_____________

No. 95-3185

_____________

United of Omaha, *

*

Plaintiff - Appellee, * Appeal from the United States

* District Court for the

v. * Western District of Missouri.

*

Business Men's Assurance *

Company of America, *

*

Defendant - Appellant. *

_____________

 Submitted: April 8, 1996

 Filed: January 14, 1997

_____________

Before RICHARD S. ARNOLD, Chief Judge, WOLLMAN and HANSEN, Circuit

Judges.

_____________

HANSEN, Circuit Judge.

Business Men's Assurance Company of America (BMA) appeals from an

order of the district court granting summary judgment to United of Omaha

(United) in a dispute under Missouri state law over which company was

responsible to pay health insurance benefits. BMA argues that the Employee

Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq.,

preempts United's claim and, alternatively, that the district court

erroneously interpreted and applied Missouri law, on issues of both

liability and damages. We affirm in part and reverse in part. 

 
2

I. FACTS

The undisputed facts of this case are as follows. BMA issued a group

health insurance policy to Western Water Management, Inc. (Western) for the

benefit of Western's employees, effective January 1, 1989. Western's group

policy was a welfare plan subject to ERISA. During the time of its

coverage, one of Western's employees, Clyde Jones, became totally and

permanently disabled, and as a result, Jones experienced a reduction in

hours of employment. This was a "qualifying event" under the Consolidated

Omnibus Budget Reconciliation Act (COBRA), 29 U.S.C. §§ 1161-68 (1988), a

1985 amendment to ERISA that requires plan sponsors like Western to provide

an opportunity for individuals like Jones to obtain continuing coverage

under such circumstances. Jones elected to obtain coverage, which BMA

began providing to Jones as a COBRA continuee on October 1, 1989. The BMA

policy expired on November 30, 1990.

Western replaced the BMA policy with an insurance policy issued by

United, effective December 1, 1990. Jones began paying monthly premiums

to United on that date and was thereafter covered as a COBRA continuee

under the United policy. 

During the period between December 1, 1990 and December 1, 1991, the

12-month period following BMA's policy's termination, a number of health

care providers presented bills to United for Jones's medical expenses.

United paid the bills but later sought reimbursement from BMA, contending

that BMA was responsible for the expenses pursuant to Missouri law that

governs the discontinuance and replacement of insurance for disabled

individuals. See Mo. Rev. Stat. §§ 376.438, 376.441. BMA refused to

reimburse United, pointing to a provision in BMA's group policy which

provides that its obligation to provide extended benefits terminates when

an individual becomes fully covered by another insurer. 
3

United brought this action against BMA, seeking damages under

Missouri law for the hospital and medical expenses United had paid on

behalf of Jones during the 12-month period following the termination of

BMA's policy. The parties filed a series of motions for summary judgment,

making arguments on liability, certain affirmative defenses, and damages.

The district court granted United's motions for summary judgment, holding

that United's state-law claim was not preempted by ERISA and, according to

Missouri law, BMA is liable for Jones's medical and hospital expenses

incurred from December 1, 1990, through December 1, 1991. The court

calculated the damages based upon the full amount of medical expenses

United had paid, plus prejudgment interest.

BMA appeals, asserting a number of arguments. First, BMA contends

that the district court erroneously interpreted sections 376.438 and

376.441 of the Missouri Revised Statutes. Second, BMA claims that ERISA

preempts the Missouri statutes, as interpreted by the district court,

because they are in conflict with the federal statute, as amended by COBRA.

BMA also argues that ERISA preempts United's state-law subrogation claim.

Next, BMA maintains that even if the district court correctly interpreted

the statutes, and even if United's claim is not preempted, the court

erroneously applied the Missouri state law of equitable subrogation.

Finally, BMA contends that the district court erred in calculating damages.

