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10 Technology Assessment, Benefit Coverage, and the Courts LEE N. NEWCOMER "If you want bad public policy, let a judge write it." The quotation is attrib- uted to Isaac Nisley, an appellate court judge who was presiding as my grand- father in a family debate at dinner. Judge Nisley, who served over 40 years on the bench, is not notable for establishing legal precedent. But it is striking that someone with his experience believed that public policy should be debated, with- out the constraints of legal rules, by all constituencies of the legislative branch. That theme dominates this chapter. The legal history of experimental exclu- sions for new technology is a model study of the judiciary establishing social policy. Despite the altruistic motives for this trend, the judicial actions have left the insurance industry and society with a policy characterized by uncertainty. Understanding these issues requires an overview of the court cases and social changes surrounding exclusions for new technology. LEGAL HISTORY OF EXPERIMENTAL EXCLUSIONS Insurers originally needed a mechanism to prevent payment for quackery. Treatments rendered by charlatans were not considered medical therapy as defined by medical insurance contracts. Using the term medically necessary to define their parameters of coverage, insurers denied payments for quack treatments. Physicians were willing allies in these cases. They, too, viewed quackery as potentially harmful to patients and outside mainstream medicine. The definition of medically necessary was implicitly understood by physicians, and they agreed with its purpose. Insurers and physicians stood together and attacked these treat- ments in the courts; quacks and charlatans were mutually threatening. 117

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118 LEE N. NEWCOMER Judges saw the issue from a different perspective. The term medically nec- essary was vague and contract law required more specific language. In Fassio v. Montana Physician Services (1976), the Fassio family petitioned the insurer for coverage of "miracle therapies" to treat their child with Down's syndrome. Both the insurer and the physician reviewers felt the treatments were worthless and therefore medically unnecessary. Benefit coverage was denied. The court ruled in favor of the Fassios, stating that exclusions in insurance contracts must "do so in words that leave no doubt." The same court, however, failed to follow its own advice and did not cite examples of unambiguous wording. In another case testing medical necessity, Dronge v. Monarch Insurance of Ohio (1979), the court again ruled for the plaintiff, citing vague contract terms when using the phrase medically necessary. The court further stated, "the test is not what the insurer intends the contract language to mean, but rather what a reasonable person placed in the position of the insured would have understood the words to mean." Additional cases support this concept. Victum v. Martin (1975) defined the term medically necessary as "wise in the light of facts known at the time ren- dered." Judgments occasionally bordered on the absurd. In Abernathy v. Pru- dential Insurance Co. of America (1980), the court stated that Prudential should cover any treatment that is "appropriate," a term as elusive as medically neces- sary. Using its definition, the court approved coverage for depilatory treatment for hairiness. Judges perceive these cases as an opportunity to provide a social benefit. Individual patients appear as underdogs in a fight against large insurers with extensive legal resources. Judges reason there is no harm in allowing coverage for individual cases. Mary Ader, an attorney for Blue Cross and Blue Shield, summarizes judicial thinking on this matter: First, judges view health plans, particularly insurance companies, not as the private companies they are, but rather as quasi-governmental bodies whose pur- pose is to distribute societal benefits across the community. Second, judges see subscriber complaints as their opportunity, or even obligation, to distribute a benefit to the individual at no cost to the community at large. These assump- tions on the redistribution of wealth translate into a general judicial predisposi- tion to find for coverage, regardless of the wording of the relevant policy provi- sions.... The long-run effect of this is that we now have judge-made insurance. Courts are designing the coverage, not insurers. (Ader, 1992~. EFFECTS OF SOCIAL CHANGES The judicial propensity to determine coverage threatened the industry. Case law at that time forced insurers to increase their risk by paying for benefits they had not underwritten, but the problems were not limited to the courtroom. At the same time, social changes affected insurers' ability to adapt.

