Court Opinion

ID: 3017854
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:18:13.377045+00
Date Added: 2024-06-11T11:47:07.505425
License: Public Domain

_____________

                                   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.
                                 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.

                                      2
     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,

                                           3
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).

                                       4
"[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

                                      5
      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

                                           6
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.

                                            7
                              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
                               1
standards on welfare plans, it does not regulate the substantive content
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),

     1
      "An employee welfare-benefit plan or welfare plan is
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
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).

                                     9
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

     2
      The savings clause is limited, in turn, by the "deemer
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 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-of-
benefits requirement of Missouri Revised Statute,

                                          11
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-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

        3
      We note that Missouri has a continuing coverage statute
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
     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

                                       13
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 conflict-
preemption 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.4    United's theory is that it became subrogated to the rights
of Jones when it paid claims for which BMA was primarily liable.               Relying
on Baxter, 886 F.2d at 186, BMA

     4
      Because United is not a "participant" or "beneficiary,"
United has no standing to bring an ERISA claim. 29 U.S.C.
§ 1132(a)(1)(B).

                                         14
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

                                     15
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

                                             16
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.

                                      17