II. Standard of Review

We review the district court's grant of summary judgment de novo,

applying the same standards as did the district court. Kerns v. Benefit

Trust Life Ins. Co., 992 F.2d 214, 217 (8th Cir. 1993). Summary judgment

is appropriate when the evidence, viewed in the light most favorable to the

nonmoving party, shows there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(c). In this case,
4

because the parties do not dispute the facts, our inquiry is limited to

whether United was entitled to judgment as a matter of law. We review the

district court's determination of Missouri state law de novo. Salva Regina

College v. Russell, 499 U.S. 225, 231 (1991); United States v. Green Acres

Enters., Inc., 86 F.3d 130, 133 (8th Cir. 1996). 

III. Statutory Interpretation

To determine whether United has a cause of action that is preempted

by ERISA, we must interpret the state statute on which the cause of action

is based. The district court interpreted the state statute to require BMA,

as a prior carrier of group health insurance, to provide Jones an

extension-of-benefits for 12 months following the termination of the

policy, regardless of whether Western had secured replacement coverage.

The court then looked at BMA's policy, which provided an extension for

medical expenses, without payment of a premium, "1) for up to 3 months

after coverage terminates for any sickness or injury; and 2) for up to 9

more months for the sickness or injury causing the total disability," but

which also stated that the extension of benefits would be terminated on

"[t]he date the [c]overed [p]erson is covered under any other group policy

or employer-funded plan." (J.A. at 76.) Finding this termination

provision of the policy to be incompatible with Missouri law, the district

court held that it was void. BMA argues that the extension-of-benefits

coverage provided in its policy does not violate the state statute because

it is reasonable, within the meaning of section 376.438.1, for BMA to

refuse to extend benefits after the disabled person is covered by a

replacement policy.

Our primary objective in interpreting the Missouri statute is to

ascertain the legislative intent from the statutory language and, if

possible, to give effect to that intent. Rothschild v. State Tax Comm'n

of Mo., 762 S.W.2d 35, 37 (Mo. 1988) (en banc). 
5

"[W]e consider the words employed in the statute in their plain and

ordinary meaning, we presume the legislature did not intend an absurd law,

and we favor a construction that avoids unjust or unreasonable results."

Id. (internal citation omitted). When the plain and ordinary meaning of

the language is unambiguous, "we are afforded no room for construction."

Brownstein v. Rhomberg-Hagling & Assoc., 824 S.W.2d 13, 15 (Mo. 1992) (en

banc). 

Section 376.438.1 of the Missouri Revised Statutes provides:

Every group policy or other contract subject to sections

376.431 to 376.442, or under which the level of benefits is

hereafter altered, modified or amended, must provide a

reasonable provision for extension of benefits in the event of

total disability at the date of any termination or

discontinuance of the group policy or contract, regardless of

the reason for the termination or discontinuance, as required

by the following subdivisions of this subsection[.]

This provision has three subdivisions. Subdivision (3) states, in relevant

part: 

In the case of hospital or medical expense coverages . .

., a reasonable extension of benefits or accrued liability

provision is required. Such a provision will be considered

reasonable if it provides an extension of at least twelve

months under major medical and comprehensive medical type

coverages . . . .

Mo. Rev. Stat. § 376.438.1(3). 

To interpret the language of section 376.438, we must also look at

section 376.441, which explains the coverage requirements of replacement

carriers and the allocation of liabilities between prior and succeeding

carriers. Section 376.441 begins by stating: 

When one carrier's contract replaces a plan of similar

benefits of another carrier, the prior carrier remains liable

only to the extent of its accrued
6

liabilities and extensions of benefits. The position of the

prior carrier shall be the same whether the group policyholder

or other entity secures replacement coverage from a new

carrier, self-insurer, or foregoes the provision of coverage.

The statute requires succeeding carriers to provide coverage for

individuals who are not eligible under the succeeding carrier's policy, but

who were validly covered under a benefit extension on the date of the prior

carrier's discontinuance and who are in the class of persons eligible for

coverage under the succeeding carrier's policy. Under this required

coverage, the succeeding carrier's obligation to pay benefits is measured

by the applicable benefits under the prior carrier's plan, reduced by the

benefits payable by the prior carrier. Id. § 376.441(1); see also id.

