Physicians can’t be trusted to make decisions about medical necessity because they will abuse that power.
That’s the message in a July 9, 2013 ruling by Los Angeles County Superior Court Judge John Shepard Wiley. He wrote that if physicians were to make final decisions about insurance coverage (and by extension arbiters of defining medical necessity), “inevitably a few will abuse that power by overutilization of medical procedures, imposing excessive costs on the insurer.”
He made no observation about insurers abusing that power.
Judge Wiley issued a ruling in a case called Mendoza, Penner and Los Angeles County Medical Association v. Health Net of California, Inc
Robert Mendoza and Kalana Penner, insured by Health Net, Inc., sued after Health Net denied claims for procedures recommended by their physicians. The insurer claimed the procedures were not, according to their guidelines, medically necessary. The medical association joined the lawsuit on the side of the plaintiffs, claiming it is harmed by having to fight insurers on behalf of their physician members.
They sued seeking a jury trial to determine damages. Judge Wiley denied their request for a trial and ruled in favor of Health Net. More on that later.
Mendoza’s Medical Necessity
Mendoza, a self-employed state court interpreter, has been insured by Health Net since 1999. In February 2011, a prostate exam showed he had an elevated prostate-specific antigen (PSA) score. He was immediately referred to an oncologist for further testing.
On March 2, 2011, he was diagnosed with an extremely rare and aggressive form of prostate cancer called adenocarcinoma with signet ring cells. Less than 100 cases have been documented worldwide.
By the time he was diagnosed, his Gleason score showed the cancer was extremely aggressive and his chances of survival were low. His first doctor recommended minimally invasive robotic assisted surgery. Mendoza sought a second opinion from the head of USC’s Norris Cancer Center; Gary Lieskovsky, M.D. Dr. Lieskovsky confirmed the diagnosis but recommended an open radical prostatectomy. In a nutshell, Dr. Lieskovsky said the robotic surgery wouldn’t be good enough and urged quick action.
In a report to the insurance company, Dr. Lieskovsky wrote that he did not believe the robotic surgery has “any significant advantages over open procedures, and I believe in fact in high-grade disease, it may clearly well be better to perform [the] open procedure.”
Mendoza opted for the open procedure and worked to obtain preauthorization from Health Net.
Health Net denied the surgery saying the treatment was “not medically necessary.” The insurer, according to the suit, provided no evidence demonstrating Dr. Lieskovsky’s prescribed procedure was “unreasonable or contrary to community medical standards.” They simply said robotic surgery was available through the first surgeon.
Mendoza asked Health Net for an explanation, but the insurer, allegedly, failed to provide one.
So Mendoza went back to his first doctor open radical prostatectomy., on April 1, 2011 to discuss the open surgery. However, according to the suit, Dr. Satterthwaite did not offer the open surgery and said he would treat Mendoza’s cancer as he would any other form of cancer. He also did not believe there was a sense of urgency. The first available date for the robotic surgery was May 24, 2011.
Mendoza didn’t think he could wait and went back to Dr. Lieskovsky and had the open surgery performed on April 4, 2001. He paid for the $30, 000 surgery himself by cashing in his wife’s life insurance policy. The insurer’s formal denial letter was dated the same day.
After his successful cancer-free recovery, Mendoza went back to Health Net to appeal the denial and offered to accept any amount Health Net would have been willing to pay Dr. Satterthwaitte for the robotic procedure. Health Net denied any responsibility for the claim.
Penner’s Improper Denied Coverage
Kalana Penner suffered from a medical condition known as occipital neuralgia. She had intense chronic pain in the upper neck, back of the head and behind her eyes. She exhausted all standard forms of medicine, including over 60 medications and 30 treatments, none of which provided lasting relief.
Her doctor referred her to Jamie Henderson, M.D., the director of neurosurgery at Stanford Hospital. Henderson recommended an Occipital Nerve Stimulator (ONS) trial to determine if a permanent ONS could help treat her pain.
Penner sought and received pre-authorization for the trial, which began on October 20, 2010.
The ONS trial was completely, but only temporarily successful. Pre-authorization was sought for a permanent ONS implant. Health Net denied the claim saying it was not medically necessary according to their guidelines. Penner claims Health Net was relying on ten-year-old literature. In fact the American Academy of Pain Medicine and the World Institute of Pain support the procedure that worked on Penner.
