### In the 

# United States Court of Appeals For the Seventh Circuit

____________________ No. 19-2898

C ARLTON G UNN, Plaintiff-Appellant

,

v.

C ONTINENTAL C ASUALTY C OMPANY, Defendant-Appellee

.

____________________ Appeal from the United States District Court for the Northern District of Il linois, Eastern Division. No. 1:18-cv-03314 — Charles P. Kocoras

, Judge

.

____________________

A RGUED A PRIL 15, 2020

— D ECIDED A UGUST 5, 2020

____________________

Before M ANION, H AMILTON, and B ARRETT, Circuit Judges

. H AMILTON , Circuit Judge . Most appellate opinions try to answer questions of law. This op inion is an exception. We ask many more questions than we can answer here. They concern choice-of-law principles as app lied to the unique challenges of interstate regulation of insu rance in the United States, and more speci fi cally as applied to a group insurance policy issued in one jurisdiction to an employer with employees in every state. We realize we are leaving a good deal of work for2 No. 19-2898

the capable district judge on remand. We hope he will receive help on choice-of-law issues fr om counsel for the parties and interested amici curiae.

Plainti ff Carlton Gunn brought this case as a putative class action against defendant Continental Casualty Company, which issued a group long-term care insurance policy to Gunn’s employer, the federal ju diciary, in Washington D.C.Gunn alleged that Continental breached its contract, committed torts, and violated consumer protection laws by raisinghis premiums dramatically. Continental persuaded the district court to dismiss the case on the pleadings based on its assertion of a fi led-rate defense, relying on the Washington state Insurance Commissioner’s approval of the new, higher premiums for individual insureds in Washington. The parties’ briefs in the district court and on appeal raised the issue of choice of law but o ff ered li tt le help in resolving it. The appellate briefs and arguments make clear that choice of law is critical in this case , but they leave too many unanswered questions. Which state’s or states’ law creates Gunn’scauses of action? Does that jurisdiction recognize an applicable fi led-rate defense, and if so, what are its contours? Which state or states have authority to approve premium rates under the group policy? If one state otherwise o ff ers Gunn a remedy but another state with authority has approved Continental’s rates, which state’s authority controls and which must yield,and why? We raised these and other questions in oral argument, but without satisfactory answers. Given their importance to the larger frameworkof multistate insurance regulation, we conclude that the best resolution of this appeal is to let the adversary process take its course, with some general direction from us to ensure th at the adversaries focus on theNo. 19-2898 3

critical issues. We therefore reverse and remand for further proceedings.

I. Plainti ff

’s Claims and Procedural Background Contracts for group insurance are in essence three-party contracts. Steven Pli ttet al., 1A Couch on Insurance 3d§ 7:1 (1995 & supp. 2019). “A group insurance policy is the contractbetween the insurer and an employer, ... or some other central entity, for the bene fi t of a group of people that have some relationship to the central entity, such as employees.” Id. The central entity, not the individual insured, holds the master policy and has “the chief contractu al relationship with the insurer.” Id. The individual insureds are considered third-party bene fi ciaries of the master policy and “typically receive certificates proving that they are insured and listing what coverage is provided.” Id. For this reason, “the addition of new individual members to a master group policy does not create a new contract of insurance.” Id. § 8:1. At the same time, individual insureds are usually not automa tically covered by the central entity’s master policy. They mu st individually elect coverage and pay their own premiums. Id. § 8:2. For purposes of defendant’s motion to dismiss, we assume the truth of the following fa ctual allegations. In 1999, defendant Continental Casualty Company delivered a group long-term care insurance policy to the federal judiciary— speci fi cally, to the Federal Judiciary Group Long Term Care Insurance Trust in Washingt on D.C. Long-term care insurance is intended to provide long-term fi nancial security by covering a variety of services, not generally covered by Medicare or ordinary health insurance, for those unable to care for themselves due to ag e or disability. As with life insurance, the cost of long-term care insurance increases with4 No. 19-2898

