem.

A.

The Act does not compel an employer to establish or maintain an

ERISA plan in order to comply with its provisions. ERISA plan

expenditures are considered in the calculation of an employer’s total

level of health insurance spending, but this factor does not create an

impermissible connection with an ERISA plan. See Burgio & Cam-

pofelice, Inc. v. N.Y. State Dep’t of Labor, 107 F.3d 1000, 1009 (2d

Cir. 1997); Keystone Chapter, Associated Builders & Contractors,

RETAIL INDUSTRY LEADERS v. FIELDER 33

Inc. v. Foley, 37 F.3d 945, 961 (3d Cir. 1994). The Act offers a com-

pliance option that is not predicated on the existence of an ERISA

plan. Again, an employer may comply by paying an assessment into

Maryland’s Fair Share Health Care Fund.

B.

The Act does not impede an employer’s ability to administer its

ERISA plans under nationally uniform provisions. A problem would

arise if the Act dictated a plan’s system for processing claims, paying

benefits, or determining beneficiaries. See Egelhoff, 532 U.S. at 147,

150. But the Act does none of those things. The only aspect of the Act

that might impact plan administration is the requirement for reporting

data about Maryland employee numbers, payroll, and ERISA plan

spending. However, any burden this requirement puts on plan admin-

istration is simply too slight to trigger ERISA preemption. See Foley,

37 F.3d at 963 (requiring employers to record benefits contributions

will not influence decisions about the structure of ERISA plans and

so will not impede the administration of nationwide plans); see also

Minn. Chapter of Associated Builders & Contractors, Inc. v. Minn.

Dep’t of Labor & Industry, 866 F. Supp. 1244, 1247 (D. Minn. 1993)

("The requirement of calculating [the cost of benefits] falls on the

employer itself, but does not place any administrative burden on the

plan. The requirements of calculating costs and keeping records may

somewhat increase the cost of the benefits plans, but this incidental

impact on the plans need not lead to preemption.").

C.

The Act does not mandate a certain level of ERISA benefits. A

statute that "alters the incentives, but does not dictate the choices, fac-

ing ERISA plans" is not preempted. Calif. Div. of Labor Standards

Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 334

(1997). The ERISA preemption provision allows for uniformity of

administration and coverage, but "cost uniformity was almost cer-

tainly not an object of pre-emption." N.Y. State Conference of Blue

Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 662

(1995).

Under the Act employers have the option of either paying an

assessment or increasing ERISA plan health insurance. This choice is

34 RETAIL INDUSTRY LEADERS v. FIELDER

real. The assessment does not amount to an exorbitant fee that leaves

a large employer with no choice but to alter its ERISA plan offerings.

See id. at 664. According to Wal-Mart estimates, the company faces,

at most, a potential assessment of one percent of its Maryland payroll.

Paying the assessment would thus not be a financial burden that

leaves Wal-Mart with a Hobson’s choice, that is, no real choice but

to increase health insurance benefits. Wal-Mart contends that it would

never choose to pay the assessment when given the option of gaining

employee goodwill through increased benefits. To begin with, Wal-

Mart’s bald claim that it would increase benefits appears dubious.

Wal-Mart has not seen fit thus far to use comprehensive health insur-

ance as a means of generating employee goodwill. More important,

Wal-Mart’s claim that it would increase benefits rather than pay the

fee is irrelevant because the choice to increase benefits is not com-

pelled by the Act. That choice would simply be a business judgment

that Wal-Mart is free to make. Indeed, an employer close to the

required statutory percentage, such as Wal-Mart, may find it easier to

pay the assessment than to increase health insurance spending. So

long as the assessment is not so high as to make its selection finan-

cially untenable, an employer may freely evaluate whether the ability

to maintain current levels of health insurance spending is worth the

price of the assessment.

The majority attempts to distinguish Travelers and Dillingham by

contrasting the indirect regulation of ERISA plans in those cases with

what it deems a direct regulation here. I disagree with the majority’s

assertion that the Maryland Act directly regulates ERISA plans.

