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You can’t push contract-Breach case to federal court

by on
in Employee Benefits Program,Human Resources

If you're a Texas employer that agrees to settle an on-the-job injury case out of court, be prepared to follow through. If you don't, you just may find your organization in a less-favorable Texas court defending itself against breach-of-contract claims. And that can mean a big, fat award from an angry Texas jury.

Case in point: Hattie Stiles was hurt at work and agreed to give up her right to sue her employer for negligence in exchange for its promise to pay her medical bills. Stiles claimed that the company then refused to pay, so she sued for fraud and breach of contract.

The employer wanted the case heard in federal court, where jury awards tend to be lower. It argued that federal law, the Employee Retirement Income Security Act (ERISA), governed the case because that law dealt with employee benefits.

Not so, said a Texas appeals court. The agreement to pay her medical bills was a separate contract, enforceable in a Texas courtroom. (Stiles v. Memorial Hermann Healthcare System, No. 01-05-00473, Texas Court of Appeals, 2006)  

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