§ 376.441(3) (measuring the succeeding carrier's obligation to pay expenses

related to preexisting conditions by the lesser of (1) the benefits of the

succeeding carrier's policy without regard to any limitation for

preexisting conditions or (2) the benefits of the prior carrier's policy).

The succeeding carrier must provide this coverage until the earliest of

several dates, one of which is when the period of extension or accrued

liability by the prior carrier has terminated. Id. § 376.441(2)(c). When

the situation arises requiring a determination of the prior carrier's

benefits, those benefits are to be determined under the prior carrier's

plan, "as if coverage had not been replaced by the succeeding carrier."

Id. § 376.441(5).

Section 376.441 reveals that BMA's policy of providing extended

benefits only until replacement coverage is secured is not "reasonable"

within the meaning of section 376.438. The first two sentences of section

376.441 clearly indicate that a prior carrier remains liable "to the extent

of its accrued liabilities and extensions of benefits," even if the group

policy holder has secured coverage from a succeeding carrier. Further, the

statute states that for individuals like Jones who were covered by a
7

benefit extension on the date of discontinuance, the amount of benefits a

succeeding carrier must pay depends upon the benefits available under the

prior carrier's plan. See Mo. Rev. Stat. § 376.441(1), (5). The plain

language of section 376.441 contemplates that the coverage of the

succeeding replacement carrier is secondary to the benefits payable by the

prior carrier under its extension-of-benefits provision. We therefore

reject BMA's interpretation of section 376.438.1(3).

We also note that BMA's interpretation of what is reasonable

misconstrues the nature of the section 376.438 requirements. The statute

mandates that BMA provide, for a reasonable time, an extension of benefits,

not full coverage. Section 376.441 makes this clear, because it requires

the succeeding carrier to provide replacement coverage until the earliest

of several dates, one of which is when the prior carrier's extension of

benefits terminates. Id. § § 376.441(2)(c). This obligation on the

succeeding carrier would be unnecessary if an extension of benefits were

the same as extended coverage. See also id. § 376.441(1) (defining the

succeeding carrier's required replacement coverage by the total coverage

provided under the prior carrier's plan before it was discontinued, minus

the benefits payable by the prior carrier). Thus, BMA's statutory

obligation to provide an extension of benefits is not a "coverage"

requirement and should not be confused with any obligation United or

Western had to Jones.

We therefore hold that BMA was primarily obligated to provide

extended benefits to Jones for a reasonable period of time. We further

hold that BMA cannot avoid this requirement merely because Western secured

replacement coverage for Jones. Because of our disposition of this case

under the preemption analysis below, we need not consider the issues of

whether the language in section 376.438(3) regarding a 12-month period is

definite or indefinite and exactly what types of benefits the statute

requires BMA to pay.
 "An employee welfare-benefit plan or welfare plan is 1

defined as one which provides to employees `medical, surgical, or

hospital care or benefits, or benefits in the event of sickness,

accident disability [or] death,' whether these benefits are

provided `through the purchase of insurance or otherwise.'" 

Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 732

(1985) (quoting 29 U.S.C. § 1002(1)). The parties agree that

Western provided its employees with a welfare plan as defined by

ERISA.

8

IV. ERISA Preemption

BMA argues that United's claim is preempted by ERISA, both because

the Missouri statutes are in conflict with COBRA and because United styles

its claim as a common-law subrogation claim. ERISA regulates employee

pension and welfare plans. While ERISA imposes various procedural

standards on welfare plans, it does not regulate the substantive content 1

of such plans. Metropolitan Life, 471 U.S. at 738. 

As with all preemption analysis, our task is to ascertain

congressional intent in enacting the federal law. Id. In enacting ERISA,

Congress set out:

"to ensure that plans and plan sponsors would be subject to a

uniform body of benefits law; the goal was to minimize the

administrative and financial burden of complying with

conflicting directives among States or between States and the

Federal Government . . ., [and to prevent] the potential for

conflict in substantive law . . . requiring the tailoring of

plans and employer conduct to the peculiarities of the law of

each jurisdiction."

