San Francisco plan for uninsured withstands final legal challenge

The U.S. Supreme Court won't review a lawsuit that restaurant owners filed against employer mandates in a city health program.

By David Glendinning — Posted July 9, 2010

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U.S. Supreme Court justices declined to consider a legal challenge to Healthy San Francisco, a health access program that has enrolled tens of thousands of uninsured city residents.

The June 28 decision leaves in place appeals court rulings upholding the employer mandate at the heart of the program. Healthy San Francisco, which offers primary and preventive care to the uninsured, requires businesses either to offer health coverage for their workers or contribute to a city fund that helps pay for the program.

It also means the end for a lawsuit against the program by the Golden Gate Restaurant Assn. The organization had argued that the employer mandate violated the Employee Retirement Income Security Act by imposing the type of patchwork local coverage directives that ERISA was designed to prohibit.

San Francisco Mayor Gavin Newsom said the high court's decision not to hear the case ensures that the city will continue providing care to uninsured residents who otherwise would go without it.

"The Supreme Court's rejection of the challenge to Healthy San Francisco is a victory for the 53,000 San Franciscans who have health care today through our groundbreaking universal health care program," Newsom said in a statement. "Healthy San Francisco is a model for health care reform that works."

But the ERISA Industry Committee, which represents employers who offer health plans, said it was disappointed the court did not take up the case.

"Under ERISA, multistate employers are able to offer a single, coordinated package of employee health care benefits to all eligible employees, regardless of where they live or work or may be transferred," said Mark Ugoretz, the committee's president. "If other cities and states follow in San Francisco's footsteps, it would substantially increase the cost and complexity of providing health care coverage at a time when coverage already is prohibitively expensive."

The appeal to the Supreme Court had prompted the Obama administration to weigh in on the case. In a brief filed in the court in May, the U.S. Solicitor General's Office argued against justices taking up the lawsuit, saying that the intervening enactment of federal health reforms largely rendered the ERISA preemption issue moot. Starting in 2014, most larger businesses will be required to offer health coverage to their workers or else subsidize employees who seek plans through insurance exchanges.

The administration acknowledged that it remained unclear whether the federal reforms would preempt certain state and local legislation, such as the statute that started Healthy San Francisco in 2006. Such questions have yet to be interpreted either by federal agencies or the courts, the brief stated.

Supreme Court justices did not comment on their reasons for declining to consider the restaurant association's lawsuit.

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