Case Law Summary for Nonsubscribers

Saturday, May 5, 2007 | 0

These are also active days in the judicial development of Texas nonsubscriber law. Although dozens of cases have been decided since our last newsletter that relate to nonsubscription, here's a quick summary of the most significant decisions.

Mandatory Arbitration of Injury Benefit Disputes is Unenforceable

We've been advising clients for years that arbitration should be focused on negligence liability claims; not injury benefit claims because ERISA prohibits mandatory arbitration of such disputes. A recent case addresses this issue head-on: Sosa v. PARCO Oilfield Services, Ltd., 2006 WL 2821882 (E.D. Tex.) (ERISA regulations prohibit a nonsubscriber's injury benefit plan -- or any other ERISA-governed plan -- from requiring an employee's appeal of an adverse benefit determination to be finally resolved by binding arbitration; this case reflects a violation of ERISA claim regulations found in certain nonsubscriber programs).

No Duty to Warn Employee of Obviously Dangerous Condition

Jack in the Box Inc. v. Skiles, 50 Tex. Sup. J. 414 (2007) (employee hurt when using a ladder to climb over a non-functioning lift gate so he could unload a delivery trailer). This is similar to last year's Texas Supreme Court decision in Kroger Co. v. Elwood, 197 S.W.3d 793 (Tex. 2006), holding that an employer owes no duty to warn an employee that slamming his hand in a car door is a bad idea.

$726,078 Court Award against Nonsubscribing Grocer Brookshire Grocery Co. v. Goss, 208 S.W.3d 706 (Tex. App.-Texarkana, 2006) (employee entered a cooler, stepped over the corner of a low-boy rack she admitted she saw, picked up an item, turned and fell over the corner of the same rack, injuring her leg and back; complex procedural history in this case, and appeal to Texas Supreme Court is pending; may be overturned on strength of Jack in the Box and Kroger cases mentioned above).

Workplace Condition Not Unreasonably Dangerous Simply because Not Foolproof

Brookshire Grocery Co. v. Taylor, O Tex. Sup. Ct. J. 170 (2006) (ice on the floor, not the ice dispenser, was a dangerous condition; but a dangerous condition must exist for some length of time before a premises owner will be held liable for resulting injury).

Must Show that Employer's Negligence Caused the Injury

Jury award of $75,000 overturned by the court. Barrientos v. Maxwell Lumber Co., Inc, 2007 WL 259545 (Tex. App.-Tyler) (employee lost a finger in an accident involving a saw, but there was no evidence the employer's failure to provide and require employees to wear safety glasses, gloves, or ear plugs while working around the saw, or the saw operator's hearing problems, or the lack of maintenance records, or that any inadequate training caused the employee's injury).

$681,669 Arbitration Award to Kitchen Worker

Morneo v. Prestonwood Country Club (Chuck Miller, Arbitrator, American Arbitration Association -- Dallas) (employee claimed she was thrown 4 feet into a metal table when she received electrical shock as she attempted to turn on a gas stove while inserting knife into broken on-off switch. Other employees had also been previously sent to turn on the stove by inserting a screwdriver into the broken switch.).

Court's Confirmation of Workers' Comp Benefits for Needle Stick that Converted to HIV Four Years Later is Reminder to Nonsubscribers of Potential Uninsured Exposure

Price v. CHRISTUS Health, 2007 WL 274233 (Tex.App.-Houston [1st Dist.] 2007) (nursing assistant stuck finger with a needle she used on a patient; immediately reported the incident to her supervisors and tested negative for HIV several times over the ensuing 17 months; more than 4 years later, she tested positive for HIV and was awarded workers' compensation benefits. This is the form of "late forming" occupational disease claim that nonsubscribers should remember in the context of the "Sunset Clause" found in many nonsubscriber insurance policies, allowing only a limited number of years of occupational disease coverage following the end of a policy period).

New Arbitration Policy Failed to Include Claims Arising Prior to its Effective Date In re Brookshire Brothers Ltd., 198 S.W. 3d 381 (Tex.App.-Texarkana 2006) (Tex. App. -- Texarkana) (among other factors, you must be specific if you want a new arbitration policy to apply to claims that have already accrued).

ERISA Does Not Preempt Claim to Enforce a Settlement Agreement

Stiles v. Memorial Hermann Healthcare System, 2007 WL 79436 (Tex.App.-Houston [1st Dist.] 2007) (Tex. App. -- Houston [1st Dist.] 2006) (employee claimed that employer breached the terms of a release of liability by not paying promised medical benefits; court held that such claims are not preempted by ERISA; the employer agreement -- contained in the settlement agreement -- to pay medical bills was not subject to ERISA because it was a distinct and separate promise from the employer's ERISA-governed injury benefit plan).

ERISA Plan Can Recover Overpayments by Reducing Future Benefits

Northcutt v. General Motors Hourly-Rate Employees Pension Plan, 467 F3d 1031 (7th.Cir.2006) (for more on this subject, see also the U.S. Supreme Court's decision in Sereboff).

Tip For Dueling Death Benefit Claims

In the face of competing claims from beneficiaries, heirs or other parties to death benefits, most employee benefit plans will file an "interpleader" to turn the death benefit over to a court to decide on proper payment. It may be best for the plan administrator to first make a determination as to who is the proper recipient of benefits and only then pay the money into the court. This may provide more court deference to the plan administrator's decision, simplify the court's review (under the U.S. Supreme Court's Firestone decision), and reduce legal costs for all parties. See Forcier v. Metropolitan Life Ins. Co., 206 WL 3350740 (1st Cir.).

This was reprinted with permission from the March edition of the Nonsubscriber Newsletter. It is printed by PartnerSource Inc. Its Web site is http://www.partnersource.com.

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