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Cheryl Miller

The Recorder

01-10-2008

A 9th U.S. Circuit Court of Appeals panel gave San Francisco the green light Wednesday to enforce its new employer-funded health care program, staying a district court's ruling that the ordinance is pre-empted by federal law.

"We conclude that the city has shown not only a 'probability of success on the merits' ... but also a 'strong likelihood of success on the merits,'" Judge William Fletcher wrote for the unanimous three-member panel. Judges Alfred Goodwin and Stephen Reinhardt joined in Fletcher's decision.

The stay means San Francisco companies with 50 or more employees must now spend a minimum amount on private or city-provided health care coverage for their workers. A similar mandate on smaller employers goes into effect on April 1.

The Golden Gate Restaurant Association is suing to stop the city's mandate on employer payments.

City leaders say the program will provide health care for 20,000 uninsured workers.

"This is an important victory for thousands of uninsured San Franciscans who will now become eligible to receive health benefits in the next several months," said City Attorney Dennis Herrera, who sought the emergency stay.

Last month, U.S. District Judge Jeffrey White struck down the employer-mandate portion of San Francisco's universal health care plan, holding that the city's requirements violate the federal Employer Retirement Income Security Act, better known as ERISA. That law bars states and local governments from forcing employers to provide health care insurance or regulating any coverage they might provide.

In its ruling Wednesday, the 9th Circuit panel said San Francisco's ordinance doesn't appear to violate ERISA because it mandates a minimum level of employer payments, not a minimum level of health care coverage.

"Employers need not have any ERISA plan at all; and if they do have such a plan, they need not make any changes to it," Fletcher wrote. "Where a law is fully functional even in the absence of a single ERISA plan ... we have great difficulty in seeing how the law makes an impermissible reference to ERISA plans."

The court will consider the city's appeal of White's decision later this year.

Fletcher's 35-page decision may provide a road map for state leaders as they try to craft a related pay-or-play health care program to withstand an ERISA challenge. In a press release, Assembly Speaker Fabian Nunez said Wednesday's court decision means "opponents of health care reform now have one less rubber arrow in their quiver."