New York Conference of Blue Cross v. Travelers Ins., 115 S. Ct. 1671, 1677

(1995) (quoting Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990)).

To this end, ERISA contains a preemption provision declaring that the

statute "shall supersede any and all State laws insofar as they may now or

hereafter relate to employee benefit plans." 29 U.S.C. § 1144(a). We

construe this language broadly, Pilot Life Ins. Co. v. Dedeaux, 481 U.S.

41, 47 (1987),
9

finding that a state law relates to employee benefit plans if it "refers

to or has a connection with covered benefit plans . . . `even if the law

is not specifically designed to affect such plans, or the effect is only

indirect,' and even if the law is `consistent with ERISA's substantive

requirements.'" District of Columbia v. Greater Wash. Bd. of Trade, 506

U.S. 125, 129-30 (1992) (quoting, and citing internally, Ingersoll-Rand,

498 U.S. at 139, and Metropolitan Life, 471 U.S. at 739). 

The "relates to" language of the preemption clause is meant to

provide some boundaries to the scope of preemption, however, and the

question of whether state law is connected with ERISA is not to be carried

to its infinite, logical limits. New York Conference of Blue Cross, 115

S. Ct. at 1677. To fall within the parameters of ERISA's preemption

clause, the state law must be related to ERISA in an aspect that affects

ERISA's objectives. Id.; see Arkansas Blue Cross & Blue Shield v. St.

Mary's Hospital, 947 F.2d 1341, 1344-45 (8th Cir 1991) (discussing the

factors courts have used to determine whether a state law relates to ERISA

plans). In essence, "[s]ome state actions may affect employee benefit plans

in too tenuous, remote, or peripheral a manner to warrant a finding that

the law `relates to' the plan." Shaw v. Delta Air Lines, Inc., 463 U.S.

85, 100 n.21 (1983). See, e.g., Mackey v. Lanier Collection Agency &

Serv., Inc., 486 U.S. 825, 831-34 (1988) (holding no preemption of a

state's general garnishment statute, even though it might burden the

administration of an ERISA plan when applied to collect judgments against

plan participants); McCallum v. Rosen's Diversified, Inc., 41 F.3d 1239,

1241-42 (8th Cir. 1994) (holding no preemption of state statute authorizing

court-ordered valuation and buyout, even though such a buyout may require

valuation of shares in employee stock ownership plan). 

If a state law does in fact fall within the scope of ERISA's

preemption clause, it may nonetheless be excepted under what has become

known as the "savings clause." 29 U.S.C. § 1144(b)(2)(A). 
 The savings clause is limited, in turn, by the "deemer 2

clause," FMC Corp. v. Holliday, 498 U.S. 52, 56 (1990), which

states that no employee-benefit plan "shall be deemed to be an

insurance company or other insurer, . . . or to be engaged in the

business of insurance or banking for purposes of any law of any

State purporting to regulate insurance companies . . . ." 29

U.S.C. § 1144(b)(2)(B). This limitation is not in issue in the

case before us today. 

10

The savings clause excepts from preemption certain categories of state law,

including state law that regulates insurance. The Supreme Court has

explained that a state law "regulates insurance" if (1) it is directed

specifically toward the insurance industry and (2) it applies to the

"business of insurance" within the meaning of the McCarran-Ferguson Act,

which gives to the states the authority to regulate the business of

insurance, see 15 U.S.C. §§ 1011-1015. Pilot Life, 481 U.S. at 48;

Metropolitan Life, 471 U.S. at 742-43; Baxter v. Lynn, 886 F.2d 182, 185

(8th Cir. 1989). A law applies to the business of insurance under the

McCarran-Ferguson Act if it (1) has the effect of transferring or spreading

the policyholder's risk; (2) is an integral part of the policy relationship

between the insurer and the insured; and (3) is limited to entities within

the insurance industry. Metropolitan Life, 471 U.S. at 743.2

Regulation of the insurance industry may exist both in ERISA and in

state law. In such circumstances, "ERISA leaves room for complementary or

dual federal and state regulation." John Hancock Mut. v. Harris Trust &

Sav. Bank, 114 S. Ct. 517, 525 (1993); see also McCallum, 41 F.3d at 1240.

