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Texas Supreme Court Holds that Severance Arrangements Relating to an ERISA Plan are Preempted by ERISA

When Tyco Valves & Controls, L.P. closed one of its facilities, it offered certain employees severance benefits pursuant to either (i) a severance pay schedule for that facility or (ii) retention agreements. At that time, Tyco employees were covered by Tyco?ÇÖs severance plan, which was undisputed to be governed by ERISA (the ?Ç£ERISA Plan?Ç¥). After Tyco sold one of the production units located in the facility, several former employees who had been denied severance filed a breach-of-contract claim under state law against Tyco. The trial court ruled in favor of the plaintiffs and awarded the severance pay. The court of appeals reversed, and the Texas Supreme Court agreed, holding that ERISA preempted the plaintiffs?ÇÖ breach-of-contract claims. The plaintiffs involved were two separate groups. The first group was promised severance pay under a schedule that referenced the ERISA Plan, copied and used terms from the ERISA Plan, and purported to supersede… Continue Reading

Network Providers May Be Entitled to ERISA Claims Procedures When Overpaid Claims are Recouped

In the case of Penn. Chiropractic Ass?ÇÖn v. Blue Cross Blue Shield Ass?ÇÖn, a third-party claims administrator for an employer-sponsored group health plan (?Ç£IBC?Ç¥) claimed to have made overpayments to members of an association of chiropractors (?Ç£PCA?Ç¥) who were participating providers in IBC?ÇÖs network.?á As allowed by the provider agreement between IBC and the PCA members, IBC recovered the overpayments by offsetting future claim payments owed to the PCA members.?á The PCA members sued IBC, claiming that IBC failed to adhere to the notice and appeal requirements under the Employee Retirement Income Security Act of 1974, as amended (?Ç£ERISA?Ç¥), in attempting to recover the overpayments.?á The federal district court agreed with the PCA members, finding that, because the plan documents provided that IBC would make payments directly to in-network providers for covered services, the PCA members were ?Ç£beneficiaries?Ç¥ for purposes of ERISA.?á Further, the court found that IBC?ÇÖs recoupment of… Continue Reading

May 2014