age. As Continental advertised for this policy, “the younger you are when your coverage begins, the lower your premiums will be for the duration of your participation in the plan.” In 2000, plainti ff Carlton Gunn was an assistant federal defender in the State of Washington eligible for coverage under the judiciary’s policy. He purchased coverage under the policy, relying in part on Continental’s representation in its marketing materials that it wo uld raise premiums, if at all, only “for everyone in your ag e category who has the kind of coverage plan that you do.” The master policy and Gunn’s individual coverage certi fi cate similarly promised that Continental would raise premiu ms “only if we change the premiums for all insureds in the same premium class.” The master policy provided speci fi cally that “Premium is computed as stated in the Master Application,” which contained tables of premium rates according to payment schedule, age on e ff ective date of coverage, and amount of daily bene fi t. No mention was made of rates varying based on the individual insured’s state of residence. To protect against the long-term e ff ects of in fl ation on the policy’s costs and bene fi ts, Gunn also purchased what Continental called a “Lifetime Compound Automatic Bene fi t Increase bene fi t.” That feature would “automatically increase the daily bene fi t for nursing home care that you select now by5% annually on a compounded basis.” “This means,” Continental explained, “you will not need to worry about increasing your premium in the futur e.” Purchasing the automatic bene fi t increase feature more than doubled Gunn’s baseline premium. Seventeen years later, Gunn received a le tt er from Continental informing him that his premium rates would rise by 25No. 19-2898 5

percent each year for the next three years, adding up to a neardoubling of the premium, from about $700 to about $1,400 annually. The le tt er also said that the e ff ective dates of the increases would depend ultimately on the approval of “certain states,” which might or might not be forthcoming at the same time, or at all. Gunn believes this geographic disparity breaches Continental’s promise to raise rates only uniformly within a “premium class.” He al so contends he should be protected from the dramatic premium increases precisely because he had already paid to protect himself against in fl ation by buying the automatic bene fi t increase. Gunn’s complaint asserted claims for breach of contract, breach of implied covenant, unfair and deceptive practices under the District of Columbia’s consumer protection statute, fraud, and fraudulent concealmen t. On behalf of himself and a putative class of insureds under the judiciary’s group policy, Gunn sought rescission (whether of the master policy or his individual certi fi cate, he did not say) and an injunction against further rate increases, or alternatively compensatory, statutory, and punitive damages. 1

Continental moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing am ong other grounds that the complaint was barred by “the fi led-rate doctrine.” The federal version of that doctrine in ge neral “forbids a regulated entity to charge rates for its services other than those properly fi led with the appropriate federal regulatory authority.” Arkansas Louisiana Gas Co. v. Hall , 453 U.S. 571, 577 (1981). One way to put it is that the “reason ableness” of a rate is an

1 No member of this panel is a me mber of the plan, so we would not be members of a potential plaintiff class.6 No. 19-2898

administrative standard, not a justiciable legal right. MontanaDakota Utils. Co. v. Nort hwestern Pub. Serv. Co. , 341 U.S. 246, 251 (1951). Another is that a buyer’s consent to pay the fi led rate is not necessary to create an obligation to pay the fi led

rate. Lowden v. Simonds-Shields-Lonsdale Grain Co. , 306 U.S. 516, 520–21 (1939). Arkansas Louisiana Gas itself held that a state-law action for breach of contract could not survive preemption based on a state cour t’s “speculation” that the responsible federal regulator would have approved the higher rate for which the parties contracted instead of the lower rate it had actually approved. 453 U.S. at 573, 578–79. States have adopted versions of this doctrine of varying breadth and force, some in statutes and some through case law. And even where di ff erent states’ doctrines di ff er only in nuance, we have said that “nuance can be important.” In re Rhone-Poulenc Rorer, Inc. , 51 F.3d 1293, 1300 (7th Cir. 1995) (reversing certi fi cation of nationwide class whose claims were governed by many di ff erent states’ laws). Citing Arkansas Louisiana Gas and other cases, Continental argued that Gunn’s individual certi fi cate had been issued tohim in the State of Washington; that the Washington insurance commissioner had authority to approve the rates Gunn was charged; and that Continen tal had sought and obtained the Washington commissioner’s approval for the challenged rate increases. Gunn’s suit, wentthe argument, amounted to a collateral a tt ack on rates duly approved by the commissioner, so that the fi led-rate doctrine prohibited courts fromentertaining Gunn’s claims. We confess that we were mystifi ed when we realized that Co ntinental’s motion did not explain whether the fi led-rate doctrine it invoked stems from federal or state law, let alone from which state’s law.No. 19-2898 7

In opposition, Gunn argued that the law of the District of Columbia does not recognize a version of the fi led-rate doctrine that would bar his claims. Neither side’s briefs to the district court engaged in a meaningful choice-of-law analysis, nor did they develop their competing assertions of legislative and regulatory jurisdiction ov er the rates Gunn should pay.

