There is a temptation here to argue that, because all other forms of treatment have not been successful with Mrs. Reimann, it must be “medically necessary” to keep trying even unproven therapies such as a multivisceral transplant. The argument takes on extra force when doctors as eminent as Dr. Lillemoe, Dr. Vianna, and Dr. Tzakis recommend this treatment. The argument has considerable emotional force, especially where the patient suffers from a progressive disease that will cause death if not treated successfully, and no other form of therapy offers hope.

The legal response to this appealing argument is that Anthem simply did not agree to cover the costs of any form of therapy that such a patient’s doctors – even extraordinarily talented doctors – might deem worth trying when they have run out of proven alternatives. . . . The standard of medical necessity applied here is not novel or selfish. It is an established mechanism for keeping medical costs under at least minimal control for all who pay for health insurance. It has been considered and applied in this case carefully and fairly. The court cannot find an abuse of discretion in Anthem’s denial of coverage for this unproven proposed treatment.

Reimann v. Anthem Ins. Cos.
, 2008 U.S. Dist. LEXIS 88562 (S.D. Ind. Oct. 31, 2008)

This lengthy opinion provides analysis of a benefit denial under a medical necessity exclusion, with particular emphasis on the “experimental” or “investigational” aspect of the proposed treatment.

The court decided the case under an abuse of discretion standard of review.

The key substantive question before the court is whether Anthem’s denial of coverage for the proposed multivisceral transplant to treat metastasized cancer was an abuse of discretion. See Metropolitan Life Ins. Co. v. Glenn, 554 U.S. , , 128 S. Ct. 2343, 2348 (2008). The Supreme Court has cautioned against formulas that will take the place of actual judging or that serve as “instruments of futile casuistry.” Glenn, 128 S. Ct. at 2352.

Noting that “identifying relevant factors can provide a useful way to organize thoughts”, the district court cited the following factors relied upon by the Seventh Circuit:

  • the impartiality of the decision maker,
  • the complexity of the issue, the process afforded to the parties,
  • the extent to which the decision maker used help from outside experts where necessary, and
  • the soundness of the fiduciary’s reasoning.

(citing, Chalmers v. Quaker Oats Co., 61 F.3d 1340, 1344 (7th Cir. 1995); Hughes v. Life Ins. Co. of North America, 112 F. Supp. 2d 780, 793 (S.D. Ind. 2000))

The court concluded that the administrator did not abuse its discretion, though several procedural irregulaties were noted.

Mrs. Reimann raises a host of procedural challenges to Anthem’s handling of her claim, arguing that individually and in sum the alleged violations show that Anthem abused its discretion in denying her claim. All of these challenges are subject to the substantial compliance standard. As explained below, the court rejects most of the challenges. And although there were some procedural errors, those errors either did not cause any substantive harm or have already been remedied by Anthem. None of the errors call for the remedy that Mrs. Reimann seeks.

Note: The court ruled against the plaintiff and permitted supplementation of the record as to the reviewing physician’s credentials.  The rationale may have more general applicability on the important question of when the record may be supplemented.  The court stated:

The court overrules plaintiff’s objection to the supplemental record with the more complete qualifications. In Semien, the Seventh Circuit recognized that even under the abuse of discretion standard, some discovery may be allowed into certain limited subjects when the plaintiff makes at least a preliminary showing that there is reason to question the fairness or impartiality of the decision. 436 F.3d at 813-14 (although discovery is normally disfavored in ERISA cases, limited discovery outside of the administrative record is appropriate to ensure that plan administrators have not acted arbitrarily and that conflicts of interest have not contributed to an unjustifiable denial of benefits). Mrs. Reimann has done so in her challenge to the credentials of the outside reviewers based on the more limited information that was initially available. When the challenge is raised, it seems only fair to allow a response, particularly in the wake of Metropolitan Life Ins. Co. v. Glenn, 554 U.S.    , 128 S. Ct. 2343 (2008). When there is a challenge to the objectivity and honesty of the plan administrator’s decision, Glenn recognized, the plaintiff must have the opportunity to supplement the record (and, presumably, to conduct at least some targeted discovery). For example, a reviewing court may consider evidence about the insurance company’s record of biased or unfair claims administration, or evidence about the insurance company’s efforts to ensure that decision makers will be objective and independent. 128 S. Ct. at 2531; accord, Hogan-Cross v. Metropolitan Life Ins. Co., 568 F. Supp. 2d 410 (S.D.N.Y. 2008) (allowing  discovery related to financial conflict of interest).

