Opinion ID: 733312
Heading Depth: 2
Heading Rank: 1

Heading: Preemption and Missouri Revised Statute 376.438

Text: 30 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, 105 S.Ct. at 2389-91, which held that a mandated-benefits statute was not preempted because it was governed by the savings clause. 31 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, 107 S.Ct. at 1557-58, 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. 32 The precise requirement at issue in this case is the extension-of-benefits requirement of Missouri Revised Statute, 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. 33 Thus, we turn to the question of whether section 376.438 is in conflict with ERISA. John Hancock Mut., 510 U.S. at 99, 114 S.Ct. at 526; see also Pilot Life, 481 U.S. at 57, 107 S.Ct. at 1558. We see no conflict between Missouri's extension-of-benefits 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 34 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. 35 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. 36 We recognize that our holding negates the provision in BMA's policy providing for a termination of extended benefits when the 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, 111 S.Ct. 403, 410, 112 L.Ed.2d 356 (1990) (finding that a subrogation provision in a self-funded ERISA plan preempted a state anti-subrogation statute because of the deemer clause, but noting that if the plan had been insured, it would be bound by state insurance regulations). 37 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 conflict-preemption analysis. 38