Merritt Personal Lines Manual: Another Flashpoint: How the Policy Defines Regular and Customary
regular or customary charge: The prevailing charge which would be made for the same type of or comparable care by most providers in the area in which the care is provided.
Health insurance benefits are often limited to the "regular or customary charges" for similar services in the area where care is given, because costs vary by geographic area. This helps to discourage excessive charges for services.
A major issue that follows from this language: whether or not a medical procedure that an insurance company calls "experimental" qualifies as regular or customary. It usually doesn't. And big disputes usually follow.
A protracted lawsuit, still going on in late 1994, pitted the survivors of a breast cancer victim against a health insurance company that limited its coverage from treatments that had anything to do with the loosely-defined term "medical research." Kenneth Fuja v. Benefit Trust Life Insurance Co. also illustrates how regulators and courts of law interpret policy exclusions.
Grace Rodela Fuja, a thirty-seven year-old woman suffering from breast cancer, sued her insurance company, Benefit Trust Life Insurance Co., for refusing to pay for a "high-dose chemotherapy treatment with autologous bone marrow transplantation" (HDC/ABMT).
In August 1989, Fuja had been diagnosed with breast cancer and underwent a lumpectomy and a modified radical mastectomy. Beginning in September 1989, she received six months of standard-dose chemotherapy treatment. She seemed to remain in remission until February 1992, when her oncologist observed that the cancer had spread to both her lungs. From February through December 1992, Fuja responded to standard-dose chemotherapy -- but during this period her physician came to the conclusion that continued treatment with such standard dose chemotherapy offered her but a negligible chance of survival. She prescribed a regimen of HDC/ABMT.
HDC/ABMT is a two-step procedure. Physicians first extract -- or harvest -- the bone marrow cells from the patient's body and place them temporarily in frozen storage. The patient undergoes a cycle of high-dose chemotherapy in hopes of killing the cancer cells. The high-dose chemotherapy also attacks the bone marrow cells; without initially removing a portion of the bone marrow cells, the high-dose chemotherapy would be lethal to the patient.
After completing the administration of the high-dose chemotherapy, the patient's own stored marrow is reinfused intravenously into the bloodstream to relieve the patient from the toxic effects of the chemotherapy.
HDC/ABMT has proven effective in treating certain cancerous blood diseases such as leukemia and Hodgkin's disease but is not as yet universally accepted treatment for solid-type tumors including breast cancer. However, in this case, Dr. Stephanie Williams (Grace Fuja's physician and a professor at the University of Chicago's Pritzker School of Medicine) argued that the medical center had been using the procedure since 1985 with encouraging results.
Benefit Trust refused to cover the treatment because it did not fall within the parameters of procedures that are "medically necessary" as defined in the insurance contract. That's when Fuja sued.
Following a hearing on December 17, 1992, the federal district court in Chicago ordered Benefit Trust to pay for the treatment. It determined that the phrase "in connection with medical or other research" was ambiguous and thus proceeded to interpret the clause "in an ordinary and popular sense as would a [person] of average intelligence and experience."
Instead, the trial court expressed concern that Benefit Trust intended to use the phrase "in connection with medical treatment" "to exclude coverage for a commonplace medical treatment."
The court added that:
Thus, even though Fuja signed an informed consent advising her that consent to treatment constitutes consent to participate in a research study and even though Dr. Williams testified that the treatment will occur under a research protocol and that she may publish the results of the treatment as part of a research study assessing the efficacy of HDC/ABMT, Fuja has shown the inherent nature of the treatment itself is not part and parcel of a medical research endeavor. HDC/ABMT is a medically accepted, urgent and necessary treatment for Fuja's illness.
Fuja underwent the treatment in January 1993. Unfortunately, the treatment was unsuccessful and she died in April 1993. (Between 2 and 5 percent of patients receiving HDC/ABMT die from complications resulting from the treatment.) Her husband took over as Fuja's representative in various legal actions.
Benefit Trust appealed the district court decision, hoping to recoup the money it paid for Fuja's treatment and -- more importantly -- to set a precedent that would discourage similar claims. The cost of HDC/ABMT usually ranges between $100,000 and $200,000. But the cost of Fuja's treatment totaled over $485,000 because of complications she suffered afterward.
The appeals court proceeded carefully. It cited the 1992 federal district court decision Harris v. Mutual of Omaha Cos., a similar case of a claimant seeking coverage for HDC/ABMT. That court summarized the problem facing courts in ruling on issues of medical coverage:
...those who wear judicial robes are human beings and as persons, are 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 rulings 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 strong. But the law [prohibits] such unlicensed formulation of unauthorized social policy by the judiciary.
To obtain coverage for the HDC/ABMT treatment under the Benefit Trust policy, Fuja had to demonstrate that the treatment was "medically necessary" under five criteria. The policy itself defined medically necessary as:
[1] required and appropriate for care of the Sickness or the Injury; and [2] that are given in accordance with generally accepted principles of medical practice in the U.S. at the time furnished; and [3] that are approved for reimbursement by the Health Care Financing Administration [HCFA]; and [4] that are not deemed to be experimental, educational or investigational in nature by any appropriate technological assessment body established by any state or federal government; and [5] that are not furnished in connection with medical or other research.
In order to be covered, a treatment had to meet all five terms. On appeal, Benefit Trust challenged the trial court's ruling on only two of the provisions: whether the treatment was in connection with medical or other research and whether it was approved for reimbursement by HCFA.
If it established that the treatment was provided in connection with medical research or that it was not approved for reimbursement by HCFA, the appeals court would have to reverse the trial court.
The appeals court found the clause clear in excluding coverage for treatment of uncertain medical efficacy and subject to ongoing, recognized and accepted medical research procedures. It pointed out that the National Cancer Institute, from which the insurance industry usually takes its cue on coverage issues, found HDC/ABMT's effectiveness on breast cancer was unclear. The NCI had sanctioned random clinical trials to compare the treatment with conventional alternatives -- but this merely played in the language of Benefit Trust's exclusion.
Dr. Williams herself testified that Fuja's treatment was provided under a protocol approved by the Institutional Review Board at the University of Chicago Medical Center. She testified that Fuja had been informed that "her treatment [would] be furnished in connection with medical research." And she explained that the treatment was part of a "clinical trial" involving human subject research and that such clinical trials were "investigative."
For all these reasons, the appeals court wrote that "to adopt the district court's construction of the term in connection with medical or other research would contravene the explicit language of the contract."
The appeals court also rejected the trial court's concern that "an insurance company might attempt to exploit the exclusion and deny coverage for a treatment whose results were merely being tabulated (as opposed to being collected to assess the very efficacy of the treatment itself) but there is no evidence in this record that Benefit Trust is guilty of exploiting the contract term "in connection with medical research."
Having concluded that Fuja failed to satisfy the burden of proof concerning the "in connection with medical or other research," the court didn't have to address Benefit Trust's second point of appeal. Failure to meet any of the five criteria was cause to deny a claim. The court sided with Benefit Trust.
Kenneth Fuja asked for a new hearing from the appeals court. His attorney implied that they would ask the U.S. Supreme Court to consider a review. "All cancer treatment is done in connection with research since there's no cure," said Eugene Schoon, Fuja's attorney. "So there's virtually no limit to what insurance companies can do to exclude procedures."
