Case Title: Haywood v. Russell Corp.

Citation: 584 So. 2d 1291

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1991-05-24T00:00:00Z

Document:
584 So. 2d 1291 (1991)
Tommie L. HAYWOOD
v.
RUSSELL CORPORATION, et al.
89-1647.

Supreme Court of Alabama.
May 24, 1991.
Rehearing Denied August 9, 1991.
James M. Patton of Patton & Goodwyn, Birmingham, for appellant.
Randall S. Haynes and Tom Radney of Radney & Morris, Alexander City, for appellees.
SHORES, Justice.
Tommie L. Haywood sued her employer, Russell Corporation ("Russell"), alleging that it had interfered with her right to receive benefits under the company's group disability insurance plan (hereinafter sometimes referred to as "the plan"). Haywood sought to recover both compensatory and punitive damages based on theories of fraud and the tort of outrage. The trial court entered a summary judgment for Russell on both of Haywood's claims on the ground that they were preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 88 Stat. 829, as amended, 29 U.S.C. § 1001 et seq.[1] Haywood appealed. On appeal, she challenges the summary judgment only as to the fraud claim. We reverse and remand.
After allegedly sustaining an on-the-job injury, Haywood filed a claim for workmen's compensation benefits with Russell, which is a self-insured employer under Alabama's Workmen's Compensation Act, Ala. Code 1975, § 25-5-1 et seq. Russell disputed that claim and denied Haywood's request for benefits. Haywood then submitted an application to Russell for benefits under the company's group disability insurance plan. That plan was underwritten by John Hancock Insurance Company ("John Hancock"). Russell's insurance clerk refused to process Haywood's claim because she had stated in her application that her injury was job related. The clerk returned the application to Haywood with a note stating: "For you to be able to receive your accident and sickness [insurance], we need for you to come by the Personnel Office and change the form so that it does not state that it was an injury on the job." Haywood refused to change her application, and it was not submitted to John *1292 Hancock. Haywood subsequently discovered that John Hancock would pay disability benefits to her, provided that she would agree to pursue her workmen's compensation claim and provided further that she would assign to John Hancock her right to any workmen's compensation benefits that she recovered, to the extent of benefits paid under the plan. Haywood eventually received benefits from John Hancock under the plan, more than a year after her application had been returned to her by Russell's insurance clerk. Haywood continued to pursue her workmen's compensation claim against Russell, and that claim is presently pending in Tallapoosa Circuit Court.
The sole issue presented for our review is whether Haywood's fraud claim, which is based on allegations that Russell interfered with Haywood's right to receive benefits under the company's group disability insurance plan, was preempted by ERISA.
ERISA comprehensively regulates, among other things, employee welfare benefit plans that, through the purchase of insurance or otherwise, provide medical, surgical, or hospital care, or benefits in the event of sickness, accident, disability, or death. See § 3(1) of ERISA, as set forth in 29 U.S.C. § 1002(1). Russell's group disability insurance plan is, therefore, clearly regulated by ERISA. Relying primarily on Harbor Ins. Co. v. Blackwelder, 554 So. 2d 329 (Ala.1989), cert. denied, ___ U.S. ___, 110 S. Ct. 2209, 109 L. Ed. 2d 535 (1990), and HealthAmerica v. Menton, 551 So. 2d 235 (Ala.1989), cert. denied, 493 U.S. 1093, 110 S. Ct. 1166, 107 L. Ed. 2d 1069 (1990), Haywood argues that her fraud claim was not preempted by ERISA. Russell contends that Haywood's fraud claim, being based on allegations that her employer had interfered with her right to receive benefits under the plan, was preempted by ERISA. We agree, but for the reason stated below, hold that § 502(a) provides a remedy to Haywood.
