San Francisco Officials Appeal Healthy Security Ordinance Ruling

The U.S. Court of Appeals for the Ninth Circuit recently heard oral arguments from San Francisco officials appealing an order issued by the U.S. District Court for the Northern District of California regarding the city's Healthy Security Ordinance, which comprises part of the "Healthy San Francisco" initiative. The ordinance requires covered private employers to make certain minimum expenditures by paying directly into health savings accounts, contributing to private health insurance plans, or participating in a city health plan created by the ordinance.

In the contested order, issued Dec. 26, 2007, U.S. District Judge Jeffrey White found the ordinance's expenditure requirements to be preempted by the Employee Retirement Income Security Act (ERISA). Congress enacted ERISA to eliminate "the threat of conflicting or inconsistent State and local regulation of employee benefit plans," and under U.S. Supreme Court precedent, a state law is preempted by ERISA if it is either connected with or makes reference to an ERISA plan, according to White's order. He held that the ordinance "affects plan administration, a core area of ERISA concern;" that "employers would necessarily have to keep an eye on the minimum health care spending requirements in each locality in order to comply with potentially conflicting requirements," thus conflicting with "ERISA's promise to provide a uniform regulatory regime;" and that the ordinance "specifically references the existence of [ERISA] plans."

White's order temporarily stalled the San Francisco program from taking effect on January 1, 2008. However, the U.S. Court of Appeals for the Ninth Circuit agreed last week to allow the program to begin, for now, until it rules on the merits of the appeal.

To view White's order in Golden Gate Restaurant Ass'n v. San Francisco, No. 06-06997 (N.D. Cal. Dec. 26, 2007), Click Here. For more information about the "Healthy San Francisco" program, go to www.healthysanfrancisco.org.

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