CATES v. INTEGRIS HEALTH, INC.
2017 OK 54
| Okla. | 2017Background
- Plaintiff Elizabeth Cates sued INTEGRIS Health, Inc., individually and on behalf of a putative class, alleging breach of contract, Oklahoma Consumer Protection Act violation, deceit, specific performance, and punitive damages over hospital charges.
- Cates alleges her patient contract and assignment of benefits created a reasonable expectation that she would be charged the in-network discounted rate set by a third-party ERISA plan or that the hospital would accept insurer discounts in specified circumstances.
- INTEGRIS argued the claims are preempted by ERISA, removed the case to federal court, and the Western District initially denied remand, finding complete preemption and federal jurisdiction under ERISA enforcement provisions.
- The Tenth Circuit’s decision in Salzer v. SSM Health Care, addressing highly similar facts, held most claims were not preempted but one ERISA-based claim gave federal jurisdiction over related state-law claims; Salzer criticized the earlier federal decision in Cates’ case.
- A different federal judge (Friot) later granted a renewed motion to remand in light of Salzer, holding the dispute primarily turns on the provider contract (state law) and that the ERISA plan may be only part of the factual backdrop.
- The Oklahoma Supreme Court reversed the earlier federal retention and remanded the case to state district court to proceed on state-law remedies (expressing no opinion on class certification).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Cates's claims are completely preempted by ERISA so federal court has jurisdiction | Cates: claims are state-law contract/tort claims; the ERISA plan is only part of the factual backdrop and does not create ERISA civil enforcement relief | INTEGRIS: enforcement of in-network discounts and third-party beneficiary status depends on ERISA plan terms, so claims fall within ERISA §502 enforcement and are preempted | Held: Not all claims are preempted; remand appropriate — plan may be factual backdrop and disputes over provider contract enforcement are state-law matters |
| Whether resolution requires interpretation of ERISA plan terms (Davila two-part test) | Cates: any reference to plan coverage or discounts is incidental; resolution focuses on provider agreement and patient contract | INTEGRIS: determining entitlement to discounted rates requires interpreting ERISA plan and thus falls within ERISA enforcement | Held: Court adopts Salzer view that mere reference to a plan to determine coverage or discount does not automatically invoke ERISA preemption |
| Whether plaintiff’s status as third-party beneficiary is independent of ERISA | Cates: third-party beneficiary status arises from provider contract and patient expectations, not solely from plan participation | INTEGRIS: beneficiary status depends on participation in ERISA plan, making claim ERISA-related | Held: Court rejects the argument that beneficiary status is necessarily dependent on ERISA for preemption purposes (Salzer approach controls) |
| Appropriate forum (remand to state court) | Cates: state court should adjudicate breach of contract and related state claims | INTEGRIS: federal court has jurisdiction due to ERISA preemption | Held: Remanded to Oklahoma District Court to proceed on state-law remedies; no ruling on class status |
Key Cases Cited
- Salzer v. SSM Health Care of Oklahoma, Inc., 762 F.3d 1130 (10th Cir. 2014) (distinguishes ERISA preemption where plan is merely factual backdrop and limits Davila application)
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (establishes two-part test for ERISA §502(a) preemption of state-law claims)
- Arizona v. California, 460 U.S. 605 (1983) (preclusion principles govern subsequent stages of same litigation)