X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Mattie Stiles’ action arose out of an injury that she sustained on Jan. 4, 2002, while working at Memorial Hermann Healthcare System. Stiles asserts that Memorial agreed to pay her health-care expenses related to the incident in consideration for Stiles’ releasing Memorial from liability for any negligence on its part. Stiles attached an unsigned Release of Claims and Covenant not to Sue to her second amended petition evidencing such an agreement. The release referenced Memorial’s Occupational Health Plan (the plan) and stated that notwithstanding Stiles’ release of her claims against Memorial, Stiles retained her rights to benefits under the plan. Stiles alleges that Memorial refused to pay her medical bills pursuant to the release. Memorial answered Stiles’ suit with a general denial and argued, among other things, that the trial court lacked subject-matter jurisdiction to hear Stiles’ claims. Memorial then filed a notice of removal, asserting that Stiles’ petition stated an action to recover benefits under the plan, which qualified under the Employee Retirement Income Security Act of 1974 (ERISA), thereby triggering complete preemption under ERISA’s civil enforcement provisions. Memorial’s notice of removal moved the case to the U.S. District Court of the Southern District of Texas. In Stiles’ subsequent motion to remand, she contended that it was Memorial’s breach and fraud related to the release agreement, distinct from any rights that she held under the plan, that formed the basis of her suit. The district court remanded the case back to the trial court for lack of federal jurisdiction, stating that substantial doubt remained as to whether Stiles’ claim fell within the pre-emptive scope of ERISA. Upon remand, Memorial moved to dismiss the suit, again arguing a lack of subject matter jurisdiction based on ERISA pre-emption. The trial court granted the motion to dismiss, concluding that the plan covered Stiles’ state law claims for breach of contract and fraud; that ERISA completely pre-empted Stiles’ state law claims; and that it had no subject-matter jurisdiction over the claims. HOLDING:Reversed and remanded. ERISA’s pre-emptive scope may be broad, the court stated, but it does not reach claims that do not involve the administration of plans, even though the plan may be a party to the suit or the claim relies on the details of the plan. In this case, the court stated that the release reflects that Stiles bargained for a distinct and independent promise from Memorial to pay her medical bills in consideration of her release of any claims against Memorial arising from the incident. The court concluded that the underlying conduct complained about in Stiles’ suit, including breach of contract and fraud, can be divorced from its connection to the employee benefit plan. Moreover, the court noted, Stiles’ state law claims do not address areas of exclusive federal concern. Stiles, the court stated, is not seeking the right to receive benefits under the terms of an ERISA plan, nor do her claims directly affect the relationship among the traditional ERISA entities. Thus, the court held that Stiles’ claims based on the breach of the release agreement do not relate to Memorial’s ERISA-qualifying plan. The court further held that the trial court erred in dismissing Stiles’ causes of action for lack of subject matter jurisdiction. OPINION:Jennings, J.; Radack, C.J., and Jennings and Alcala, J.J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.