American Journal of Law & Medicine

San Francisco health care ordinance withstands ERISA preemption challenge - Golden Gate Rest. Ass'n v. City & County of S.F.

San Francisco Health Care Ordinance Withstands ERISA Preemption Challenge--Golden Gate Rest. Ass'n v. City & County of S.F. (1)--The United States Court of Appeals for the Ninth Circuit held that Section 514(a) of the federal Employee Retirement Income Security Act of 1974 (2) ("ERISA") did not preempt the spending requirements of the San Francisco Health Care Security Ordinance (3) ("Ordinance"). (4) Review of the Ninth Circuit's holding is now pending a grant of writ of certiorari from the United States Supreme Court. (5)

In July 2006, the City and County of San Francisco ("City") passed the Ordinance, a "pay-or-play" law with two primary components: (1) a city-administered health care program called the "Health Access Plan" ("HAP"), and (2) employer spending requirements. (6) The Ordinance requires that medium- and large-sized employers make minimum health care expenditures on behalf of covered employees, (7) either by funding the employees' health benefits or by furnishing funds to the HAP. (8) Under the "City-payment option," an employer may make payments directly to the City, and its employees then receive medical benefits from the HAP after enrolling in the program. (9) The Ordinance also includes administrative requirements, such as mandating that employers maintain accurate records of health care expenditures and provide local officials "reasonable access" to these records. (10)

Golden Gate Restaurant Association ("Association"), a nonprofit trade association of restaurants, filed suit against the City in November 2006, alleging that ERISA preempted the Ordinance's spending requirements. (11) The Association sought declaratory relief and a permanent injunction against enforcement of the spending provisions. …

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