Missouri Insurance Coalition v. Huff
MEMORANDUM AND ORDER: IT IS HEREBY DECLARED that subsections 4, 5, and 6(1), (2) and (3) of Missouri Revised Statutes § 376.1199 are invalid. The Court assumes that Defendants commitment not to enforce any provisions found unconstitutional requires the State of Missouri to withdraw any administrative complaints filed against health insurers for violations of the provisions of the state law at issue. Signed by District Judge Audrey G. Fleissig on 3/14/2013. (KSM)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
MISSOURI INSURANCE COALITION,
HEALTH ALLIANCE LIFE INSURANCE
COMPANY, and HMO MISSOURI, INC.,
JOHN M. HUFF, in his capacity as Director
of the Missouri Department of Insurance,
Financial Institutions, and Professional
No. 4:12CV02354 AGF
MEMORANDUM AND ORDER
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.
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
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, 2012 WL 4481208 (E.D. Mo. Sept. 28, 2012);
Annex Med., Inc. v. Sebelius, No. 13-1118 (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 moral tenets contrary to the use or provision of contraceptives are
themselves exempt from subdivision 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. §
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)
In addition to the newly added § 376.1199, S.B. 749 also added §191.724, not
directly at issue here, to Missouri Revised Statutes.
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
On December 21, 2012, after a hearing, the Court granted Plaintiff MIC’s2 motion
for a Temporary Restraining Order enjoining 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 cost in all plans issued to individuals and employers.
At the time of the TRO, the only Plaintiff was MIC. Health Alliance and HMO
Missouri, Inc. were added as Plaintiffs in an Amended Complaint on January 10, 2013.
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,
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 above-quoted provision of § 376.1199.5 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. Defendant posits that as this would apply to plans
that are exempt from the provisions of the federal law, Missouri law provides more
access to contraceptive coverage than the federal law. In response to the concern that the
federal contraceptive mandate requires contraceptive coverage at no additional cost to
women, Defendant notes that there is no requirement in § 376.1199.5 that a separate
charge be imposed on those enrollees wishing to purchase contraceptive coverage when
their health plan excludes such coverage.
Defendant further asserts that there would be no need, in any event, to invalidate
the entire statute, contending that the Court should sever any sections of Missouri law
that the Court may conclude are invalid, and invalidate only those sections. Defendant
also maintains that the sections challenged by Plaintiffs can be applied to those entities
and individuals that are exempt from the federal contraceptive mandate, without creating
a conflict with federal law. Defendant also asks the Court to quash the TRO entered in
this case and hold the case in abeyance until the federal government finally revises the
safe harbor provision, and the Eighth Circuit lifts its stay and injunction of the federal
contraceptive mandate in O’Brien and Annex Med., Inc. Defendant acknowledges that
this case is not about whether the federal contraceptive mandate violates the RFRA, but
argues that the likelihood that the federal mandate does violate the RFRA in various cases
“calls into question any consideration of a conflict with state law.” Defendant concludes
by maintaining that the basic goals of the federal and state laws are the same – access to
contraceptive services while protecting moral, ethical, and religious beliefs – and that
Missouri law “does this precisely and does not prevent the application of federal law.”
Amicus Curiae Our Lady’s Inn states that it is a religious organization that is
exempt from the federal contraceptive mandate under the safe harbor regulation. It
argues that the federal exemptions to the mandate “reveal a shared motive with the
Missouri statute: respecting the rights of those who object to providing their employees
with contraceptives. The Missouri statute simply gives the objectors a mechanism to
enforce their rights against insurance companies that want to force one-size-fits-all plans
on their insureds.” Our Lady’s Inn argues that “[i]f there are any inconsistencies
[between the federal and state laws], which is unlikely, Section 376.1199 should be
invalidated only ‘to the extent’ of the inconsistency.”
The second Amicus Curiae in the case is America’s Health Insurance Plans
(“AHIP”), a national trade association representing the health insurance industry, some of
whose members provide health insurance in Missouri. AHIP argues, as do Plaintiffs, that
§ 376.1199 imposes requirements on health insurers that directly conflict with the federal
mandate that health insurers and group health plans provide contraceptive coverage
without any cost-sharing requirements to women. By complying with Missouri’s
requirements, health insurers would unavoidably violate the federal contraceptive
mandate. AHIP notes that the exemptions to the federal mandate are not congruent with
Missouri’s conflicting state-law requirements. For example, by permitting employers
with any “religious ethical or moral” objection to contraceptive coverage to opt out of
providing such coverage, Missouri provides a broader exemption than the federal
exemption for “religious employers.”