"Where a legal requirement may be easily satisfied through means

unconnected to ERISA plans, and only relates to ERISA plans at the

election of an employer, it ‘affect[s] employee benefit plans in too

tenuous, remote, or peripheral a manner to warrant a finding that the

law "relates to" the plan.’" Foley, 37 F.3d at 960 (quoting Shaw, 463

U.S. at 100 n. 21). Moreover, Travelers and Dillingham focused not

on nebulous distinctions between direct and indirect effects, but on

establishing a general rule for ERISA preemption that "look[s] both

to the objectives of the ERISA statute as a guide to the scope of the

state law that Congress understood would survive as well as to the

nature of the effect of the state law on ERISA plans." Dillingham, 519

U.S. at 325 (emphasis added) (quotation marks and citations omitted).

The statutes in Travelers and Dillingham were permissible regulations

RETAIL INDUSTRY LEADERS v. FIELDER 35

of ERISA plans primarily because they did not mandate a particular

level of benefits or impact plan administration, not because of the

non-ERISA targets of the regulations. See Travelers, 514 U.S. at 664;

Dillingham, 519 U.S. at 332-33.

We must similarly focus our inquiry on any threat the Maryland

Act poses to the purposes of the ERISA preemption provision rather

than on hazy distinctions between direct and indirect regulations. See

Travelers, 514 U.S. at 656. Congress generally does not intend to pre-

empt acts in traditional areas of state regulation, such as health and

safety. De Buono v. NYSA-ILA Medical & Clinical Servs. Fund, 520

U.S. 806, 813-14 (1997). The purpose of the Act, to relieve state

Medicaid burdens and improve health care for low income residents,

falls into this category. Travelers and Dillingham demonstrate that so

long as the regulation impacts a traditional area of state concern, and

employers are left with an effective choice that avoids ERISA impli-

cations, the regulation may stand.

Rather than fitting within the ERISA preemption target, the Mary-

land Act is in line with Congress’s intention that states find innova-

tive ways to solve the Medicaid funding crisis. Congress already

directs states to "take all reasonable measures to ascertain the legal

liability of [and to seek reimbursement from] third parties (including

health insurers . . . or other parties that are, by statute, contract, or

agreement, legally responsible for payment of a claim for a health

care item or service) to pay for care and services available under

[Medicaid]." 42 U.S.C. §§ 1396a(a)(25)(A) & (B). I recognize, of

course, that the Maryland Act goes beyond this basic directive, but it

is nevertheless a legitimate response to the consistent encouragement

Congress has given to the states to find "novel approaches" and to

"develop innovative and effective solutions" to deal with the worsen-

ing Medicaid funding problem. S. Rep. No. 99-146, at 462 (1985), as

reprinted in 1986 U.S.C.C.A.N. 42, 421 (remarks of Sen. Orrin G.

Hatch); see also Travelers, 514 U.S. at 665 (recognizing that Con-

gress has "sought to encourage . . . state responses to growing health

care costs and the widely diverging availability of health services").

D.

The Act also contains no impermissible reference to an ERISA

plan. Such a reference occurs only when a statute explicitly refers to

36 RETAIL INDUSTRY LEADERS v. FIELDER

or relies upon the existence of an ERISA plan. District of Columbia

v. Greater Wash. Bd. of Trade, 506 U.S. 125, 130 (1992) (statute pre-

empted because it applied to "health insurance coverage," which is an

ERISA plan). Obligations under the Act are tied to a covered employ-

er’s level of tax deductible health insurance spending. The Act does

not make any explicit statement about ERISA plans or rely on their

existence.

E.

As the record makes clear, Maryland is being buffeted by escalat-

ing Medicaid costs. The Act is a permissible response to the problem.

Because a covered employer has the option to comply with the Act

by paying an assessment — a means that is not connected to an

ERISA plan — I would hold that the Act is not preempted.