979 F.2d 653 (8th Cir. 1992), 91-3751, Farley v. Benefit Trust Life Ins. Co.

Docket Nº:91-3751, 91-3752.
Citation:979 F.2d 653
Party Name:Carl L. FARLEY, Appellant, v. BENEFIT TRUST LIFE INSURANCE COMPANY, Appellee. Carl L. FARLEY, Appellee, v. BENEFIT TRUST LIFE INSURANCE COMPANY, Appellant.
Case Date:November 10, 1992
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 653

979 F.2d 653 (8th Cir. 1992)

Carl L. FARLEY, Appellant,

v.

BENEFIT TRUST LIFE INSURANCE COMPANY, Appellee.

Carl L. FARLEY, Appellee,

v.

BENEFIT TRUST LIFE INSURANCE COMPANY, Appellant.

Nos. 91-3751, 91-3752.

United States Court of Appeals, Eighth Circuit

November 10, 1992

Submitted Sept. 14, 1992.

Rehearing and Rehearing En Banc

Denied Dec. 22, 1992.

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[Copyrighted Material Omitted]

Page 655

Stephen Hiotis, St. Louis, Mo., argued (Richard A. Gartner, Stephen C. Hiotis and Becky R. Eggmann, on the brief), for appellant/cross-appellee.

Keith Rabenberg, St. Louis, Mo., argued (Clark H. Cole and Keith A. Rabenberg, on the brief), for appellee/cross-appellant.

Before JOHN R. GIBSON, BEAM, and MORRIS SHEPPARD ARNOLD, Circuit Judges.

MORRIS SHEPPARD ARNOLD, Circuit Judge.

In 1987, Judith Farley had a lesion removed from her scalp; the lesion was diagnosed as a malignant melanoma, or skin cancer. The following year, evaluation revealed that the cancer had spread; tumors were present in her lung and her brain stem. Mrs. Farley's husband, plaintiff Carl Farley, was employed by Thiel Tool and Engineering at the time of these events. He had group health insurance through his employer with Benefit Trust Life Insurance Company; Mrs. Farley was covered under his policy.

Mrs. Farley's primary physician referred her to a cancer specialist at the Washington University School of Medicine. The cancer specialist recommended that she receive high-dose chemotherapy accompanied by an autologous bone marrow transplant, a procedure in which the patient's bone marrow in the area of chemotherapy is removed temporarily in order to limit the damage to bone cells from the chemotherapy and reintroduced into the patient's body a few days later. The cancer specialist then wrote to Benefit Trust, asking if Mrs. Farley's coverage would include the treatment he was recommending for her. He included with his letter some preliminary results from a study of the same treatment on other cancer patients. Benefit Trust responded that its current information indicated that such treatment for the type of cancer Mrs. Farley had was considered "investigational/experimental." Benefit Trust further stated that Mrs. Farley's health coverage excluded "benefits for treatments that are experimental, educational, investigational or ... furnished in connection with medical or other research."

The Farleys decided to proceed with the treatment nonetheless. In the fall of 1988, Mrs. Farley underwent high-dose chemotherapy

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accompanied by an autologous bone marrow transplant. She died six months later.

After Mrs. Farley's treatment, Mr. Farley had submitted to Benefit Trust various bills relating to her hospitalization. Benefit Trust subsequently denied payment, asserting that the treatment was "classed as experimental, educational, informational, or given in conjunction with research" and therefore not covered under the Farleys' policy.

Mr. Farley then sued Benefit Trust in state court, alleging various common-law causes of action--breach of contract, bad faith, outrage, and unfair claim settlement practices. Benefit Trust removed the case to federal court, where the trial court dismissed the common-law claims but allowed Mr. Farley to amend to add a cause of action under the Employee Retirement Income Security Act, see 29 U.S.C. §§ 1001-1461, since the health insurance policy was an employee welfare benefit plan under federal law, see 29 U.S.C. § 1002(1)(A), § 1003(a)(1).

After a three-day bench trial and the submission of posttrial briefs, the trial court found that the original policy had been amended to add provisions describing "medically necessary" treatment and limiting benefits only to treatment considered "medically necessary" under that description; that the description contained five criteria for "medically necessary" treatment; that the treatment given to Mrs. Farley met three of those criteria; and that the treatment failed to meet two of those criteria. The trial court therefore found for Benefit Trust and dismissed Mr. Farley's claim with prejudice.

Both parties appeal. Mr. Farley appeals the trial court's findings that the policy was amended to include the provisions as to "medically necessary" treatment, that he had the burden of proof on the question of whether Mrs. Farley's treatment was "medically necessary," and that Mrs. Farley's treatment failed to meet two of the relevant criteria. Benefit Trust appeals the trial court's findings that Mrs. