NJ's employer Medicaid fee lawsuit and the ERISA preemption question

Well, that didn’t take long.

Yesterday, August 20, a coalition led by the National Retail Federation, the International Franchise Association, the American Hotel & Lodging Association, and the Restaurant Law Center sued to block New Jersey’s new employer Medicaid fee, P.L.2026, c.23.

I’ve been telling clients and brokers that this law was headed to a courtroom.

The headline claim is ERISA preemption. I don’t think it’s the strong one. The fee contains no plan-related safe harbor and no plan-design trigger. It’s a per-head charge based on Medicaid enrollment, something employers don’t control and can’t see.

Under Travelers, indirect economic pressure without a plan hook is a hard preemption case. The coalition’s own framing, that no plan change can avoid the fee, cuts against the ERISA theory.

The process claims are where I’d watch. The statute requires payment first, puts the burden on the employer to disprove the state’s count, declares the underlying enrollment data confidential, and makes late penalties non-refundable even when the department concludes the fee was improperly imposed. A remedy you must fund up front and cannot see the proof of is a genuine constitutional question.

This is brand new litigation over a brand new law, and threshold fights over whether the fee is a tax could decide it before any merits ruling.

If you have a New Jersey workforce, budget for the fee but watch the docket.