What the Unconstitutional Conditions Doctrine Can Teach Us About ERISA Preemption: Is it Possible to Consistently Identify "Coercive" Pay-or-Play Schemes?

With the ranks of the uninsured steadily increasing and the federal government failing to intervene, several state and local governments have considered employer pay-or-play schemes as a tool to expand coverage. But two recent circuit decisions—first Retail Industry Leaders Ass’n v. Fielder in the Fourth Circuit then Golden Gate Restaurant Ass’n v. San Francisco in the Ninth Circuit—have left far from clear the extent to which these schemes are valid in the face of an ERISA preemption challenge. Debate indeed continues as to whether the currently operative, but as yet unchallenged, pay-or-play law in Massachusetts is preempted. The Ninth Circuit reasoned in Golden Gate that the San Francisco scheme it upheld was distinguishable from the Maryland scheme the Fourth Circuit struck down because it did not coerce employers into increasing their ERISA health benefits, and therefore the decision created no circuit split. This Note argues that a coercion-centered test is unlikely to produce a consistent doctrine. To make this point, it analogizes to the unconstitutional conditions doctrine, in which courts have also tried to measure the coercive effect of economic incentive schemes but have failed to fashion a coherent test capable of producing predictable outcomes. Instead of focusing on coercion, courts can, with equal fidelity to the law, apply a rebuttable presumption against preemption to pay-or-play schemes that are part of comprehensive health reform initiatives. This approach provides a superior basis for distinguishing the Maryland and San Francisco schemes, and also leads to the predictable outcome that the Massachusetts pay-or-play law is not preempted.