Bechtold v. Physicians Health Plan of Northern Indiana, Inc.

• Citation: 19 F.3d 322
• Decision Date: 18 March 1994
• Docket Number: No. 93-1938,93-1938
• Parties: , 17 Employee Benefits Cas. 2770, Medicare&Medicaid Guide P 42,188, 4 NDLR P 437 Penny Jo BECHTOLD, Plaintiff-Appellant, v. PHYSICIANS HEALTH PLAN OF NORTHERN INDIANA, INCORPORATED, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 322

19 F.3d 322

62 USLW 2590, 17 Employee Benefits Cas. 2770,

Medicare&Medicaid Guide P 42,188, 4 NDLR P 437

Penny Jo BECHTOLD, Plaintiff-Appellant, v. PHYSICIANS HEALTH PLAN OF NORTHERN INDIANA, INCORPORATED,

Defendant-Appellee.

No. 93-1938.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 26, 1993.

Decided March 18, 1994.

J. Timothy McCaulay (argued), Helmke, Brams, Boyer & Wagner, Fort Wayne, IN, for plaintiff-appellant.

Stacey L. Katz (argued), Vincent J. Backs, Beers, Mallers, Backs & Salin, Fort Wayne, IN, for defendant-appellee.

Before BAUER and COFFEY, Circuit Judges, and SKINNER, District Judge. ^*

COFFEY, Circuit Judge.

Penny Jo Bechtold, a female diagnosed and treated for breast cancer, brought this action under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1132(a)(1)(B), to recover benefits under an ERISA-governed employee welfare benefit plan. In her suit against Physicians Health Plan of Northern Indiana ("PHP"), Bechtold is seeking coverage for high-dose chemotherapy with autologous bone marrow transplantation ("HDC/ABMT"). The case was assigned to a U.S. Magistrate Judge by consent pursuant to 28 U.S.C. Sec. 636(c). On March 18, 1993, the magistrate judge denied the plaintiff's motion for summary judgment but granted the defendant's motion for summary judgment. We affirm.

BACKGROUND

The parties have stipulated to the relevant facts in this case and legal issues only need be determined. Penny Jo Bechtold is a forty year-old pre-menopausal adult female. She is employed by Magnavox Electronic Systems which maintains a health plan administered by the defendant Physicians Health Plan of Northern Indiana. The plan is an "employee welfare benefit plan" as defined in 29 U.S.C. Sec. 1002(1).

In October, 1991, the plaintiff was diagnosed as having breast cancer and underwent a modified radical mastectomy. The surgery disclosed heavy lymph node involvement with the breast cancer cells. After the removal of the tumor she was treated with HDC/ABMT is a two-step procedure. Physicians first extract ("harvest") the bone marrow cells from the patient's body and place them temporarily in frozen storage. Next, the patient undergoes a cycle of high-dose chemotherapy in hopes of killing the cancer cells. Because the high-dose chemotherapy also attacks the bone marrow cells, it is necessary to withdraw some of the bone marrow prior to undergoing the high-dose chemotherapy. Without initially removing a portion of the bone marrow cells, the high-dose chemotherapy would be lethal because of its myeloblative effect (it destroys bone marrow cells which produce blood cells (red and white) as well as platelets) rendering the patient highly susceptible to infection. After completing the administration of the high-dose chemotherapy, the patient's own ("autologous") 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 to date it has not been universally accepted treatment for solid-type tumors including breast cancer.

standard chemotherapy and radiation. Her oncologist recommended that she receive heavy dose chemotherapy with an autologous bone marrow transplant (HDC/ABMT) and referred her to the Cleveland Clinic for this treatment.

Before Bechtold proceeded with the treatment, PHP advised her that the HDC/ABMT treatment was not a covered service under the plan. Under the policy, a claimant is entitled to a hearing following the denial of a claim, and the plaintiff did in fact appeal the denial of benefits and received a hearing before a committee selected by PHP. ¹ The committee recommended that even though the insurer had met its obligations to the plaintiff under the contract, that the insurer should change its policy and authorize payment for the procedure because the treatment was reasonable for a patient of Bechtold's age. PHP did not agree with the committee's recommendation, and refused to pay for the treatment stating that it had "lived up to its Contract obligations" under the "clear and unambiguous language in the Contract." PHP advised the plaintiff it was denying her appeal in a letter dated October 2, 1992. With her administrative remedies exhausted, the plaintiff initiated this suit in the U.S. District Court for the Northern District of Indiana.