Penner claims the company made no attempt to show that the ONS procedure was plainly unreasonable or against community medical standards.
Given her extreme pain, Penner requested an expedited review, which the insurer denied. Instead Health Net hired a “peer reviewer” who determined the procedure was not medically necessary based on the insurer’s own guidelines. The reviewer recommended medication which Penner had already tried and a procedure called occipital neurectomy. Penner’s doctor had specifically warned that that procedure was highly invasive, destructive, commonly ineffective and carried substantial risk of returning symptoms which become untreatable.
Six months later, on April 1, 2011, the California Department of Insurance determined that Health Net had improperly denied coverage. Health Net finally approved the surgery, which was performed on April 20, 2011. The surgery was successful, but Penner says it was six months of bedridden pain too late.
So Mendoza and Penner sued, requesting an injunction against Health Net to keep it from continuing its “unlawful conduct.” They also want damages to be determined by a jury.
Medical Association’s Mission
The Los Angeles County Medical Association joined in saying it was harmed by being diverted from its mission of allowing doctors to spend more time “treating and healing their patients and less time haggling with insurance companies [like Health Net] who, at every opportunity, interfere with the doctor-patient relationship and second-guess the medical expertise of treating physicians.”
Legal Arguments
Plaintiffs argued it in order to deny a health insurance claim on the basis that a treatment or hospitalization was not medically necessary, the legal standard is that the treating physician’s judgment must be shown to be plainly unreasonable or contrary to community medical standards. (Sarchett v. Blue Shield of California (1987)).
Instead, argue the plaintiffs, Health Net set up its own criteria, which is at variance with California law.
Judge Wiley noted that plaintiff’s claims rested on two precedents involving Blue Shield of California and Blue Cross of Northern California. He quickly ruled neither case applied here and ruled against allowing a jury trial.
Medical Judgment v Risk Management
Instead Wiley wrote that the plaintiffs’ appeal would be more appropriately directed to a policymaking body, not a court. He continued that suggesting that insurers cannot consider treatment costs when making coverage decision would “narrow the range of choices available to prospective subscribers.” He continued with his coup d’etat, writing, “…it is unlikely that any insurer could permit the subscriber free selection of a physician if it were required to accept without question the physician’s view of reasonable treatment and good medical practice. If the treating physician makes the final decision whether the treatment he prescribes is covered by the policy, inevitably a few will abuse that power by overutilization of medical procedures, imposing excessive costs on the insurer.” (Emphasis added.)
He continued that “subscribers would pay the price in reduced insurance alternatives and increased premiums.” (Emphasis added.)
Wiley went further and said that he could find no support for the plaintiff’s assertion that under case law, the insurer must justify a denial of coverage by establishing the physician’s judgment is unreasonable or contrary to good medical practice. He said the court already rejected the argument that an insurance policy should be “construed in light of the reasonable expectations of the insured so as to cover any treatment the treating physician recommends, simply because the physician has recommended it.”
Contract Language Rules
He concluded that the subscriber’s expectations can be “best fulfilled not by giving his physician an unreviewable power to determine coverage, but by construing the policy language liberally, so that uncertainties about the reasonableness of treatment will be resolved in favor of coverage.”
In other [our own] words, the language of contracts and lawyers trumps the medical judgment of physicians in determining medical necessity.
The courts have not been consistent in interpreting medical necessity wrote Morris Landau, J.D., M.H.A, for the University of Houston Law Center in 2000. “Although some courts have held that the sole responsibility for determining medical necessity should be placed in the patient’s physician’s hands, other courts have held that medical necessity is strictly a contractual term in which a patient’s physician must prove that a procedure is medically appropriate and efficacious. One U.S. District Court defined ‘medically necessary’ as a treatment that is commonly recommended, or not outside the mainstream of the usual customary practice of medicine, or meets the common standard of care. Whitehead v. Federal Express Corp., 878 F. Supp. 1066 (W.D. Tenn. 1994).”
A spokesperson for the plaintiffs told us that the parties plan to appeal Judge Wiley’s decision not to give them a trial.
In the end, we’re left with the question every patient asks: “Who do I trust to do what’s best for me?” When it comes to insurers and physicians, only one took an oath to do what’s in the best interest of the patient. Maybe a jury will get to decide.