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TECHNOLOGY ASSESSMENT, BENEFIT COVERAGE, AND THE COURTS 1l 9 Employers discovered that their future survival depended on their ability to reduce or control medical costs. For most industries, the cost of medical care is the single largest expenditure on the balance sheet. Lacking internal expertise for these problems, the companies turned to insurers for solutions. The mandate was clear reduce medical cost trends immediately. Elimination of unproven technology presents a logical way to reduce expen- ditures without jeopardizing the quality of medical care. In the past, insurers often paid claims unknowingly. They now began to rapidly acquire the medical and claims expertise to identify such unproven technologies. But insurers also expanded the scope of their denials. By definition, academic research treatments were not proven effective; it would be unethical to conduct research comparing treatments if one therapy was already proven to be superior. The costs of clinical care for research treatments were denied under the same exclusions as quackery. From the insurer perspective, these treatments were just as speculative. Physicians, previously allies with insurers against unnecessary care, were also experiencing new pressures. The demand for accountability forced insurers to begin examining standard medical practices. As a professional group, physi- cians believed they were accountable only to themselves. Their autonomy was threatened and they saw insurers as the primary threat. Once collegial, the two groups became adversarial. Insurers then began to ask physicians to support the concept that research treatments in academic medical centers were "unproven" and"medically unnec- essary." The two terms were paradoxical to physicians. They could readily agree that many treatments were unproven that is the nature of research. But they had difficulty accepting the premise that the same treatments were medical- ly unnecessary. Wasn't some treatment necessary for a patient with no other options? How could medical science develop without additional research? Ev- ery physician had been trained in an academic medical center; they perceived this function as fundamental to medicine. Denigrating quackery was easy; testifying against academic research was not. Finally, physicians shifted from professionalism to consumerism. These terms are best defined with examples. Consider the mother who brings her nine- year-old son to a family practitioner in the 1960s. The child has a fever and a cough with copious sputum and looks sick. He is able to swallow liquids and medicine, so the physician prescribes an oral antibiotic with instructions to return if the fever remains after 48 hours. The 1960s mother asks the physician, "What if he has pneumonia? Shouldn't he have a chest X-ray?" The doctor probably didn't even turn around as he said no. He knew the X-ray wouldn't change his treatment and he was too busy to waste the time. The waiting room was jammed and he was usually the only physician in the neighborhood; patients had no other choices. Consider that same scenario today. Acutely aware that the patient's mother will take her child elsewhere, it is easy for the physician to reason that the chest

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120 LEE N. NEWCOMER X-ray won't cause any harm, the insurance company will pay for it, and the mother will be reassured by the findings. He orders the X-ray and- the therapy doesn't change. In the professionalism model, physicians chose technologies based primarily on their determination of medical needs. This model included careful consider- ation of the value or necessity of technology against the potential harms (includ- ing economic damages), and patient preference was secondary or ignored. Con- sumerism shifts the decisionmaking focus to patient values and desires over medical appropriateness. Physicians become patient advocates who are often unwilling to state that a patient is requesting technology that is probably worth- less. The new standard asks, "Does the patient want the technology and is there any harm?" During these social changes, and after losing several court cases, insurers sought new terms to clarify their exclusions. The phrases experimental and investigational emerged to exclude unproven care. These terms were often sup- ported with additional language like "as determined by the balance of physician opinion" or the "preponderance of scientific evidence" to clarify their meanings. The new language not only eliminated coverage for quackery but expanded the denials to unproven treatment conducted by legitimate medical research organi- zations. Like their predecessors, these terms were also challenged in court. The cases evolved along two lines of logic. In Sweeney v. Gerber Products Company Medical Benefits Plan (1989), the patient petitioned the court for coverage of an autologous bone marrow transplantation with high-dose chemotherapy for the treatment of metastatic breast carcinoma. The court examined consent forms signed by the patient and found the word experimental in several paragraphs. The medical literature revealed that there was no consistent agreement on the type of medication or the dosage to be used in the procedure. The treatment was used only in phase II trials. Using the common definition of experimental, the court concluded that the exclusion was valid for this treatment. The Sweeney case, however, was not the norm of judicial reasoning. Pirozzi v. Blue Cross-Blue Shield (1990) is more typical of cases decided across the country. The Pirozzi court also examined autologous bone marrow transplantation and ruled that the treatment was not experimental because it was used in major medical centers and published reports in the literature indicated that tumor shrinkage had occurred with the procedure. The court ignored the fact that the medical centers performing the procedure were the same ones conduct- ing research. A common feature at each of these trials is the expert witness, who devel- oped the technology, testifying for the plaintiff patient. These experts are charac- terized by faculty appointments, strong biases in favor of the technology, and persuasive arguments that the technology is "state of the art." Defense attorneys also produce witnesses in the same specialty, but these witnesses do not use the