The district court also did no t engage with the choice-oflaw problem, but it agreed withContinental that Gunn’s suit was the type of a tt ack on duly approved rates generally barred by fi led-rate rules and dismissed the complaint with prejudice. We have jurisdictionof the appeal under 28 U.S.C. § 1291.

II. Analysis

A. The Choice-of-Law Problem We review de novo a grant of a motion to dismiss for failure to state a claim. Warciak v. Subway Restaurants, Inc.

, 949 F.3d 354, 356 (7th Cir. 2020). A Rule 12(b)(6) motion tests “the legal su ffi ciency of a complaint,” as measured against the standards of Rule 8(a). E.g., Runnion v. Girl Scouts of Greater Chicago and Northwest Indiana , 786 F.3d 510, 526 (7th Cir. 2015). It is the defendant’s burden to establish the complaint’s insuffi ciency. Yeksigian v. Nappi, 900 F.2d 101, 104 (7th Cir. 1990). There is procedural problem in this case, however, that made defendant’s use of Rule 12 (b)(6) inappropriate. Continental did not actually challenge the complaint’s su ffi ciency, at least by invoking the fi led-rate doctrine. Continental instead advanced an a ffi rmative defense, which it had the burden of pleading and proving. Fed. R. Civ. P. 8(c)(1) (burden of pleading); Benson v. Fannie May Confections Brands, Inc.

, 944 F.3d 639, 645 (7th Cir. 2019) (burden of proving); see E. &8 No. 19-2898

J. Gallo Winery v. EnCana Corp. , 503 F.3d 1027, 1039 n.11 (9th Cir. 2007) ( fi led-rate doctrine as a ffi rmative defense). With a narrow and pragmatic exception for a plainti ff who haspleaded herself out of court, the appropriate vehicle for resolving an a ffi rmative defense is a motion for judgment on the pleadings under Rule 12(c), not a Rule 12(b)(6) motion. Benson , 944 F.3d at 645; see also Burton v. Ghosh , 961 F.3d 960, 964– 65 (7th Cir. 2020) (collecting cases); cf. Brooks v. Ross , 578 F.3d 574, 579 (7th Cir. 2009) (example of pragmatic exception where complaint unambiguously set forth dates establishing statute-of-limitations defense). “Observing the distinction is necessary to allocate correctly the burdens of pleading and proof,” H.A.L. N.Y. Holdings, LLC v. Guinan , 958 F.3d 627, 632 (7th Cir. 2020), and serves animportant notice function. Burton , 961 F.3d at 965, citing Blonder-Tongue Labs., Inc. v. Univ. of Illinois Found. , 402 U.S. 313, 350 (1971), among others. In this case, Continental’s fi led-rate defense certainly drew on materials outside the comp laint and was not appropriate for a Rule 12(b)(6) motion. Gunn did not plead himself out ofcourt with one stray reference to the Washington state insurance commissioner, so an an swer and motion under Rule 12(c), not a Rule 12(b)(6) motion, would have been the appropriate path to raise a fi led-rate defense. We construe Continental’s motion as one under Rule 12(c), and Continental bore the burden of showing that th e allegations of the complaint and an answer showed that an a ffi rmative defense conclusively defeated all of Gunn’s claims as a ma tt er of law. See Alexander v. City of Chicago , 994 F.2d 333, 336 (7th Cir. 1993). Regardless of the procedural bobble, Continental had to address an indispensable threshold question: under the law of what sovereign was it entitled to judgment? Law “does notNo. 19-2898 9

exist without some de fi nite authority behind it.” Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co.

, 276 U.S. 518, 533 (1928) (Holmes, J., dissenting). Claims and defenses have to come from somewhere. “Proof of [them] in the air, so to speak, will not do.” Palsgraf v. Long Island R.R. Co. , 162 N.E. 99, 99 (N.Y. 1928). Yet that has basically been Continental’s approach. In support of its motion to dismiss, Continental assumed without argument that the applicable law was Washington’s, though Gunn pleaded at least on e cause of action arising under a statute of the District ofColumbia. On appeal, Continental asserts, again without argument, that Washington law creates Gunn’s causes of action an d, astonishingly, claims that “federal common law” creates its fi led-rate defense. But Continental does not argue for federal preemption. 2 Nor does the