However, "in the case of a direct conflict, federal supremacy principles

require that state law yield." Id. at 526. Moreover, "`where [state] law

stands as an obstacle to the accomplishment of the full purposes and

objectives of Congress,' federal preeemption occurs." Id. at 526 (quoting

Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248 (1984)); see also Pilot

Life, 481 U.S. at 57 (finding state cause of action for improper processing

of a claim for ERISA benefits conflicts with
11

the civil enforcement scheme of ERISA-plan participants and beneficiaries

to recover benefits owed under an ERISA plan).

 

With this legal framework in mind, we turn now to BMA's arguments

that Missouri's extension-of-benefits statute and this cause of action are

preempted.

A. Preemption and Missouri Revised Statute 376.438

Applying the same preemption analysis as set forth above, the

district court concluded that ERISA does not preempt sections 376.438 and

376.441 of the Missouri Revised Statutes. The court determined that

although the Missouri statutes "relate to" the ERISA plan, they are rescued

from preemption by the savings clause because they "mandate certain

benefits and govern liability among insurance carriers for providing those

benefits." (Appellant's Adden. at A-4.). The district court determined

that the statutes regulate the business of insurance within the meaning of

the McCarran-Ferguson Act. In reaching its conclusions, the district court

relied primarily on Metropolitan Life, 471 U.S. at 741-43, which held that

a mandated-benefits statute was not preempted because it was governed by

the savings clause. 

BMA contends that the district court's conclusion is flawed because

the court failed to consider adequately the limitations on the savings

clause announced in Pilot Life, 481 U.S. at 56-57, a case decided after

Metropolitan Life. In Pilot Life, the Supreme Court held that a

beneficiary may not bring a state-law cause of action disputing the

allocation of benefits, for such an action conflicts with ERISA's civil

enforcement scheme. Id. BMA maintains that the Missouri statutes conflict

with COBRA and thus are preempted pursuant to Pilot Life.

 

The precise requirement at issue in this case is the extension-ofbenefits requirement of Missouri Revised Statute,
 We note that Missouri has a continuing coverage statute 3

that is in fact analogous to COBRA, Mo. Rev. Stat. § 376.428. 

The Missouri legislature avoided any conflict with COBRA by

amending the statute in 1987 to apply "only to those persons who

are not subject to the continuation and conversion provisions set

forth in [COBRA]." Id. § 376.428.4. 

12

section 376.438. We conclude that although this statute relates to

employee benefit plans, it is excepted from preemption by the savings

clause. As already discussed, the extension of benefits statute works to

ensure that a discontinued carrier remains primarily liable for a

reasonable extension of benefits to a disabled individual. The statute is

directed specifically toward insurance companies and regulates the business

of insurance within the meaning of the McCarran Ferguson Act. Accordingly,

we agree with the district court's conclusion that section 376.438 is saved

from ERISA preemption.

Thus, we turn to the question of whether section 376.438 is in

conflict with ERISA. John Hancock Mut., 114 S. Ct. at 526; see also Pilot

Life, 481 U.S. at 57. We see no conflict between Missouri's extension-ofbenefits statute and COBRA. COBRA requires plan sponsors of group health

insurance policies to provide the opportunity for continuing coverage to

beneficiaries who would lose coverage as a result of a qualifying event.

