Federal Court Rules that HMOs are Insurance Companies

A federal appeals court in St. Louis ruled on Aug. 23 that HMOs are insurance companies, a first-of-its-kind ruling that means that, according to Missouri assistant attorney general Ronald Molteni, "regulations and laws passed in Missouri cannot be easily challenged on the grounds that they are pre-empted by federal law," the St. Louis Post-Dispatch reports. The ruling, by a three-judge panel of the 8th U.S. Circuit Court of Appeals, extends a "safety clause" of the 1974 Employment Retirement Security Act to managed care organizations, which, according to Molteni, "makes insurers otherwise subject to ERISA rules also subject to state regulation and law." The court ruled against Express Scripts Inc., Associated Industries of Missouri, the Missouri Chamber of Commerce and the St. Louis Business Health Coalition, which had brought a suit against the Missouri Insurance Department challenging a provision of the state's patients' bill of rights that required insurers to offer a "pricing incentive" to policyholders who purchase prescription drugs through the mail. The groups sought to keep the state from extending the incentive to people who purchase prescriptions at local pharmacies (VandeWater, St. Louis Post-Dispatch, 8/25).