Roxanne Hook v. The Morrison Milling Company

EDITH H. JONES, Circuit Judge,

dissenting:

With due respect to my colleagues, I disagree with their conclusion that Ms. Hook’s negligence claim against her employer Morrison Milling Co. was not preempted by her participation in the employer’s ERISA benefits plan. I therefore dissent.

Texas is among a handful of states that do not require its employers to furnish state-mandated worker’s compensation coverage. Morrison Milling availed itself of the privilege of being a nonsubscriber, but it also sought to compensate its employees for their on-the-job injuries. To do so, the company established an ERISA welfare benefits plan and permitted, but did not require, employees to enroll in that plan. Under the plan, they would receive benefits for on-the-job injuries comparable to or better than those under the state program simply by proving that an on-the-job injury occurred. In exchange for the certainty and promptness of *787 payment of benefits, however, the employees were asked to sign a waiver of right to sue the employer under the Texas Workers’ Compensation Act. 1

Hook liked the plan’s provision for benefits, which she collected after falling down a staircase at work. She did not like the waiver of right to sue, however, so she also filed suit against Morrison Milling for negligence.

This sequence of events should make it obvious why the majority is wrong in concluding that Hook’s lawsuit does not “relate to” an ERISA plan for purposes of federal preemption. If all of Morrison’s employees tried to have their cake and eat it by collecting benefits and then suing Morrison Milling, Morrison Milling could not afford the luxury of providing its welfare benefit plan. The plan is a substitute for, not a vehicle to finance, employee litigation.

Not only is the waiver of right to sue economically essential to Morrison Milling’s plan, but Hook’s claim legally “relates to” the plan by challenging the enforceability of that waiver. I cannot follow the majority’s assertions to the contrary. First, the majority states that, taken alone, Hook’s claim against her employer based on an unsafe workplace would not be preempted. This might well be true in the absence of a waiver. The majority then opines that even considering the waiver, the question is not whether Hook’s claim “is preempted because the waiver, as a part of the plan, relates to Hook’s claim. Instead, the appropriate question ... is whether the claim or law relates to an ERISA plan.” Apparently, one should focus only on the negligence claim, ignoring that it squarely conflicts with a provision of this ERISA plan. This logic is rather like a borrower’s accepting money under a promissory note and asking the court to ignore its reference to a security agreement.

Without parsing the majority’s analysis further, I think they have simply overlooked the breadth of the ERISA preemption doctrine, and in particular, the significance of the Supreme Court’s holding in FMC Corp. v. Holliday, 498 U.S. 52 , 111 S.Ct. 403 , 112 L.Ed.2d 356 (1990). The Court held in FMC that a subrogation clause by which an employee agreed to reimburse the ERISA plan for benefits paid if the employee recovered on a claim in a liability action against a third party preempted Pennsylvania’s Motor Vehicle Financial Responsibility Law. That state law purported to override any right of subro-gation of a tort recovery in a motor vehicle accident. 498 U.S. at 55 , 111 S.Ct. at 406 . The Supreme Court reasoned that the anti-subrogation law had a “connection to” the ERISA plan because it “prohibits plans from being structured in a manner requiring reimbursement in the event of recovery from a third party.” Id. at 58 , 111 S.Ct. at 408 . Neither the amici nor the majority have in my view successfully distinguished FMC Corp. from this case. In FMC Corp., the injured ERISA beneficiary surrendered his right to sue free of subrogation rights to the ERISA plan, whereas in this case, the injured party has ostensibly surrendered her right to sue for work-related injuries. None of the cases cited by the majority concerning the nature or extent of an “ERISA relationship” for purposes of preemption analysis is relevant here; Hook’s claim directly draws into question the enforceability of the plan’s waiver of right to sue.

Like the majority, I reach this conclusion without having expressly to decide whether the waiver of right to sue would be enforceable, although I have concluded that if Texas law governs this question, it ought to be enforceable. 2

*788 Moreover, I am not particularly pleased to reach the conclusion that these matters are preempted by federal law. ERISA contains an explicit exemption for welfare benefit plans that are maintained to comply with state workers’ compensation laws, and, as noted above, ERISA leaves unaffected the mandatory compensation schemes of nearly all the states. Had the ERISA statute been drafted differently, it might easily have excluded the plans promulgated by non-subscribers to Texas’ compensation scheme. There are strong policy reasons for preferring state regulation of on-the-job injury claims to the indirect regulation that is accomplished through federal monitoring of ERISA plans. Finally, to hold that claims such as Hook’s are preempted by the terms of this ERISA plan is to impose a heavy burden on federal courts.

But despite my unease with this conclusion, I cannot overlook the breadth of ERISA preemption and the applicability of FMC Corp. v. Holliday in this case.

I respectfully dissent.

. Under Texas law, an employee may sue a non-subscriber to state workers compensation and his employer may not take advantage of common law defenses.

. Both federal and state cases have held that a nonsubscriber may require a release from an employee as a condition of receiving insurance benefits. Collier v. Allstate Ins. Co., 395 F.2d 719 (5th Cir.1968); Tigrett v. Heritage Bldg. Co., 533 S.W.2d 65 (Tex.Civ.App.—Texarkana 1976 writ ref'd n.r.e.); Employers Mutual Casualty Co. v. Poorman, 428 S.W.2d 698 (Tex.Civ.App.—San Antonio 1968, writ ref'd n.r.e.); United States Fidelity & Guaranty Co. v. Valdez, 390 S.W.2d 485 (Tex.Civ.App.—Houston 1965, writ ref'd n.r.e.). One Texas case cites these authorities and then holds that a waiver is "against public policy” unless it expressly precluded the employer's reliance on common law defenses. Hazelwood v. Mandrell Industries, Inc., 596 S.W.2d 204, 206 (Tex.Civ.App.—Houston 1980). Because the coverage in Hazelwood required proof *788 of negligence, whereas this plan does not, Hazel-wood is distinguishable.

More recently, the Beaumont Court of Appeals held that a waiver of the right to sue the employer for negligence, contained in an ERISA benefits plan offered by a nonsubscriber to Texas workers compensation, was void and against public policy. Texas Health Enterprises, Inc. v. Kirkgard, 882 S.W.2d 630 (Tex.App.—Beaumont 1994). Even if this decision is correct, in light of the above-cited authorities, the case is distinguishable from the one before us. First, the waiver in that case was involuntary, whereas participation in Morrison Milling's ERISA plan is voluntary. Second, unlike Ms. Hook, appellees in that case did not seek benefits under the employer's plan.