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TECHNOLOGY ASSESSMENT, BENEFIT COVERAGE, ID THE COURTS 121 technology because they believe it is not yet proven. These witnesses are less credible to the judiciary; how could they understand the technology if they don't use it? If the defense expert is convincing, the judge then faces conflicting credible experts. In these situations the judge is obligated to rule in favor of the plaintiff patient; reasonable doubt produces losses for the defense. INSURERS' OPTIONS The Pirozzi case is typical of most litigation involving experimental technol- ogy. Given these precedents, what options do insurers have to exclude coverage for technologies that they believe are unproven? The first option is to list all specific excluded technologies in the contract. This approach is irrefutable if the language is clear. But there are still pitfalls. Blue Cross and Blue Shield wrote a specific exclusion for "temporomandibular joint syndrome" in their contracts, but was overruled in Ponder v. Blue Cross of Southern California (1983) because it "failed the plain and clear test because the undefined technical terminology (temporomandibular joint syndrome) is not cal- culated to be part of the working vocabulary of average lay persons." The approach has several disadvantages. What can the insurer do if new information proves that the procedure should be the standard of care? Making an exception to an exclusion jeopardizes the entire contract; the insurer is subject to bad faith contract litigation. Conversely, a new technology invented after the contract list publication must be covered until the next contract renewal, regard- less of its efficacy. Issuing a new contract for each group or individual annually would be a major logistical problem for insurers. And the document would require amend- ments at least annually for this tactic to be successful. Finally, the approach invites legislative retaliation. Specifically denying a procedure in a contract without considering the unique circumstances of an indi- vidual's request appears arbitrary. If legal appeal is not possible, a rejected policyholder may seek legislative solutions. Infertility treatment is an excellent example of this action; several states now mandate coverage. Specifying in the contract the decisionmaking process for determination of experimental status is a second alternative approach. The process focuses on objective standards whenever possible. Asking whether an experimental consent form is required to obtain the treatment or requiring Food and Drug Administra- tion approval are examples of objective parameters. This tactic individualizes the decision and allows people to examine how the decisions are made. They must be carefully reasoned against the facts of each circumstance. Unfortunately, courts can disagree with the reasoning. In Reilly v. Blue Cross and Blue Shield (1988), the insurer stated in the contract that a new technology must have a success rate of 50 percent or greater to qualify for cover

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22 LEE N. NEWCOMER age. The court rejected the criterion, stating that a per se success ratio was inadequate to determine whether the course of treatment is experimental. The major disadvantage to this approach is the requirement to follow the process exactly. Insurers cannot change or modify the process to fit a need. Several cases demonstrate the courts' intolerance of deviation from the contract process. In Dorza v. Crum and Forster Insurance Company (1989), technology not "commonly and customarily recognized throughout the doctor's profession as appropriate in the treatment of sickness or injury or . . . provided primarily for research purposes" is excluded from coverage. The Prudential Insurance Com- pany, acting as the agent for Crum and Forster, did not conduct a poll or survey physicians about the treatments they denied. Prudential chose to rely on the medical literature and expert opinion as a proxy for recognition. The court over- ruled the exclusion stating that Prudential failed to meet their own standards. In a similar case, Adams v. Blue Cross and Blue Shield of Maryland (1991), the insurer excluded treatment not "accepted by the suitable medical specialty practicing in Maryland." While denying an autologous bone marrow transplanta- tion, the insurer cited multiple articles from the medical literature supporting its own position. The plaintiff produced several physicians from Maryland who performed the procedure. The judge applied the language of the contract and awarded coverage to the plaintiff. This approach also requires an individual review for each request. For ex- ample, use of an internal policy document stating that the insurer does not cover autologous bone marrow transplantation procedures is insufficient when consid- ering an individual case. It is expected that the relevant contract language, the medical records, and the process criteria are reviewed for each case. This ap- proach increases administrative costs for insurers. CONCLUSIONS Reviewing the history of experimental exclusions for new technology sug- gests four conclusions. First, insurers deserved the court intervention. During development of this process too many decisions were arbitrary or were made with insufficient information. This system left no alternative to the patient but persistent appeals or litigation to win a balanced hearing. As stated before, "The meek did not inherit the treatment" (Newcomer, 1990~. Second, insurers failed to tell the public why they denied experimental tech- nology. New developing technologies are not "state of the art" but rather "state of the theory." These treatments or devices are based on promising evidence from studies in the laboratory or in animals, but they have yet to prove their value in the clinic. There is a definite chance for harm. Paul Molino states the issues clearly: However, when evaluating the exclusion language of a policy, a court needs to be aware that the purpose of such exclusions is not simply to avoid payment to a

