U.S. opposes legal challenge to San Francisco employer mandate

A trade group wants the U.S. Supreme Court to overturn a city requirement that employers contribute to workers' health coverage.

By Amy Lynn Sorrel — Posted June 14, 2010

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The enactment of national health system reform may help protect the employer mandate underpinning San Francisco's universal health coverage program from a pending legal challenge -- at least for now.

Obama administration lawyers told the U.S. Supreme Court that reform largely has removed the need for justices to consider the validity of the local ordinance requiring businesses either to contribute toward workers' health coverage or pitch in to a city fund for Healthy San Francisco. The universal access program, which offers primary and preventive care to uninsured residents, had about 53,000 enrollees as of May.

The Golden Gate Restaurant Assn. asked the court to take up the issue after the 9th U.S. Circuit Court of Appeals upheld the mandate in 2008 and 2009. Judges rejected arguments by the trade group that the requirement violated the federal Employee Retirement Income Security Act by imposing the type of burdensome local directives ERISA sought to prevent.

"The intervening enactment of comprehensive federal health care legislation has dramatically changed the landscape governing payment for health care, substantially reducing the importance of the question whether ERISA preempts state or local requirements," states a brief that acting U.S. Solicitor General Neal K. Katyal filed in the high court in May. Reform also may give rise to additional legal questions that have yet to be addressed by federal regulators, government lawyers said.

The Supreme Court last October asked the government to weigh in on the case. At this article's deadline, the high court had not yet decided whether to accept the case. A decision was expected before its term concluded at the end of June.

The government's brief strengthens the city's position "in a case that had already been significantly bolstered by the passage of health care reform at the national level," City Attorney Dennis Herrera said in a statement. "It would be hard to imagine the high court reaching out to undermine a local program that works for thousands of families who would otherwise go without health care."

But Kevin Westlye, executive director of the restaurant association, said it was the spending mandate's opponents that were boosted by federal reform. "It's in the federal government's interest to have everybody working on rolling out the federal program, rather than having small municipalities running and applying their own programs."

San Francisco businesses already are required to comply with two sets of regulations -- from the city and now the federal government -- making the issue ripe for court review, Westlye said.

More questions than answers

White House officials, however, argued that the federal legislation includes provisions designed to encourage the availability of health insurance, making it unlikely that state and local governments would enact new employer spending requirements.

For example, the law imposes assessments on employers with 50 or more full-time workers that do not provide health insurance to their employees. The statute also gives states a role in overseeing and enforcing the regulation of certain provisions.

But it remains unclear whether reform would preempt certain state or local legislation, administration lawyers said. Although national reform allows for the preservation of some state laws and possibly local ones, the issue is one that has yet to be interpreted by implementing agencies, as well as by the courts, the U.S. brief said.

Still, the goals of the San Francisco program remain in line with the purposes of federal health reform, lending credence to the city effort, said Long Do, director of litigation for the California Medical Assn. The organization filed a friend-of-the-court brief urging the 9th Circuit to uphold the spending ordinance and is considering filing a brief in the high court should the justices take up the issue.

"But there is a side question now as to whether [Healthy San Francisco] is necessary given health system reform," Do said. "Even if a court were to decide [the ERISA question], that doesn't address all of the other pending issues, so the case is no longer a good vehicle to present them to the Supreme Court."

The federal law, however, has done nothing thus far to alter ERISA's prohibition on requirements that interfere with employers' ability to provide uniform health benefits without facing a patchwork of regulations, the restaurant association's Westlye said. He also pointed to an April Supreme Court decision in Conkright v. Frommert, reinforcing those standards.

Federal reform similarly strives to "have one standard and have everybody in the country following it," Westlye said, adding that some of San Francisco's requirements are more stringent.

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Case at a glance

Can San Francisco require employers to contribute to workers' health coverage?

The U.S. Supreme Court could decide.

Impact: Obama administration lawyers say the enactment of health system reform has largely eliminated the need for the justices to take up the issue. San Francisco businesses say the local mandate, in addition to the new federal requirements, unfairly burdens them and violates other federal laws.

Golden Gate Restaurant Assn. v. City and County of San Francisco, Calif., U.S. Supreme Court petition pending

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External links

Office of the City Attorney for San Francisco for the government's brief in Golden Gate Restaurant Assn. v. City and County of San Francisco, California (link)

Golden Gate Restaurant Assn. updates on employer mandated health care, including Supreme Court brief (link)

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