In the most recent decision of the United States Supreme Court dealing with ERISA preemption, Ingersoll-Rand Co. v. McLendon, ___ U.S. ___, 111 S. Ct. 478, 112 L. Ed. 2d 474 (1990), the Court was confronted with the issue of whether ERISA preempted a state common law claim based on allegations that the employee had been wrongfully discharged by his employer to prevent his pension benefits under an ERISA regulated pension plan from vesting. Holding that that state claim was both expressly and impliedly preempted, the Court once again elaborated on the preemptive effect of ERISA. We quote extensively from the Court's opinion:
___ U.S. at ___, 111 S. Ct.  at 482-85.
The Supreme Court then stated that although the state causes of action were preempted by ERISA, ERISA expressly *1295 guaranteed the same right by § 510 and could be enforced exclusively by the remedy provided by § 502(a).
___ U.S. at ___, 111 S. Ct.  at 486.
All of the Justices of the Supreme Court joined Justice O'Connor in the following statements:
___ U.S. at ___, 111 S. Ct.  at 481-82 (citations omitted; emphasis omitted; emphasis added).
The facts in the case before us are indistinguishable from those in Ingersoll-Rand. In that case the employee alleged that his employer had tortiously terminated his employment just before his plan benefits would have vested and that he had been damaged as a result of that alleged action of the employer. The Supreme Court held that a remedy for that tort existed under § 510 and that the state court was authorized to award damages beyond the benefits to which the plaintiff was entitled under the plan. In this case the plaintiff alleges facts from which a factfinder could conclude that the employer tortiously interfered with her right to disability benefits under an ERISA plan. She seeks compensatory and punitive damages for that interference. Ingersoll-Rand teaches that this plaintiff's allegations state a cause of action under § 510 and that a remedy exists under § 502(a) that may be enforced in the federal or state courts notwithstanding that the state common law tort claim is preempted by the Act.
We reverse the judgment of the trial court and remand the cause to permit the plaintiff to attempt to prove an ERISA cause of action against her employer for tortiously interfering with her right to receive disability benefits. This is a right expressly guaranteed to her by § 510, ERISA, and for which § 502(a) provides a remedy. Ingersoll-Rand, at ___ U.S. at ___, 111 S. Ct.  at 486. If she can prove that the defendant interfered with rights protected by § 510, 29 U.S.C. § 1140, she is entitled to recover compensatory and punitive damages, depending upon the culpability of the defendant in interfering with those rights. The prohibitions set out in § 510 were aimed primarily at preventing unscrupulous employers from interfering with an employee's rights under ERISA plans. If the plaintiff can show that her employer wrongfully interfered with her right to benefits under the disability insurance plan, she is entitled to such damages as the evidence may support.
We are not concerned that the plaintiff here has not heretofore sought relief under ERISA. The Supreme Court opinion in Ingersoll-Rand, expressly stating that ERISA authorizes relief beyond that expressly provided in the Act was not released until December 3, 1990, although other federal courts had held that remedies available to participants in ERISA plans were not limited to those specifically provided by the act. The late Judge Robert S. Vance, in an opinion issued after his death, anticipated such action by the Supreme *1296 Court of the United States. In Kane v. Aetna Life Insurance Co., 893 F.2d 1283 (11th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 232, 112 L. Ed. 2d 192 (1990). Judge Vance, writing for the United States Court of Appeals for the 11th Circuit, stated that although ERISA preempts all state common law claims relating to employee benefit plans, "Federal courts possess the authority, ... to develop a body of federal common law to govern issues in ERISA actions not covered by the act itself." District Judge William M. Acker, Jr., in Blue Cross & Blue Shield of Alabama v. Lewis, 753 F. Supp. 345 (N.D.Ala.1990), observed that "Ingersoll-Rand brings to full flower" the idea expressed by Judge Vance that federal courts have the authority to develop remedies beyond those expressly provided by ERISA. Judge Acker then stated:
753 F. Supp.  at 347.
We agree entirely with Judge Acker's reading of Ingersoll-Rand. The holding is unanimous and unequivocal. No reasonable person can misunderstand it, although one might disagree with it. In our view, it comes as no surprise. The dissatisfaction with the Court's broad interpretation of the preemption provisions of ERISA, without specifically articulating what remedies existed to replace preempted state remedies, has been often brought to the attention of Congress by those, such as the writer of this opinion, who believed that the Court's construction of the preemption provisions of ERISA, without a recognition of some rights and remedies to take the place of *1297 preempted state rights and remedies, went beyond what the Congress intended. As recently as 1988, the Education and Labor Committee of the House of Representatives described the legislative intent behind ERISA as follows:
H.R.Rep. No. 801, 100th Cong., 2d Sess, p. 2, at 63 (1988) (emphasis added).