AHIP urges the Court to reject Defendant’s request to hold this case in abeyance
pending resolution of the cases brought by employers under the RFRA, because however
these actions are resolved, they will not eliminate the conflict that exists between the
Affordable Care Act and Missouri law.
As the Court noted in the Order granting the TRO, the issue here is not whether it
is or is not proper either to require contraceptive coverage or to require that insurers
allow one to opt out of contraceptive coverage. Rather, the issue here is a legal issue of
federal pre-emption under the Supremacy Clause.
“The Supremacy Clause, U.S. Const., Art. VI, cl. 2, invalidates state laws that
‘interfere with, or are contrary to,’ federal law.” Qwest Corp. v. Minn. Pub. Utils.
Comm’n, 684 F.3d 721, 726 (8th Cir. 2012) (citations omitted). The Supremacy Clause
comes into play where, among other situations, “there is an actual conflict between state
and federal law” such that “compliance with both federal and state regulations is a
physical impossibility . . . or when state law stands as an obstacle to the accomplishment
and execution of the full purposes and objectives of Congress.” Id. (citations omitted).
Federal regulations, like those at issue in this case, have the same preemptive force as
federal laws. See Fid. Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153 (1982).
Here, the federal law and regulations, with limited exceptions, provide that
insurers must provide contraceptive coverage, without cost-sharing by an insured. The
State law says that insurers cannot provide contraceptive coverage to any person or entity
that objects to such coverage based on any moral, ethical, or religious objection. The
Court is hard-pressed to see how this does not create a direct conflict for Missouri health
insurers. The Court rejects Defendant’s argument that the state law does not conflict with
the federal law because the state law provides more coverage for contraceptives. The
state law does not provide more coverage-without-cost-sharing, the kind of coverage
mandated by the Affordable Care Act.
The Court also rejects Defendant’s request to hold this case in abeyance pending
resolution of cases challenging the federal contraceptive mandate of the Affordable Care
Act under the RFRA, and/or pending finalization by the federal government of the scope
of the “religious employers” exception. This case is not about whether the federal
contraceptive mandate of the Affordable Care Act violates RFRA. Furthermore, the
Missouri law in question encompasses moral and ethical beliefs of an employer, enrollee,
and health insurer, whereas challenges under the RFRA are limited to a party’s religious
A delay in deciding the issue now before the Court would allow Defendant to
continue enforcing a state law that is in conflict with, and preempted by, existing federal
law, and force health insurers to risk fines and penalties by choosing between compliance
with state or federal law. The Court notes that Defendant has been unwilling to defer
enforcement of Missouri’s challenged law during the abeyance he requests.
The Court agrees with Defendant that certain portions of § 376.1199 are not preempted by the Affordable Care Act. Specifically, the Court concludes that subsections 1,
2, 3, and 6(4) and (5) are not pre-empted. Although the Court agrees with Defendant that
subsections 4, 5, and 6(1), (2) and (3) of § 376.1199 can be applied in situations where a
federal exception to or exemption from the provisions of the Affordable Care Act exists
without running into pre-emption problems, that is not what the state law says.
In sum, the Court concludes that subsections 4, 5, and 6(1), (2) and (3) of
§ 376.1199 are pre-empted by the federal Affordable Care Act and its implementing
regulations. The Court takes no position on the merits of the conflicting laws. The Court
further concludes that under the circumstances of this case, an injunction is not needed
based on Defendant’s representations that Defendant would only enforce § 376.1199
consistent with the scope of the Court’s declaratory judgment ruling.
IT IS HEREBY DECLARED that subsections 4, 5, and 6(1), (2) and (3) of
Missouri Revised Statutes § 376.1199 are invalid. The Court assumes that Defendant’s
commitment not to enforce any provisions found unconstitutional requires the State of
Missouri to withdraw any administrative complaints filed against health insurers for
violations of the provisions of the state law at issue.
A separate Judgment shall accompany this memorandum and Order.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 14th day of March, 2013
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