Evidence of both types will ordinarily not be included in the individual claim file that provides the usual administrative record in an ERISA case. This reasoning based on Glenn extends to Mrs. Reimann’s challenge to the qualifications and expertise of the outside reviewers. If the supplement were not allowed, the appropriate remedy for review by someone not shown to have the requisite expertise would probably be a remand for another review by someone more expert. That approach here would be pointless, especially in light of the excellent credentials of all four outside reviewers. In response to Mrs. Reimann’s challenge, it seems more reasonable to allow each side to supplement that limited administrative record, as each side has done in this case. Plaintiff’s objection to the record supplements with the reviewers’ credentials (Dkt. No. 74) is therefore overruled.

Substantial Compliance – What is the penalty if an administrator fails to substantially comply with procedural requirements?  The court appeared baffled:

By making this exaggerated claim about “special interest,” Dr. Lane and Anthem did not substantially comply with ERISA or its regulations.

What remedy is appropriate for such a violation? In ERISA cases, the court must base its remedy determination “‘on what is required in each case to fully remedy the defective procedures given the status quo prior to the denial or termination’ of benefits.” Pakovich v. Broadspire Services, Inc., 535 F.3d 601, 607 n.3 (7th Cir. 2008), quoting Schneider v. Sentry Group Long Term Disability Plan, 422 F.3d 621, 629-30 (7th Cir. 2005); Hackett v. Xerox Corp. Long Term Disability Income Plan, 315 F.3d 771, 776 (7th Cir. 2003).

Here, the first reviewer was qualified to render an opinion, but the exaggeration of his credentials might have led Mrs. Reimann to be less likely to question or appeal Anthem’s denial. The exaggeration did not produce that effect, which affects the appropriate remedy. A return to the status quo, in this situation, would not require remand to Anthem for a new evaluation; the first reviewer was  in fact well-qualified to evaluate Mrs. Reimann’s claim. For a different claimant who could show prejudice as a result of Anthem’s overstatement, a return to the status quo might require remand or referral for a new independent, binding outside review. Mrs. Reimann did not rely on Anthem’s statement, and she was not deterred in pursuing her appeal rights. Anthem’s and Dr. Lane’s exaggeration may warrant further scrutiny in other cases, see, e.g., Glenn, 128 S. Ct. at 2351 (noting that evidence of plan administrator’s violations in other cases may be relevant in evaluating whether denial of benefits was abuse of discretion), but the court sees no further suitable remedy in this case.

Consistent Explanation – The court observed that the case was distinguishable from one in which the basis for denial changed:

Mrs. Reimann is correct that in some cases a change in the basis for a denial of benefits from “not medically necessary” to “experimental” can demonstrate an abuse of discretion. Pl. Br. 27, citing Velez v. Prudential Health Care Plan, 943 F. Supp. 332, 343 (S.D.N.Y 1996). In Velez, the first denial letter the plaintiff received stated that the treatment she requested was “medically unnecessary,” without any explanation or specific grounds on which that determination was based. Id. at 336. The second denial letter stated that the  treatment was “experimental” but did not explain how the policy definition had been applied. The third denial letter stated that the treatment requested was both medically unnecessary and experimental, again, without further explanation. Id. at 337. U

Unlike the plan here, the plan in Velez did not define “medically unnecessary” to include “experimental” treatments, and the insurer offered no explanation for its decision that Velez’s treatment was excluded. Here, as previously explained, Anthem’s reliance on the “not medically necessary” exclusion and its later reliance on the more specific “experimental” exclusion was not evidence of abuse of discretion. In each denial letter, Anthem explained its reasoning in ways that have been sufficiently clear and consistent throughout the process