2Chief Judge Howell denied dismissal in a recent case similar to Gunn’s, noting that a filed-rate defense “typically” has a basis in federal statute and in that context “supports the supremacy of federal regulation over certain federal as well as state and common law claims.” Krukas v. AARP, Inc. , 376 F. Supp. 3d 1, 18 (D.D.C. 2019). In Krukas , the court assumed for purposes of argu ment that some version of a filed-rate doctrine could apply to insurance regulation and denied dismissal because the plaintiff did not directly challenge any regulated rates. Id . at 20

− 26. Federal law leaves insurance regulation and pricing to the States. 15 U.S.C. § 1011. In this context, it is “neith er prudent nor appropriate for a federal court to impose the filed-rate doctrine on a state which has not adopted it, nor should a court stretch or bend a st ate doctrine to mo re comfortably fit the contours of the federal rule.” Bhasker v. Kemper Cas. Ins. Co. , 284 F. Supp. 3d 1191, 1233 (D.N.M. 2018) (denying dismissal of insurance claims based on filed-rate doctrine), quoting Clark v. Prudential Ins. Co. of Am ., No.CIV. 08-6197, 2011 WL 940729, at *10 (D.N.J. Mar. 15, 2011) (denying motion to strike insurance class claims based on filed-rate doctrine).10 No. 19-2898

doctrine a ff ect federal jurisdiction. 3 Continental has not explained why, in Gunn’s case arising under state law, federal law (let alone the narrow niches of federal common law that have survived Erie Railroad ) could be relevant at all. See Erie R.R. Co. v. Tompkins , 304 U.S. 64 (1938); Williams v. Jader Fuel Co., Inc. , 944 F.2d 1388, 1400 (7th Cir. 1991) (“the legal and factual su ffi ciency of an a ffi rmative defense is examined with reference to state law”).Because Continental did not identify the source of governing law, we have li tt le trouble concluding that it did not showproperly that it was entitled to judgment based on this freefl oating defense.

The more di ffi cult question is what to do about it. “The

ma tt er of what questions may be taken up and resolved for the fi rst time on appeal is one left primarily to the discretion of the courts of appeals.” Singleton v. Wul ff

, 428 U.S. 106, 121 (1976). But the record here o ff ers li tt le guidance. Gunn also did not engage on the choice-of-law issue. We must say frankly that the parties let the district court down. The parties each asserted their choice-of-law positions, and they clearly signaled that th e choice of law could be decisive. But the parties went no farther than those assertions; neither side supportedits position. The district court did not make

3 There is no suggestion here or reas on to think that any version of the filed-rate doctrine affects a federal court’s subject-matter jurisdiction. See Wilson v. EverBank, N.A. , 77 F. Supp. 3d 1202, 1233 n.6 (S.D. Fla. 2015) (collecting cases holding filed rates go to merits, not jurisdiction); see also Krukas , 376 F. Supp. 3d at 14 n.5 (dis tinguishing “nonjusticiability” rationale for filed-rate doctrine from Article III ju sticiability).No. 19-2898 11

its own choice of law but cited fi led-rate cases from many state and federal courts.We recognize that an appeal is too late to raise a choice-oflaw issue for the fi rst time and we are under no obligation to do so on our own initiative. “We are busy enough without creating issues that are unlikely to a ff ect the outcome of the case (if they were likely to a ff ect the outcome the parties would be likely to contest them).” Wood v. Mid-Valley Inc.

, 942 F.2d 425, 427 (7th Cir. 1991). In this case, however, both sides raised the choice-of-law issue but then o ff ered the district court (and us) li tt le help.Choice of law may well be decisive here. The relevant issues are doubtful enough, and th e stakes high enough for our state-based systems of decentralized insurance regulation, that they are be tt er addressed by the district court in the fi rst instance, perhaps with help from interested friends of the court who can provide insight into those systems and their relationship to one another. See, e.g., Harris v. KBR Servs., Inc.

, 724 F.3d 458, 462 (3d Cir. 2013) (rem anding for initial choiceof-law determination where nece ssary to review dismissal for non-justiciability).