ISSUES

On appeal, the plaintiff raises two issues: (1) whether PHP erroneously denied coverage for HDC/ABMT under the plan, and (2) whether she was denied a "full and fair review" of her claim for benefits when PHP declined to accept the recommendation of the complaints committee.

DISCUSSION

We are aware that Mrs. Bechtold and her immediate family have undoubtedly endured a great deal of heartache, frustration and depression during her battle with cancer. ² There is no doubt that the policy questions posed in cases like this are of grave concern to all of us, yet we, as a court of law, are called upon to make legal determinations. ³

                The issue in this case is very straightforward:  Does the PHP benefit plan authorize coverage of HDC/ABMT?   This is a matter of contract interpretation that does not implicate the broader policy issues involved in whether insurers should cover medical procedures that are presently of unknown medical value and extremely costly
                

A claim for benefits under an ERISA-governed plan "is a matter of contract interpretation. When there are no triable issues of fact, we have held that '[c]ontract interpretation is a subject particularly suited to disposition by summary judgment.' " ⁴ Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1389 (7th Cir.1993) (quoting Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331, 1333 (7th Cir.1988)). The interpretation of an unambiguous contract is a question of law for the court. Ryan v. Chromalloy Am. Corp., 877 F.2d 598, 602 (7th Cir.1989). "A term is [only] ambiguous if it is subject to reasonable alternative interpretations." Hickey, 995 F.2d at 1389 (quoting Taylor v. Continental Group, 933 F.2d 1227, 1232 (3rd Cir.1991)).

The parties have devoted considerable time arguing what the proper standard of review is in this case. In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 112, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989), the United States Supreme Court ruled that the denial of benefits by an ERISA plan administrator must "be reviewed under the de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the plan." Id. at 115, 109 S.Ct. at 956. "[I]f a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a 'facto[r] in determining whether there is an abuse of discretion.' " Id. (quoting Restatement (Second) of Trusts Sec. 187, Comment d (1959)). The plaintiff argues that because PHP was operating under a conflict of interest (i.e., PHP stood to gain a greater profit if the claim was denied) we should grant less deference to PHP's determination that HDC/ABMT is experimental. We need not decide what level of deference to give to the defendant's interpretation of the contract term because under the facts in this case, even applying de novo review, the clear and unambiguous language of the policy dictates that the defendant, Physicians Health Plan of Northern Indiana, properly denied coverage for the HDC/ABMT treatment.

Denial of Coverage

In part, the Plan provides:

" 'Experimental or Unproven Procedures' means any procedures, devices, drugs or medicines or the use thereof which falls within any of the following categories:

1. Which is considered by any government agency or subdivision, including but not limited to the Food and Drug Administration, the Office of Health Technology Assessment, or HCFA Medicare Coverage Issues Manual to be:

a. experimental or investigational;

b. not considered reasonable and necessary; or

c. any similar finding;

2. Which is not covered under Medicare reimbursement laws, regulations or interpretations; or

3. Which is not commonly and customarily recognized by the medical profession PLAN reserves the right to change, from time to time, the procedures considered to be Experimental or Unproven. Contact PLAN to determine if a particular procedure, treatment, or device is considered to be Experimental or Unproven."

in the state of Indiana as appropriate for the condition being treated.

(Emphasis added).

The HCFA Medicare Coverage Issues Manual (which is referenced in the PHP Plan) provides in section 35-31:

"C. Autologous Bone Marrow Transplantation (Effective for Services Performed on or After 04/28/89).-- Autologous bone marrow transplantation is a technique for restoring bone marrow stem cells using the patient's own previously stored marrow.

* * * * * *

2. Noncovered Conditions.--Insufficient data exist to establish definite conclusions regarding the efficacy of autologous bone marrow transplantation for the following conditions:

. Acute leukemia in relapse (ICD-9-CM codes 204.0, 205.0, 206.0, and 208.0);

. Chronic granulocytic leukemia (ICD-9-CM code 205.1); or

. Solid tumors (other than neuroblastoma) (ICD-9-CM codes 140-199).

In these cases, autologous bone marrow transplantation is not considered reasonable and necessary within the meaning of Sec. 1862(a)(1)(A) of the Act and is not covered under Medicare."

(Emphasis added). ⁵

The plaintiff does not challenge the language of the HCFA Medicare Coverage Issues Manual but argues that the phrase in the Plan that PHP "reserves the right to change, from time to time, the procedures considered to be Experimental or Unproven" creates an obligation on the part of PHP to cover the contested treatment in light of recent medical research endorsing the procedure for solid tumors like breast...