The Plaintiffs in this case, who were citizens of Missouri and Illinois, brought suit against MetLife for recovery of premiums paid for inflation protection under long-term care insurance policies. Plaintiffs had purchased a “5% Automatic Compound Inflation Protection Rider” (Inflation Rider), which contained a clause stating that the insured’s benefit will “automatically increase each year with no corresponding increase in premiums.” Plaintiffs claimed that after purchasing this product, their annual base premiums doubled in amount, and thus alleged that MetLife made fraudulent misrepresentations and concealed material facts about the effect of the inflation Rider on their premiums.

In their complaint, Plaintiffs asserted causes of action for common law fraud, fraudulent concealment, violation of state consumer unfair and deceptive practices protection acts, and breach of the implied covenant of good faith and fair dealing. MetLife responded with a motion to dismiss for failure to state a claim. MetLife argued, among other things, that (1) both the Missouri and Illinois Plaintiffs’ claims should be dismissed because they are barred by the filed-rate doctrine and (2) the Missouri Plaintiffs must be dismissed because the Missouri Plaintiffs did not exhaust the required administrative process for challenging insurance rates or rules before the Missouri Department of Insurance.

The filed-rate doctrine continues to be a formidable defense to premium rate increase litigation.  Under the filed-rate doctrine, a regulated entity cannot charge rates for its services other than those properly filed with the proper regulatory authority; conversely, a plaintiff seeking relief from a regulated entity cannot recover “damages measured by comparing the filed-rate and the rate that might have been approved absent alleged misconduct” (Opinion, Page 10). Historically, the filed-rate doctrine was applied to common carriers, telecommunications, and utilities, but over the past several decades courts have applied the filed-rate doctrine to other regulated industry, including the insurance industry. Whether the filed-rate doctrine is recognized under Missouri law as applied in the insurance context was an issue of first impression. After reviewing Missouri’s insurance law and regulatory scheme, the Court found that Missouri Supreme Court would extend the filed-rate doctrine to cases involving long-term care insurance.  The Court emphasized that it believed the Missouri Supreme Court would apply the filed-rate doctrine because the “the state regulatory agency is granted discretionary authority to oversee industry compliance with Missouri’s statutory and regulatory long-term care policy requirements, including accepting or rejecting rate increases” (Opinion, Page 14).

As applied to Plaintiff’s claims, the Court noted that “the language of the Inflation Rider and the rates associated with it were not only filed with but were reviewed for compliance and accepted by the Department of Insurance,” with the “very language of the Inflation Rider Plaintiffs contend is false – ‘your premium is not expected to increase as a result of the benefit amount increases provided by this Rider’ – [being] required by Missouri’s [long-term care] regulation” (Opinion, Page 18). Thus, the Court concluded that “no matter how Plaintiffs attempt to frame their claims, it is clear they are asking the Court to review rates that have been filed with and deemed reasonable by the Missouri Department of Insurance, which is exactly what the filed-rate doctrine was designed to prohibit” (Opinion, Page 18). The Court reached the same conclusion when analyzing Illinois law, with substantially similar reasoning. Thus, the Court dismissed the complaint with prejudice based on the filed-rate doctrine.

Plaintiffs argued that the filed-rate doctrine did not bar their claim “because they are not challenging the rates MetLife charged, but rather the fraudulent misrepresentations that the company made in the policies and Inflation Rider” (Opinion, Page 18). Rejecting this argument, the Court noted that “the alleged misrepresentations relate directly to insurance rates, and Plaintiffs would not be bringing the suit unless their premiums were raised based on those increased rates” (Opinion, Page 18). Further, the Court noted that “the language of the Inflation Rider and the rates associated with it were not only filed with but were reviewed for compliance and accepted by the Department of Insurance,” with the “very language of the Inflation Rider Plaintiffs contend is false – ‘your premium is not expected to increase as a result of the benefit amount increases provided by this Rider’ – [being] required by Missouri’s [long-term care] regulation” (Opinion, Page 18). Thus, the Court concluded that “no matter how Plaintiffs attempt to frame their claims, it is clear they are asking the Court to review rates that have been filed with and deemed reasonable by the Missouri Department of Insurance, which is exactly what the filed-rate doctrine was designed to prohibit” (Opinion, Page 18).

The Court also held, in the alternative, that the Missouri Plaintiff’s claims should be dismissed for failure to exhaust administrative remedies. Plaintiffs did not seek administrative relief and argued that they were not required to pursue administrative remedies because Missouri law only requires the pursuit of administrative remedies when the insured is “attacking ‘the rate charged, rating plan, rating system, or underwriting followed or adopted by an insurer or rating organization’” and the Plaintiffs were only attacking policy misrepresentations. The Court was unpersuaded by this argument, and noted that “the misrepresentations Plaintiffs alleged MetLife made relate directly to rates: Plaintiffs are brining suit because MetLife was allowed to increase their rates and charge Plaintiffs more in premiums” (Opinion, Page 24). Thus, the Court concluded “this is not a case of policy interpretation or coverage” (Opinion, Page 24) and that the Plaintiffs had to exhaust administrative remedies before seeking judicial relief.