B. Considerations on Remand

1. Illinois Choice-of-Law Rules Control We begin with the fundamenta ls. A federal court exercising its diversity jurisdiction ov er state-law claims applies the choice-of-law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487 (1941). Here, that state is Illinois, which applies forum law unless an actual con fl ict with another state’s law is shown, Bridgeview Health Care Ctr. v. State Farm Fire & Cas. Co. , 10 N.E.3d 902, 905 (Ill. 2014), or12 No. 19-2898

the parties agree that forum law does not apply. See Belleville Toyota, Inc. v. Toyota Mot or Sales, U.S.A., Inc. , 770 N.E.2d 177,194 (Ill. 2002). Neither Gunn nor Continental seeks application of Illinois law, and the laws of the District of Columbia and Washington appear likely, at a minimum, to give di ff erent e ff ect to the acts of the Washington state insurance commissioner. The analysis then turns to which state’s law applies. Bridgeview, 10 N.E.3d at 905. In general, Illinois follows the Restatement (Second) of Con fl ict of Laws (Am. Law Inst. 1971). Barbara’s Sales, Inc. v. Intel Corp. , 879 N.E.2d 910, 919 (Ill. 2007). For claims on a contract, the Second Restatement usually enforces the parties’ contractual choice of law, see § 187, which may extend to tort claims “dependent” on the contract. Facility Wizard Software, Inc. v. Southeastern Technical Servs, LLC , 647 F. Supp. 2d 938, 943 (N.D. Ill. 2009). In this case, however, the parties’ contract contains no choice-of-law provision.

Absent e ff ective party choice, to govern issues in contract the Second Restatement chooses the “local” law (that is, the substantive law excluding choice-of-law rules) of the state which, “with respect to that issue, has the most signi fi cant relationship to the transaction and the parties.” § 188(1). To govern issues in tort, the Second Restatement similarly chooses the law of the state which, “with respect to that issue, has the most signi fi cant relationship to the occurrence and the parties.” § 145(1). These general standards o ff er li tt le direct guidance in resolving particular cases. See Barbara’s Sales

, 879 N.E.2d at 920. But the Second Restatement also supplies “a secondary statement in black le tt er se tt ing forth the choice of law rules in a given situation.” Id. (quotation marks omitted). These “speci fi c presumptive rules” provide moreNo. 19-2898 13

concrete points of departure. Townsend v. Sears, Roebuck & Co.

, 879 N.E.2d 893, 902 (Ill. 2007). For claims regarding a group life insurance contract, the Second Restatement’s presumptive rule is that “rights against the insurer are usually governed by the law which governs the master policy.” § 192 cmt. h. That is usually the law of theemployer’s principal place of business, where the master policy was delivered. Id. The Illinois Supreme Court has cited this rule with approval in the cont ext of group health insurance. Hofeld v. Nationwide Life Ins. Co. , 322 N.E.2d 454, 458 (Ill. 1975).The Couch treatise is in accord as to group insurance generally, 1A Couch on Insurance§ 8:7, and we have reached thesame conclusion as to group accident insurance under Indiana’s version of the “most signi fi cant relationship” test. Horn v. Transcon Lines, Inc. , 7 F.3d 1305, 1307–08 (7th Cir. 1993). Applied to this case, comment h to section 192 of the Second Restatement seems to suggest thatIllinois would choose Districtof Columbia law to govern Gunn’s claim for breach of contract. As for Gunn’s tort claims (unfair and deceptive consumerpractices, fraud, and fraudulent concealment), the Second Restatement’s presumptive rule fo r torts of deception provides that if the place of defendan t’s deception and the place of plainti ff’s reliance on it were the same, the law of that place applies. § 148(1). If deception and reliance took place in different states, a list of relevant contacts guides the court’s determination of what jurisdiction has “the most signi fi cant relationship” to the case. § 148(2) . Illinois has applied section 148 to consumer fraud claims. Barbara’s Sales , 879 N.E.2d at 922. Applied to this case, section 148 suggests Illinois may choose either District of Co lumbia or Washington law to14 No. 19-2898

govern Gunn’s tort claims, de pending on whether it would legally characterize Continental’s alleged misrepresentationsas having been made to Gunn in Washington or to his employer in the District of Columbia. 4

2. The Filed-Rate Doctrine in the District of Columbia “In the District of Columbia, the fi led rate doctrine is statutorily mandated.” District of Columbia v. D.C. Pub. Serv. Comm’n , 905 A.2d 249, 256 (D.C. 2006), citing D.C. Code § 34- 603. The statutory scheme withinwhich the mandate is embedded provides that every public utility in the District must fi le proposed rate changes with the D.C. Public Service Commission for the Commission’s approval. § 34-901(c)–(d). The statutory fi led-rate rule provides that rates approved by the Commission “shall be prima facie reasonable until fi nally found otherwise in an action brought for that purpose.” § 34- 603; see also § 34-1129 (“It shall be unlawful for any publicutility to ... receive a greater or less compensation for any service performed by it within th e District of Columbia ... than

