Golden Gate Restaurant Association: Employer Mandates and ERISA Preemption in the Ninth Circuit

Abstract:     
This Article focuses on two significant questions in the aftermath of the Ninth Circuit's decision in Golden Gate Restaurant Association, which stayed a District Court ruling that had held the San Francisco Health Care Security Ordinance preempted by federal law. The core of that ordinance is the requirement that covered employers in San Francisco make minimum outlays for their own programs for their employees' health care or instead make contributions in the required amounts to the city to finance either San Francisco's Health Access Program (HAP) or municipally-run health reimbursement accounts. I conclude that under the U.S. Supreme Court's decisions construing ERISA Section 514(a), ERISA preempts the San Francisco Health Care Security Ordinance.

An important, but so far unrecognized, consideration is that employers' payments to the City of San Francisco under the ordinance constitute ERISA-governed health plans because employers, by those payments, either purchase for their employees lower premiums for coverage in the city's Health Access Program or fund municipally-run health reimbursement accounts for those employees. By its ordinance, San Francisco is not just regulating employers' ERISA-governed health plans; it is administering such plans.

San Francisco's regulation of employers' ERISA-governed health plans is deep, intruding substantively and procedurally into each such plan via the ordinance's minimum expenditure and administrative requirements. Moreover, San Francisco's regulation of such plans is broad. Virtually all employer outlays for medical care constitute employee benefit plans under ERISA, whether such outlays are self-administered by the employer, are administered for the employer by a third party such as an insurer, or are administered by the city through its Health Access Program or its municipally-run reimbursement accounts. The San Francisco ordinance regulates the entire spectrum of these ERISA-governed plans. In addition, San Francisco's regulation of employers' ERISA health plans is direct, targeting such plans and impacting upon them directly by means of the ordinance's expenditure mandates and recordkeeping obligations.

Keywords: ERISA, preemption, health plans, health care, local government, benefits, San Francisco Health Care Security Ordinance

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