On December 26, 2007, United States District Judge Jeffery White granted summary judgment in favor of the Golden Gate Restaurant Association's challenge to the San Francisco Health Care Security Ordinance. The judge held that the Ordinance is invalid because it is preempted by the Employee Retirement Income Security Act of 1974 (ERISA) and issued an injunction against implementation.
On January 9th, the U.S. Court of Appeals for the Ninth Circuit stayed the injunction, which means that implementation will continue. Covered employers now have a choice. They may make quarterly "Health Care Expenditures" on behalf of each covered employee through insurance or an ERISA plan, they may pay their Health Care Expenditures to the City of San Francisco, or they may refuse to comply based on an expectation that the Ordinance will be invalidated on appeal. The decision on appeal is not expected before the first quarterly payments must be made. A decision by the same three judge panel that issued the stay would likely uphold the Ordinance, but might eventually be overturned by the Ninth Circuit en banc or by the Supreme Court.
For more information on the Ordinance, see our December 12, 2007 Client Alert, New Guidance on San Francisco Health Care Ordinance".
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