4 We note one wrinkle in Illinois conflicts law that may or may not bear on this case. Illinois recognizes the doctrine of dépeçage, or “cutting into pieces” a single claim and subjecti ng different issues to different jurisdictions’ laws. Spinozzi v. ITT Sheraton Corp. , 174 F.3d 842, 848 (7th Cir. 1999). Even if Illinois would choose District of Columbia law to govern one or more of Gunn’s claims, perhaps Illinois might choose Washington law to govern Continental’s defenses if it determined that Washington had the most significant relationship to the case with respect to a specific issue, such as the fi led-rate defense. See Doctor’s Data, Inc. v. Barrett, 170 F. Supp. 3d 1087, 1107 (N.D. Ill. 2016) (r ecognizing possibility of splitting claims from defenses under principle of dépeçage ); see generally Restatement (Second) § 6 (factors relevant to “most significant relationship” analysis).No. 19-2898 15

is speci fi ed in such printed schedules ... as may at the time be in force.”). The problem for Continental’s defense, however, is that this statutory language says nothing about insurers, which are not included in the de fi nition of “public utilities.” See § 34- 214. Nor does the statute address the District’s insurance regulator or insurance premiums. We have found no District of Columbia case or statute applying fi led-rate principles in the insurance context. We also have found no District of Columbia case recognizing a fi led-rate defense to a suit for breach of a promise as to how premiums would be computed, still less to a suit for fraud. Dicta suggest the District of Columbia may recognize a common law fi led-rate doctrine not anchored in a speci fi c statute, see Watergate East, Inc. v. D.C. Pub. Serv. Comm’n , 662 A.2d 881, 889 (D.C. 1995) (statute “amounts to a codi fi cation of the fi led rate doctrine”), but if such a doctrine exists, its contours are yet to be revealed. After all, a legislative decision to adopt the doctrine in one context (public utilities) could be understood as a legislat ive choice not to adopt it in others (like insurance). And at any rate, the District would still have to balance the policies underlying fi led-rate rules against its own consumer protection policies. See, e.g., McCarthy Finance, Inc. v. Premera , 347 P.3d 872, 875 (Wash. 2015) (“But while a court must be cautious not to substitute its judgment on proper rate se tt ing for that of the relevant agency, the legislature has directed that the [consumer protection statute] be liberally construed.”). Even if the District of Columbia otherwise recognizes a common law fi led-rate doctrine broad enough to bar Gunn’sclaims, it also is not clear whether such a doctrine would apply to enforce the decision of a di ff erent jurisdiction’s16 No. 19-2898

regulator. Continental’s brief as sumes that the public law of Washington must in all events, and in all courts, trump theprivate law of the District of Columbia. Traditionally, however, courts have been reluctant to enforce the public law of other states. See Restatement (First) of Con fl ict of Laws § 610 (Am. Law Inst. 1934) (“No action can be maintained on a right created by the law of a foreign state as a method of furthering its own governmental interests.”); id. , cmt. c (“No action can be maintained by a foreign state to enforce its license ... laws”); Moore v. Mitchell , 30 F.2d 600, 604 (2d Cir. 1929) (L. Hand, J., concurring) (“To pass upon the provisions for thepublic order of another state is, or at any rate should be, beyond the powers of a court”).Why would District of Columbia law privilege Washington state’s interest in the au thority of its insurance commissioner above the District’s own interest in a ff ording a remedy to injured plainti ff s whom it would otherwise protect? See Emory v. Grenough , 3 U.S. (3 Dall.) 369, 370 n. (1797), translating 2 Ulrich Huber, Praelectiones Juris Romani et Hodierni, ch. “De Con fl ictu Legum” (1689) (“By the courtesy of nations, whatever laws are carried into execution, within the limits of any government, are considered as having the same e ff ect every where, so far as they do not occasion a prejudice to the rights of the other governments, or their citizens.”); Joseph Story, Commentaries on the Con fl ict of Laws 33 (1834) (“It is diffi cult to conceive, upon what ground a claim can be rested, to give to any municipal laws an extra-territorial e ff ect, when those laws are prejudicial to the rights of other nations, or their subjects.”), approving Hube r, supra. The District of Columbia has an interest in protec ting those subject to its laws from unfair and deceptive business practices. See Shaw v. Marrio ttInt’l, Inc. , 605 F.3d 1039, 1045 (D.C. Cir. 2010). PerhapsNo. 19-2898 17

more to the point, the District of Columbia has an interest in enforcing contracts negotiated and performed there, Wright v. Sony Pictures Entm’t, Inc. , 394 F. Supp. 2d 27, 32 (D.D.C. 2005), and the nature of group insurance suggests the master policy in this case fi ts that description. It is not clear the District of Columbia could or would subord inate those interests to the regulatory interests of the State of Washington.

