Appeals Panel Questions Federal Judge's Decision That Healthy San Francisco Violates ERISA

Main Category: Health Insurance / Medical Insurance
Also Included In: Medical Malpractice / Litigation
Article Date: 07 Jan 2008 - 12:00 PDT

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A three-judge panel of the Ninth Circuit Court of Appeals on Thursday "made it clear they thought U.S. District Judge Jeffrey White was on shaky ground last week" when he struck down a key funding provision for the city's Healthy San Francisco program, the San Francisco Chronicle reports (Egelko, San Francisco Chronicle, 1/4).

Under the law establishing Healthy San Francisco, private employers with at least 20 employees and not-for-profit groups with at least 50 employees must provide health care benefits at a cost that meets minimum spending levels or help cover the cost of the Healthy San Francisco program. Other funding comes from tax revenue and member premiums. The program is intended to ensure access to health care services at San Francisco clinics and the city's public hospital for San Francisco's 82,000 uninsured residents. White last week ruled that the employer spending provision violated the 1974 federal Employee Retirement Income Security Act (Kaiser Daily Health Policy Report, 1/3).

The panel, which held the hearing to address the city's request for an emergency stay of White's decision, "appeared to agree" with city attorneys' arguments that White had misread the law, the Chronicle reports. According to city attorneys, the law only requires that employers spend a certain amount on health care, either in coverage for their workers or in payments to the city. According to Ninth Circuit Court Judge William Fletcher, that distinction under past U.S. Supreme Court rulings has allowed state and local governments to pass laws protecting the health and welfare of residents. Fletcher said if the city's interpretation of its law is correct, "that takes away virtually all of Judge White's reasoning."

However, Richard Rybicki -- a lawyer for the Golden Gate Restaurant Association, which filed the lawsuit against the city -- said the San Francisco law would require employers to pay for different levels of benefits across cities and therefore conflict with federal law.

The panel gave "mixed signals" on whether it would grant an emergency order suspending White's ruling and allowing the ordinance to be fully implemented as the state appeals the decision, the Chronicle reports. According to the Chronicle, the judges' questions and comments during the hearing "suggested that the court was prepared to interpret the 1974 federal law in a way that leaves room for universal, shared-cost health coverage at the state and local levels, in the absence of a national health care law." According to the Chronicle, the ruling also could "determine" the legality of a statewide health care proposal that would be partially funded by an employer fee (Egelko, San Francisco Chronicle, 1/4).

Editorial
"White's reasoning may not be rational, but then, the arguments against universal health care have never been about rationality," a Chronicle editorial states. The Chronicle continues, "For the most foolish of reasons, America consistently falls for the okeydoke when it comes to health care, believing that illness is someone else's problem and should be at someone else's expense."

The Golden Gate Restaurant Association is "correct in only one sense -- it is unfair to ask San Francisco's restaurants to pay when no one else has to," but "that reasoning should disappear soon, too," as the "state, which has been struggling to get its own universal health care plan off the ground all year, has been watching this case closely."

The Chronicle concludes that in 2009, "the entire country may be finally looking at a federalized solution to our health care nightmares," and "the fights that looming date will precipitate make it all the more important for San Franciscans to stay vigilant about the success of their city's plan" (San Francisco Chronicle, 1/4).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.