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TECHNOLOGY ASSESSMENT, BENEFIT COVERAGE, AND THE COURTS 123 specific insured in any one case. Rather these exclusions, by requiring medical treatment to meet minimal accepted standards, help protect insured from inef- fective, unproven and potentially harmful treatments; help eliminate worthless treatments from the marketplace; and help control skyrocketing health care costs (Molino, 19911. The general public needs to understand that effective technology assessment serves them as a consumer protection agency. Insurers must convey that mes- sage. Third, the judiciary must cease creating social policy and writing benefit coverage. The courts served a useful purpose by raising the standards for tech- nology assessment and coverage decisions. They should now stick to inte~preta- tion of the language. In a recent decision from Harris v. Mutual of Omaha (1992), Judge John Daniel Tinder places the entire issue in perspective. He begins his decision with a eulogy for a respected colleague and friend who lost her life to breast cancer during the time the Harris case was heard. Now, facing a woman petitioning for coverage of an autologous bond marrow transplantation for the same disease, he wntes: Despite rumors to the contrary, those who wear judicial robes are human beings and as persons, as inspired and motivated by compassion as anyone would be. Consequently, we often must remind ourselves that in our official capacities, we have authority only to issue ruling within the narrow parameters of the law and the facts before us. The temptation to go about, doing good where we see fit, and to make things less difficult for those who come before us, regardless of the law, is s~ong. But the law, without which judges are nothing, abjures such unlicensed formulation of unauthorized social policy by the judiciary (Harris v. Mutual of Omaha, 1992~. Judge Tinder's courageous statement serves as a guide to all judges. Finally, all of these judicial strategies are only temporary tactics. Society must debate and answer two questions if it expects any progress on the issue of new technology coverage. First, who should pay the cost of clinical research? Is this a taxpayer, manufacturer, or insurer obligation? Second, can universal cnte- ria be written to define the transition from experimental or investigational status to a technology's being a standard, widely accepted treatment modality? When these questions are answered and they are answerable there will no longer be a need for courtroom decisions about coverage. REFERENCES Abernathy v. Prudential Insurance Company of America, 264 S.E.2d 836 (S.C. 19801. Adams v. Blue Cross and Blue Shield of Maryland, 757 F. Supp. 661 (D. Md. 1991~. Dorza v. Crum and ForsterInsurance Company, 716 F. Supp. 131 (D. N.J. 1989~. Dronge v. Monarch Insurance of Ohio, 511 F. Supp. 1, 41 (D. Kan. 1979~.

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24 LEE N. NEWCOMER Fassio v. Montana Physician Services, 563 P.2d 998 (Mont. 19761. Harris v. Mutual of Omaha, No. IP92-1089-C (S.D. Ind., Aug. 26, 19921. Molino, P. J. 1991. Reimbursement disputes involving experimental medical treatment. Journal of Health and Hospital Law 24:329-336. Newcomer, L. N. 1990. Defining experimental therapy A third party payer's dilemma. New England Journal of Medicine 323:1702-1704. Pirozzi v. Blue Cross-Blue Shield, 741 F. Supp. 586 (E.D. Va. 19901. Ponder v. Blue Cross of Southern California, 145 Cal. App. 3d 709, 193 Cal. Rptr. 632 (2d Dist. 1983). Reilly v. Blue Cross & Blue Shield United, 846 F.2d 416 (7th Cir. 19881. Sweeney v. Gerber Products Company Medical Benefits Plan, 728 F. Supp. 594 (D. Neb. 1989). Victum v. Martin, 326 N.E.2d 12, 16 (Mass. 1975~.