3. The Filed-Rate Doctrine in Washington State The State of Washington recognizes a “common law fi led rate doctrine” not grounded in any statute. McCarthy Finance, Inc. v. Premera , 347 P.3d 872, 875 (Wash. 2015). The doctrinehas been applied to bar state consumer protection claims challenging health insurance premiums that had been approved by the state insurance commissioner. Id. at 876. But claims under the state consumer protectionlaw or for breach of contractthat are “merely incidental” to rates approved by the commissioner are not barred. Harvey v. Centene Mgmt. Co. , 357 F. Supp. 3d 1073, 1083 (E.D. Wash. 2 018) (denying motion to dismiss in part), quoting McCarthy, 347 P.3d at 875. “[W]hile a court must be cautious not to substitute its judgment on proper rate se tt ing for that of the relevantagency, the legislature has directed that the [consumer protection statute] be liberally cons trued ... . In most cases, courts must consider [such] claims even when the requested damages are related to agency-approved rates.” McCarthy

, 347 P.3d at 875. Accordingly, to the extent Washington state law applies, Gunn’s claims may or may not be barred depending on whether they are deemed “merely incidental” to or“would necessarily require courts to reevaluate” the commissioner’s approval of Continental’s rates, as the Washington Supreme Court—and no othe r court—would apply that18 No. 19-2898

distinction. Harvey, 357 F. Supp. 3d at 1083, quoting McCarthy

, 347 P.3d at 875.

4. Multistate Regulation of Group Insurance In the McCarran–Ferguson Act of 1945, Congress essentially insulated state regulation of “the business of insurance” from the dormant Commerce Clause and from implied federal preemption. 15 U.S.C. §§ 1011–1012; see American Ins. Ass’n v. Garamendi, 539 U.S. 396, 427–28 (2003) (“state regulation ... will be good against preemption by federal legislation unless that legislation speci fi cally relates to the business of insurance” (quotation marks omi tt ed)); Group Life & Health Ins. Co. v. Royal Drug Co. , 440 U.S. 205, 218 n.18 (1979) (“States are free to regulate insurance companies without fear of Commerce Clause a tt ack.”). Given the national reach of so many in surance companies and of group insurance policies issued to national employers, regulation of such group policies poses import ant choice-of-law questions. Continental’s understanding of those challenges leads it to assert that its promise of inte rstate uniformity in a group insurance policy was illusory. “[L] ike all long-term care insurers,” Continental says, it “must seek approval of rate increases on a state-by-state basis.” Continental says that the necessity is so obvious that a reasonable customer should have known that any promises of uniform rates among similarly situatedinsureds should not have been believed. Continental’s position is startling, but we have been given no support—as a matter of law, custom, or reason—f or its central assumption that the proper regulatory subject is the individual certi fi cate of a customer like Gunn rather than the employer’s master policy under which the individual certi fi cates are issued.No. 19-2898 19

A necessary foundation for a fi led-rate defense is the regulator’s “jurisdiction to determine the reasonableness of rates.” McCarthy, 347 P.3d at 875. Washington asserts, as it canassert, legislative and regulatory jurisdiction over only instate activity. See Midwest Title Loans, Inc. v. Mills , 593 F.3d 660, 666 (7th Cir. 2010), quoting Healy v. Beer Inst. , 491 U.S. 324, 337 (1989); Dean Foods Co. v. Brancel , 187 F.3d 609, 614–15 (7th Cir. 1999), quoting Bonaparte v. Tax Court, 104 U.S. 592, 594 (1881); Wash. Rev. Code § 48.01.020. As to ratemaking, Washington requires that ever y company “engaged in the business of making contracts of insurance” fi le its proposed rates with the insurance commis sioner for approval or disapproval. Wash. Rev. Code § 48.01.050; see §§ 48.19.040,48.19.060. The question then is how to describe the legal geography of a group insurance policy with an employer and master policy in one location an d individual insureds all over the nation. More than one state has at least arguable interests in such national policies and the individual certi fi cates issued under them.As noted above, the key contractual event in group insurance transactions is generally he ld to be delivery of the master policy, not the individual certi fi cates issued under it. See 1A Couch on Insurance§ 8:1 (“the addition of new individualmembers to a master group policy does not create a new contract of insurance.”). Apparently on the same understanding, Washington’s current statutory re gulation of group long-term care insurance applies to “a lo ng-term care insurance policy or contract that is delivered or i ssued for delivery in this state” and “any certi fi cate issued under a group long-term care insurance policy that has been de livered or issued for delivery in this state.” Wash. Rev. Code § 48.83.020. (The long-term care insurance statute in force in 2000, when Gunn fi rst20 No. 19-2898