29 U.S.C. § 1161(a). COBRA is directed at the plan sponsor (here,

Western), whereas section 376.438 is directed at prior carriers (here,

BMA). COBRA mandates an opportunity for Jones to obtain coverage, for

which he pays premiums, see id. § 1162(2)(C) (coverage ceases when

beneficiary fails to make timely payment of premium), while section 376.438

requires BMA to provide reasonable extended benefits for certain claims,

without the payment of any additional premiums and regardless of any other

coverage Jones may have. Thus, section 376.438 does not conflict with

COBRA, because it governs a different situation and is directed at an

entirely different entity.3
13

BMA's assertion that United subjected itself to COBRA requirements

by issuing a group policy to Western misses the mark. Western, the plan

sponsor, fulfilled its COBRA obligations by securing an opportunity for

Jones to obtain continued coverage through United. BMA's claims that

United became a fiduciary under COBRA and that United has continuing duties

under COBRA (such as giving Jones notice) simply do not affect BMA's duty

to provide an extension of benefits under Missouri state insurance law. 

BMA also submits a conflict-preemption argument based on COBRA's

requirement that the continuing coverage provided to disabled individuals

be identical to the coverage provided to similarly situated beneficiaries

to whom a qualifying event has not occurred. See 29 U.S.C. § 1162(1). BMA

contrasts this requirement with the language in section 376.441(3) of the

Missouri statutes, which provides that a succeeding carrier's obligation

to pay benefits is determined by the terms in the prior carrier's plan.

BMA contends that because the terms in the prior plan may not be identical

to the coverage similarly situated beneficiaries have under the succeeding

carrier's plan, the Missouri statutes governing discontinuance and

replacement coverage for disabled individuals must be preempted. Once

again, we note that COBRA is directed at the plan sponsor, whereas sections

376.438 and 376.441 are directed at the insurance companies. More

importantly, however, we conclude that we need not decide today whether

section 376.441 is preempted by virtue of this alleged conflict, for it has

nothing to do with the precise question before us; the narrow issue

presented in this case is whether ERISA preempts section 376.438, which

requires BMA to provide extended benefits for a reasonable period of time.

We leave the preemption question regarding section 376.441 for another day,

and specifically hold that ERISA does not preempt section 376.438 of the

Missouri Revised Statutes.

We recognize that our holding negates the provision in BMA's policy

providing for a termination of extended benefits when the
 Because United is not a "participant" or "beneficiary," 4

United has no standing to bring an ERISA claim. 29 U.S.C.

§ 1132(a)(1)(B).

14

recipient obtains other coverage, but this provision conflicts with the

substance of state insurance law. Having already concluded that the state

extension-of-benefits statute is an insurance regulation saved from

preemption and fully compatible with the language and spirit of ERISA, we

will not now find that a conflicting provision in BMA's ERISA plan

overrides the state statute. To do so would be to open the door for

insurance companies to avoid any state insurance law simply by including

a contrary provision in their group ERISA welfare plans. Arkansas Blue

Cross & Blue Shield, 947 F.2d at 1345. We do not believe Congress intended

such a result. Cf. FMC Corp. v. Holliday, 498 U.S. 52, 61, 64 (1990)

(finding that a subrogation provision in a self-funded ERISA plan preempted

a state antisubrogation statute because of the deemer clause, but noting

that if the plan had been insured, it would be bound by state insurance

regulations). 

In summary so far, we conclude that section 376.438 of the Missouri

Revised Statutes, which requires insurance companies to provide an

extension of benefits to disabled individuals upon discontinuance of the

policy, relates to employee benefits plans but is rescued from ERISA

preemption because it comes within ERISA's savings clause. Additionally,

we conclude that the statute is not preempted by ERISA under a conflictpreemption analysis. 

B. Preemption and the Common Law of Subrogation

Whether United's cause of action is preempted presents yet another

question. United brought this cause of action under state common law as

a subrogee. United's theory is that it became subrogated to the rights

4

of Jones when it paid claims for which BMA was primarily liable. Relying

on Baxter, 886 F.2d at 186, BMA
15

argues that ERISA preempts United's state-law subrogation claim. We agree.

