Missouri’s Controversial Law on Contraceptives and Health Insurance

Back in 2001, Missouri, like many states, enacted a law that required most health plans that covered prescription drugs to cover contraceptive drugs and devices approved by the Food and Drug Administration. [2001 HB 762, enacted June 21, 2001]. Mo. Rev. Stat. section 376.1199 allowed purchasers of group plans whose religious or moral beliefs opposed contraception to exclude coverage. Group policies had to include a conspicuous notice to individual plan members stating: (1) whether the plan included or excluded coverage of contraceptives; (2) that if the group purchaser had included contraceptive coverage, the individual could request a policy without it; (3) if the employer or group purchaser had excluded coverage, the carrier must allow the individual to purchase contraceptive coverage at an additional premium. The employer was not to know which choice the employees made. And the policy could not exclude contraceptive drugs or devices prescribed for purposes other than preventing pregnancy.

Apparently, the national controversy over the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) generally, and the preventive services mandate in particular, prompted conservative members of the Missouri legislature to resist PPACA proactively with legislation. In July 2010, the legislature amended Mo. Rev. Stat. sec. 376.805 to prohibit any health insurance exchange operating in the state from offering policies that cover abortion services, even through an optional rider.

In July 2012, the Missouri legislature passed SB 749, amending Mo. Rev. Stat. Sec. 376.1199 to require plans to offer and issue policies excluding contraceptive coverage to entities whose beliefs are contrary to the use or coverage of contraception. The conspicuous notice to individuals must state whether the group policy includes a rider for the coverage of elective abortions. If the benefit is included, the notice must state that an individual has the right to exclude the coverage and not pay for it if it is contrary to his or her moral, ethical or religious  beliefs.

The bill also added section 191.724 to the Missouri statutes. This section creates an additional right not to obtain or pay for coverage of abortion, sterilization or contraception if those items or services are contrary to the religious or moral beliefs of an individual, employer, health plan sponsor, or other person or entity.  No government entity or official may discriminate against or penalize in any way an entity that exercises its rights under the statute. And the state attorney general may sue in state or federal court to protect the right not to purchase the coverage. Governor Jay Nixon (D) vetoed the bill. But on September 12, 2012, the legislature overrode the veto. Section 191.724 became effective immediately because of an “emergency clause,” while the changes to section 376.1199 became effective 30 days later.

Enforcement

On October 12, 2012, John Huff, Director of the Missouri Department of Insurance, Financial Institutions and Professional Regulation (DIFP) issued Bulletin No. 12-03 advising the industry that policies must meet the new requirements in order to receive agency approval before they may be offered for sale.  The Missouri Insurance Coalition (MIC) , an industry group,  saw a problem. PPACA required health insurers to cover contraceptives in all group plans except those sold to religious employers. Now state law required them to offer and sell policies that exclude contraceptives to anyone who claimed a moral objection.  The state agency brought cease-and-desist orders against some coalition members. Others were required to respond to market conduct interrogatories by describing their efforts to come into compliance with section 376.1199. The DIFP also refused to approve policies that did not comply with the Missouri statute.

The Litigation

So the MIC asked a federal court for a declaratory judgment that the state law was invalid and an injunction against state enforcement. The MIC argued that the law was preempted by PPACA under the Supremacy Clause of the United States Constitution, which states that the constitution and federal laws are “the supreme law of the land; in other words, when there is a conflict been state and federal law, the federal law preempts,  or takes precedence over, the state law.

At the hearing, the DIFP argued that an insurer’s failure to comply with section 376.1199 constitutes unlawful misrepresentation, concealment and suppression of material facts about the rights of policyholders. DIFP expected to obtain civil penalties and the costs of investigations from insurers who violated the law, and it would not waive the accrual of penalties while the litigation continued—notwithstanding its inability to present any argument that could support a ruling that the federal law did not preempt the state law.

Judge Audrey Fleissig granted a temporary restraining order barring state officials from taking any action to enforce the law. But Missouri hasn’t given up. The state recently asked the court to transfer venue, to move the case from the federal court in St, Louis to the one in Jefferson City, the state capital.  The court denied the request in accordance with basic procedural rules.

[Editor’s Note: A White Paper on state mandates for coverage of contraception will be released this spring.]