Opinion ID: 1451431
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Heading Rank: 2

Heading: Missouri's Regulatory Regime.

Text: Like most States, Missouri thoroughly regulates the business of insurance. The premium rates charged by property and casualty insurers are governed by Chapter 379 of the Missouri Statutes. Insurers must file their rates and policy forms and, in the case of homeowners insurance, may only charge the filed rates. See Mo.Rev. Stat. §§ 379.321, 379.356. In setting rates, insurers must consider past and prospective loss experience within and outside this state, catastrophe hazards, past and prospective expenses both countrywide and those specifically applicable to this state, a reasonable margin of underwriting profit and contingencies, and all other relevant factors, including trend factors. § 379.318(1). In establishing rates, insurers may group risks by classifications that measure any differences among risks that can be demonstrated to have a probable effect upon losses or expenses. § 379.318(2). Missouri prohibits rates that are excessive ... or unfairly discriminatory, terms carefully defined in § 379.318(4): No rate shall be held to be excessive unless such rate is unreasonably high for the insurance coverage provided and a reasonable degree of competition does not exist in the area.... Unfair discrimination shall be defined to include, but shall not be limited to, the use of rates... which unfairly discriminate between risks having essentially the same hazard and having substantially the same degree of protection against fire and allied lines. Plaintiffs note that two provisions in Chapter 375 specifically address the issue of race discrimination, prohibiting an insurer from canceling or refusing to insure or refusing to continue to insure because of race. Mo.Rev.Stat. §§ 375.007, 375.936(11)(g). But they cite no authority extending those statutes beyond their plain meaning to cover a disparate impact claim of racially discriminatory pricing. Thus, discrimination in pricing is governed exclusively by § 379.318(4). The Missouri Department of Insurance is charged with the execution of all laws... in relation to insurance and insurance companies doing business in this state. § 374.010. The Director of Insurance may examine an insurer at any time he may deem it advisable, but at least once every four years. § 379.343. If the Director finds that any rate filed by an insurer may not comply with the provisions of Chapter 379, he shall hold a public hearing in connection therewith. § 379.346.2. [4] If he finds after a hearing that the rate does not comply, he shall issue an order ... stating when, within a reasonable period of time thereafter, the further use of such rate ... shall be prohibited. § 379.346.3. The Director may also order the insurer to cease and desist violating the insurance laws, to take affirmative steps to comply with those laws, and to pay a civil penalty and the reasonable costs of investigation. § 374.046.1. The authorized amount of civil penalties is specified. Charging unfairly discriminatory rates is a level two violation for which the maximum penalty is $1,000 per violation or $50,000 per year for multiple violations. §§ 374.049.2(2), 379.361. The Director may suspend or revoke an insurer's license for a willful violation. § 379.361.1. A person aggrieved by any rate charged may ask the insurer to review the rate and, if the request is denied, may file a written complaint and request for hearing with the director, who must hold a hearing if he finds that the complaint is made in good faith and with probable cause. § 379.348. Plaintiffs filed no administrative complaints in these cases. We assume  though it appears the Supreme Court of Missouri has never considered the question  that a decision by the Director not to hold a hearing in response to a § 379.348 complaint could be judicially reviewed under the contested case provisions of the Missouri Administrative Procedure Act. See Mo.Rev.Stat. §§ 536.063(1), 536.100; cf. Farm Bureau Town & Country Ins. Co. of Mo. v. Angoff, 909 S.W.2d 348 (Mo. banc 1995). Under that statute, the court reviews whether the agency action was in excess of its authority; unsupported by substantial evidence; procedurally unlawful; arbitrary, capricious or unreasonable; or an abuse of discretion. § 536.140. In July 2006 amendments, the Legislature authorized the Director to file a civil action in state court seeking various remedies against a non-complying insurer, including an order of restitution or disgorgement in favor of identifiable consumers who have suffered financial loss from a violation of the insurance laws. § 374.048.2(d). This remedy applies to violations of the rate-regulating provisions of Chapter 379. § 379.361.2. As with the administrative remedies, punitive damages are unavailable and civil penalties are limited to $1,000 per violation. § 374.049.3(2). No provision of the Missouri insurance statutes allows an aggrieved insured to file a lawsuit in state court challenging an unlawful rate. Only the Director, in his discretion, may do so. Plaintiffs also concede there is no implied private right of action under Missouri law to enforce the mandate in § 379.318(4) that rates not be excessive or unfairly discriminatory. Cf. Dierkes v. Blue Cross & Blue Shield of Mo., 991 S.W.2d 662, 667 (Mo. banc 1999). In Dierkes, the Court dismissed claims based solely on the statutory violation but allowed common law fraud and breach-of-contract claims against an insurer for misrepresenting that its policies met all state and federal requirements because those claims existed independent of the foregoing statute. Id. at 667-68.