Mo. Ins. Coal., Health Alliance Life Ins. Co. v. Huff

• Decision Date: 22 May 2013
• Docket Number: No. 4:12CV02354 AGF.,4:12CV02354 AGF.
• Citation: 947 F.Supp.2d 1014
• Parties: MISSOURI INSURANCE COALITION, Health Alliance Life Insurance Company, and HMO Missouri, Inc., Plaintiffs, v. John M. HUFF, in his capacity as Director of the Missouri Department of Insurance, Financial Institutions, and Professional Registration, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

947 F.Supp.2d 1014

MISSOURI INSURANCE COALITION, Health Alliance Life Insurance Company, and HMO Missouri, Inc., Plaintiffs,

v.John M. HUFF, in his capacity as Director of the Missouri Department of Insurance, Financial Institutions, and Professional Registration, Defendant.

No. 4:12CV02354 AGF.

United States District Court,

E.D. Missouri,

Eastern Division.

May 22, 2013.

Preempted

V.A.M.S. § 376.1199(1)(4), (4, 5), (6)(1–3)

Neal F. Perryman, David W. Gearhart, Lewis Rice, St. Louis, MO, for Plaintiffs.

Jeremiah J. Morgan, John M. Reeves, Attorney General of Missouri, Jefferson City, MO, for Defendant.

MEMORANDUM AND ORDER

AUDREY G. FLEISSIG, District Judge.

Plaintiffs Missouri Insurance Coalition (“MIC”), Health Alliance Life Insurance Co. (“Health Alliance”), and HMO Missouri, Inc., seek a declaration that certain provisions of the recently-enacted Missouri Senate Bill 749, codified at Mo.Rev.Stat. § 376.1199, are void under the Supremacy Clause of the United States Constitution because the state law is in direct conflict with the “contraceptive mandate” of the federal Patient Protection and Affordable Care Act (“Affordable Care Act”), 42 U.S.C. § 300gg–13, and its implementing regulations. Upon review of the record, including the two amicus curiae briefs filed with the Court, and the parties' oral arguments, the Court will grant Plaintiffs' request for declaratory judgment.

BACKGROUND

Plaintiff MIC is a nonprofit consumer education organization representing and promoting the interests of the insurance industry in Missouri. The other two Plaintiffs are health insurers and members of MIC. Defendant John Huff is the Director of the Missouri Department of Insurance, Financial Institutions, and Professional Registration (“DOI”).

The Federal Law

The Affordable Care Act provides, in relevant part, as follows:

[A] group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for ... with respect to women, such additional preventive care and screenings ... as provided for in comprehensive guidelines supported by the Health Resources and Services Administration (“HRSA”) for purposes of this paragraph.

42 U.S.C. § 300gg–13(a)(4). HRSA guidelines, in turn, require coverage, without cost sharing, for, among other things, “[a]ll Food and Drug Administration [ (FDA) ] approved contraceptive methods ... for all women with reproductive capacity.” 77 Fed.Reg. 8725 (Feb. 15, 2012).

This “contraceptive mandate” is backed by financial penalties: employers who do not comply face enforcement actions, 29 U.S.C. § 1132(a); a penalty of $100 per day per employee, 26 U.S.C. § 4980D(a)–(b); and an annual tax surcharge of $2,000 per employee. Id. § 4980H(a). Excluded from the mandate are certain “grandfathered” health plans, 45 C.F.R. § 147.140(c)(1) (2010), and exempted are “religious employers” as defined at 45 C.F.R. § 147.130(a)(iv)(B) (2011). The regulatory guidelines include what has been referred to as a “temporary enforcement safe harbor” for plans that do not qualify for the “religious employer” exemption but are sponsored by certain non-profit organizations with religious objections to contraceptive coverage. 77 Fed.Reg. 8725, 8726–8728 (Feb. 15, 2012). These organizations are exempt from application of the mandate until August 1, 2013, by which time it is expected that new regulations broadening the definition of “religious employer” will be finalized.

The Affordable Care Act has its own pre-emption provision that provides as follows: “Nothing in this title [Title I of the Act, which includes the preventive services requirement] shall be construed to preempt any State law that does not prevent the application of the provisions of this title.” 42 U.S.C. § 18041(d). The federal law further provides that it “shall not be construed to supersede any provision of State law which establishes, implements, or continues in effect any standard or requirement ... except to the extent that such standard or requirement prevents the application of a requirement of this part.” 42 U.S.C. § 300gg–23(a)(1).

Under the Affordable Care Act, individuals are exempt from the general requirement to obtain health insurance if they are members of a “recognized religious sect or division” that conscientiously objects to acceptance of public or private insurance funds or are members of a “health care sharing ministry.” 26 U.S.C. § 5000A(d)(2).