In Baxter, the beneficiary had been awarded damages from a tortfeaser

in addition to the medical benefits he had received under an ERISA plan.

When the plan's insurer attempted to enforce a plan provision creating a

right of subrogation in favor of the insurer against the beneficiary, the

beneficiary pointed to state law precluding such subrogation. We found

that the state antisubrogation law prevented the plan administrator from

exercising its rights under the plan to obtain reimbursement from the

beneficiary for the medical expenses paid. Because the state law directly

impacted the structure of the ERISA plan, we concluded that it was related

to the plan. See Arkansas BCBS, 947 F.2d at 1345 (explaining Baxter). We

further found that the law was not saved from preemption by the savings

clause, and consequently, ERISA preempted the state antisubrogation law.

The district court in this case distinguished Baxter and rejected

BMA's preemption argument on the basis that United's subrogation claim is

not related to the plan. The court stated:

Although the terminology is the same, the subrogation

involved in Baxter and that involved here are entirely

different. The subrogation at issue in Baxter related to the

rights and obligations running between the insurer and the

insured. It thus "relate[d] to an employee benefit plan," and

required analysis under the McCarran-Ferguson Act. By contrast

the subrogation involved here is unrelated to the substantive

provisions of the insurance policy; it is simply an equitable

principle for recovering a claim from one who ought to have

paid it.

(Appellant's Adden. at A-5.)

We agree that in some respects, this case is quite different from

Baxter. Here, the dispute is between two insurance companies
16

over which company is responsible to pay for certain benefits. This

particular state-law claim does not affect either the amount of benefits

due to Jones or any reimbursement from him to the plan. This subrogation

claim implicates the allocation of liability between prior and succeeding

insurance carriers under state insurance law. 

Despite these distinctions from Baxter, we nonetheless conclude that

ERISA preempts United's claim. Under Missouri law, "[i]t is . . . well

established that in [a subrogation] action a party makes a claim through

a derivative right acquiring no greater rights in law or equity than the

party for whom it was substituted and therefore, cannot make a claim its

subrogor could not make." Stoverink v. Morgan, 660 S.W.2d 743, 745 (Mo.

Ct. App. 1983). Thus, as a subrogee, United stands in the shoes of Jones

and has no greater rights than Jones has. Under settled law, Jones could

not bring a state-law claim seeking benefits owed him under section

376.438, because ERISA would preempt that claim and require him to use

ERISA's remedies. See Pilot Life, 481 U.S. 54-56 (holding that ERISA

preempts a beneficiary's state-law causes of action based on improper

processing of claims for benefits because the civil enforcement provisions

of ERISA are meant to be the exclusive vehicle for such actions).

Consequently, United's state-law subrogation claim is likewise preempted.

To be sure, subrogation is an equitable doctrine founded on

principles of justice, and BMA was obligated under Missouri law to provide

a reasonable extension of benefits. See American Nursing Resources, Inc.

v. Forrest T. Jones & Co., 812 S.W.2d 790, 796 (Mo. Ct. App. 1991); Quality

Wood Chips, Inc. v. Adolphsen, 636 S.W.2d 94, 96-97 (Mo. Ct. App. 1982)

(explicating the nature of subrogation claims). The equitable nature of

the doctrine, however, is that we theoretically place the subrogee in the

shoes of the subrogor. We cannot change the color or size of those
17

shoes. We therefore hold that United's state-law cause of action, based

on its right of subrogation, is preempted by ERISA. 

V. Conclusion

For the above reasons, we affirm the district court in its conclusion

that ERISA does not preempt section 376.438 of the Missouri Revised

statutes, but we reverse the district court's conclusion that ERISA does

not preempt United's subrogation cause of action. We do not consider the

parties' remaining arguments, because our reversal on the basis of

preemption renders them moot. The judgment of the district court is

vacated, and the case is ordered dismissed with prejudice.

RICHARD S. ARNOLD, Chief Judge, concurs in the judgment.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.