Smith v. Texas Children’s Hospital, 1996 U.S. App. LEXIS 11331 (5^th Cir. 1996)-- Plaintiff, while working for St. Luke's Hospital, was eligible for employee benefits, including long term disability benefits. Plaintiff alleges that Texas Children's Hospital, a sibling corporation of St. Luke's, in an effort to persuade her to transfer her employment, made oral and written assurance that all of her employment benefits would transfer. Plaintiff transferred on October 1, 1991. Later that same month she was diagnosed with multiple sclerosis. She stopped working and was put on long-term disability in September 1992. Plaintiff received her first benefit check for the period of December 11, 1992, to January 1, 1993 in January. Immediately thereafter, UNUM (the claims adjuster) called Plaintiff and told her not to cash the check. UNUM had determined that the last day of Plaintiff's elimination period was December 31, 1991. Therefore, Plaintiff's multiple sclerosis, which was diagnosed in October 1991, was a preexisting condition as of December 31. Hence, UNUM determined that Plaintiff did not qualify for benefits under the Texas Children's LTD plan. Plaintiff sued Texas Children's in Texas state court, alleging state-law claims of fraudulent inducement and breach of contract. Texas Children's removed the case to federal court asserting that ERISA preempted Plaintiff's claims. The district court ordered Plaintiff to amend her complaint to conform to an ERISA claim. Plaintiff complied and filed her First Amended Complaint asserting ERISA claims. Defendant asserted the affirmative defense of ERISA pre-emption and argued that Smith's claims were not cognizable under ERISA. The district court entered final judgment for Texas Children's on Plaintiff's ERISA and common law estoppel claims, but remanded her fraudulent-inducement claim to state court. On appeal, Texas Children's argued that the Plaintiff's First Amended Complaint did not restate a fraudulent-inducement claim, and, even if it did, the claim is preempted by ERISA. In analyzing whether Plaintiff's claim was preempted by ERISA, the circuit court distinguished between a claim for disability benefits under Texas Children's plan (in which case her claim is preempted) and Plaintiff's allegations that she gave up her accrued benefits at St. Luke's in reliance upon Texas Children's alleged misrepresentations. The court found that Plaintiff was not claiming benefits under Texas Children's plan, but instead, was basing her claim on the benefits she would have had at St. Luke's and relinquished by leaving. Finally, because of ambiguities regarding Plaintiff's First Amended Complaint, as well as the nature of Plaintiff's state-law claims, and considering the possible relevance of the Supreme Court's recent decision in Varity Corp. v. Howe, 516 U.S. 489 (1996), the circuit court vacated the district court's remand order and remanded the case to the district court. See our discussion of the later decision in this case.