Approximately three months before this action was filed, and again during the pendency of the action, the Eighth Circuit enjoined the enforcement of the federal contraceptive mandate against specific for-profit companies that objected to the mandate on the basis of their religious beliefs, under the Religious Freedom Restoration Act of 1993 (“RFRA”). See O'Brien v. HHS, 894 F.Supp.2d 1149, (E.D.Mo.2012); Annex Med., Inc. v. Sebelius, No. 13–1118, 2013 WL 1276025 (8th Cir. Feb. 1, 2013). In Annex Med, Inc., the appellate Court explained that the granting in these two cases of a stay (O'Brien) and a preliminary injunction (Annex Med., Inc.) pending appeal necessarily included a conclusion by the appellate Court that the appellants made a sufficient showing of likelihood of success on the merits of their claims. Id.

The State Law

Missouri law requires health insurers to submit health insurance policies to the DOI for approval before they may be sold; the DOI may only approve those policies that are in compliance with Missouri law. If the DOI determines that a health insurer is in violation of state law related to insurance, the DOI may issue an order directing the insurer to cease and desist such conduct, and may impose a civil monetary penalty. Mo.Rev.Stat. § 374.046.

Subsection 1(4) of § 376.1199 requires health benefit plans that provide coverage for pharmaceutical benefits, to “provide coverage for contraceptives either at no charge or at the same level of deductible, coinsurance or co-payment as any other covered drug.” Subsection 4, however, the so-called “opt-out provision,” requires Missouri health insurers to honor requests by employers to issue policies excluding coverage for contraceptives if “the use or provision of such contraceptives is contrary to the [employer's] moral, ethical or religious beliefs or tenets.” Mo.Rev.Stat. § 376.1199.4(1). Similarly, individual enrollees in a health plan that provides contraceptive coverage can opt-out of that coverage, and health insurers that have their own moral, ethical, or religious tenets contrary to the use or provision of contraceptives are themselves exempt from subsection 1(4). Id. § 376.1199.4(2, 3).

The statute also provides that health insurers must “allow enrollees in a health benefit plan that excludes coverage for contraceptives ... to purchase a health benefit plan that includes coverage for contraceptives.” Id. § 376.1199.5. Subsection 6 requires health insurers to notify enrollees that they have “the right to exclude coverage for contraceptives if such coverage is contrary to his or her moral, ethical or religious beliefs” and that “an enrollee who is a member of a group health benefit plan without coverage for contraceptives has the right to purchase coverage for contraceptives.” Id. § 376.1199.6(2, 3).¹

Procedural Posture

On November 6, 2012, the Insurance Market Division of the DOI filed a “Verified Statement of Charges and Request for Orders,” charging Health Alliance and HMO Missouri for being in violation of § 376.1199 by not offering plans excluding coverage for contraceptives. (Doc. No. 26–2.) The DOI requested that Huff (Defendant herein) issue cease and desist orders requiring these Plaintiffs to cease their violations and requiring them to pay a civil penalty. Id. The Statement of Charges identified each charged entity at an address in St. Louis, Missouri. On November 16, 2012, a cease and desist order was issued by Defendant. The present suit for declaratory judgment and injunctive relief was initiated on December 19, 2012, against Defendant in his official capacity.

On December 21, 2012, 2012 WL 6681688, after a hearing, the Court granted Plaintiff MIC's ² motion for a Temporary Restraining Order (“TRO”) enjoining Defendant from enforcing the state law in question. The Court held that Plaintiff was likely to succeed on the merits of its claim that there was a direct conflict between the state law and the federal law, and that Defendant could not disapprove health insurance policies, contracts, and forms on the ground that they were not compliant with the state law. (Doc. No. 13.) The parties thereafter elected to proceed with a consolidated Preliminary and Permanent Injunction Hearing.

Arguments of the Parties and Amici Curiae

Plaintiffs in the present case argue that the Missouri statute requiring them to offer and issue a health plan without contraceptive coverage to employers or persons based on their moral, ethical, or religious beliefs or convictions “squarely conflicts” with federal law which, with limited exceptions, requires health insurers like Plaintiffs to provide contraception coverage without additional cost in all plans issued to individuals and employers. Plaintiffs' prime argument is that the conflict between the laws is irreconcilable, and health insurers in Missouri cannot comply with both mandates. Thus, under the Supremacy Clause, the federal law must prevail. The same result is reached, according to Plaintiffs, under the express preemption provision in 42 U.S.C. § 300gg–23(a) quoted above. Plaintiffs argue that subsections 4, 5, and 6(2) and (3) of § 376.1199 are invalid and cannot be severed from the entire § 376.1199, which accordingly should be declared invalid in its entirety.

Defendant argues that Missouri law is not in conflict with the federal contraceptive mandate, but rather is “more protective of access to contraceptive services.” Defendant relies on the...