CATES v. INTEGRIS HEALTH, INC.
2017 OK 54
| Okla. | 2017Background
- Plaintiff Elizabeth Cates (individually and putative class) sued INTEGRIS Health for breach of contract, Oklahoma Consumer Protection Act violations, deceit, specific performance, and punitive damages over the hospital’s billing/discount practices.
- INTEGRIS argued the claims were completely preempted by ERISA; case was removed to federal court and initially retained by the Western District of Oklahoma.
- The Tenth Circuit decided Salzer v. SSM Health Care, a highly factually similar ERISA/preemption case, holding most state claims were not preempted because the ERISA plan was only part of the factual backdrop, though one claim supported federal jurisdiction.
- After Salzer, a different federal judge (Friot) granted Cates’s renewed motion to remand, finding the dispute primarily concerned enforcement of a provider agreement (a state-law contract claim) and that the plan was not the core of the claim.
- The Oklahoma Supreme Court reviewed the matter, concluded the federal court should have remanded, reversed the federal retention, and remanded the case to Oklahoma district court for state-law proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ERISA completely preempts Cates’s state-law claims and supports federal jurisdiction | Cates: claims enforce a provider agreement and third‑party‑beneficiary rights; ERISA plan is only factual backdrop, so state law governs | INTEGRIS: plaintiff’s rights derive from ERISA plan terms, so claims fall under ERISA §502 and are completely preempted | Court reversed federal retention and remanded: claims are not preempted under the Salzer analysis; state court may adjudicate them |
| Whether resolution requires interpreting ERISA plan terms | Cates: resolving contractual discount claim does not require interpreting plan terms beyond factual reference | INTEGRIS: determining entitlement to discounted rates depends on interpreting the ERISA plan/provider agreement | Held: plan may be consulted as factual backdrop but is not necessarily the dispositive legal source; no required plan interpretation that forces ERISA preemption |
| Whether plaintiff’s third‑party‑beneficiary status is dependent on ERISA (i.e., not independent) | Cates: third‑party‑beneficiary claim is independent of ERISA and enforces the provider contract | INTEGRIS: Cates’s status and rights flow from the ERISA plan, so the claim is ERISA-based | Held: Following Salzer and Judge Friot, the beneficiary status can be treated as independent for purposes of preemption analysis; not preempted |
| Preclusive effect of the federal court’s earlier retention decision | INTEGRIS/Federal court: prior federal decision created jurisdiction and should control | Cates: Salzer and subsequent federal ruling justify remand despite earlier retention | Held: Oklahoma Supreme Court remanded; noted that the later federal judge’s remand governs further proceedings in that federal case and directed remand to state court for continuation of state-law remedies |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (articulates ERISA §502(a) complete-preemption framework used to test whether state-law claims are preempted)
- Salzer v. SSM Health Care of Oklahoma Inc., 762 F.3d 1130 (10th Cir. 2014) (distinguishes claims where ERISA plan is merely factual backdrop and therefore not preempted)
- Arizona v. California, 460 U.S. 605 (1983) (addresses effect of earlier federal rulings on subsequent stages of the same case)