The Supreme Court, in Ingersoll-Rand, has now specifically held that the courts are authorized to award damages, both extracontractual, and even punitive, where the facts support them, even though they are not specifically provided for in ERISA. In doing so, it simply correctly carries out the intent of Congress in passing ERISA.
State courts, with concurrent jurisdiction of ERISA actions, likewise possess such authority. In this case, the cause of action stated happens to be one specifically provided for in ERISA, so the trial court need not go beyond the Act itself to formulate a remedy for the wrong allegedly done the plaintiff. Ingersoll-Rand, of course, would authorize recovery even if the relief sought were not expressly provided for in the Act. Therefore, we reverse the judgment and remand the cause and permit the plaintiff to attempt to state a claim under § 510, ERISA.
In recognizing that ERISA permits such actions, the Supreme Court of the United States acknowledged that the polestar of *1298 any legislation is legislative intent. The Congress of the United States could not have intended to strip from beneficiaries of pension and employee benefit plans all of the protections long afforded by state common law and not to provide a statutory replacement for those state common law protections. Certainly it would not have done so in the guise of passing legislation to protect the very persons whose rights were the focus of the legislation. The fact that the statutory rights bear many of the characteristics of the state remedies that the Act preempted is not unusual. In Alabama the legislature has adopted statutes providing remedies for medical and legal malpractice. Ala.Code 1975, § 6-5-480 et seq; § 6-5-570 et seq. These statutory causes of action bear a striking resemblance to the common law actions they replaced. In specifically authorizing the courts to develop remedies not specifically provided for in ERISA, the Supreme Court now recognizes the possibility of recovery of tort-like damages in ERISA cases. We agree with the observation of Judge Acker in Blue Cross & Blue Shield of Alabama v. Lewis that this leads inexorably to the right of trial by jury in these ERISA cases.
Because the plaintiff has stated a claim protected by § 510, and because § 502(a) provides a remedy that may be adjudicated in the state courts, we reverse the judgment and remand the cause for trial of the ERISA cause of action.
REVERSED AND REMANDED.
HORNSBY, C.J., and ALMON, ADAMS, STEAGALL and KENNEDY, JJ., concur.
MADDOX and HOUSTON, JJ., concur specially.
HOUSTON, Justice (concurring specially).
I dissented in HealthAmerica v. Menton, 551 So. 2d 235, 252 (Ala.1989), cert. denied, 493 U.S. 1093, 110 S. Ct. 1166, 107 L. Ed. 2d 1069 (1990), not because I liked the doctrine of preemption (I do not), but for the following reasons:
The second paragraph of Article VI of the Constitution of the United States (the supremacy clause) required that I vote to hold that Menton's cause of action was preempted.
Ingersoll-Rand Co. v. McLendon, ___ U.S. ___, 111 S. Ct. 478, 112 L. Ed. 2d 474 (1990), clarified the preemption question. The cause of action was preempted, with no ifs, ands, or buts about it. This Court in this case recognizes that.
In my dissent in HealthAmerica v. Menton, 551 So. 2d  at 249-56, I proposed doing what a unanimous United States Supreme Court in Ingersoll-Rand Co. indicated could be done and what this Court is indicating can be done in this case:
In this case, this Court does exactly what I suggested that the Court should have done in my dissent in HealthAmerica. I join the majority, for, two years after HealthAmerica, it has joined me.
MADDOX, J., concurs.
[1]  The trial court granted Russell's motion to strike Haywood's claims; however, because it appears that the trial court may have considered matters outside the pleadings, we will treat the trial court's order as a summary judgment. Rule 12(b), A.R.Civ.P.