obtained coverage, did not address group insurance speci fi

cally. See Wash. Rev. Code § 48.84.020; Wash. Admin. Code § 284-54-010.) So we might expe ct the Washington state insurance commissioner to care about master policies delivered in Washington and about certi fi cates issued, no ma tt er where or to whom, under master policies delivered in Washington. That would make good multistate sense. If universalized, it would mean that every grou p policy has one and only one regulator, steering clear of the regulatory Scylla avoided in the private-law context by the usual choice-of-law rule. See Horn v. Transcon Lines, Inc. , 7 F.3d 1305, 1307 (7th Cir. 1993) (“There is only one policy and one form of certi fi cate evidencing coverage. We cannot imagine why Liberty Mutual would prefer a choice-of-law approach under which 50 di ff erent rules govern the same policy of insurance”); Restatement(Second) § 192 cmt. h (“it is desirable that each individual insured should enjoy the same privileges and protection”); 1A Couch on Insurance§ 8:7 (“This rule prevents the same policy from being interpreted according to the law of potentially 50 states thus creating uniformity in the coverage and protection of every individual insured under the group policy.”).But Continental proceeded on nearly the opposite assumption in 2015, when it sought the challenged rate increases. Continental wrote the Washington insurance commissioner:The new premium rates will be applied to all insureds under group policie s that were sitused in your state except insure ds under the group policies sitused in your state that were issued certi fi cates in another state th at is an extraterritorial (ET) jurisdiction. These insureds areNo. 19-2898 21

governed by the other ET state’s laws and regulations and will be included in that state for rate increase purposes. The new premium rates will also be applied to insure ds issued in your state under groups sitused outside of your state.

As we read this le tt er, Continental submi tt ed rates to the commissioner for every individual certi fi cate issued in Washington, even if the master policy had not been delivered there, but not for every master policy de livered in Washington, if the certi fi cate was issued in an “extraterritorial jurisdiction” (which appears to describe Washington as well). The briefs do not explain what is an “extraterritorial jurisdiction,” what makes it one, orwhether the District of Columbia is one, nor did counsel at oral argument. We assume that interstate regulation of insurance transactions involves a good deal of comity and agreem ent among regulators of different states, without each re gulator always pushing for maximum power. Any state’s claim to extraterritorial power merits further inquiry, at least. Continental’s le tt er to the Washington insurance commissioner su ggests if nothing else that its basic position is overstated: at least some states, those that are not “extraterritorial jurisdictions,” are content to leave ratemaking authority in the hands of the regulator where the master policy was delivered, even if certi fi cates under that policy are issued to insureds within their own borders. Untying this knot is not possible on the record now before us. But it is essential to even a threshold determination of the validity of any fi led-rate defense that would give decisive effect to the decisions of the Washington state insurance commissioner. We must remand this task to the capable district judge, who may fi nd it useful to enlist the help of interested22 No. 19-2898

amici, including the National Association of Insurance Commissioners, associations of in surance companies, and perhaps others who can educate generalist federal courts about the broader implications of choice-of-law rules as applied to group insurance policies. We acknowledge the questions we have posed are moreeasily asked than answered. And we have not framed or discussed those questions with any intention to prejudge the correct outcome(s) in this ca se. The district court may fi nd that a motion under Rule 12(c), a motion for summary judgment on a more complete record, or perhaps a motion for class certi fi

cation could bring the issues into sharper relief. See In re Bridgestone/Firestone, Inc. , 288 F.3d 1012, 1015 (7th Cir. 2002). Those are case management issues best left to the district court’s discretion. The judgment of the district court isREVERSED and the case is REMANDED for further proceedings consistent with this opinion.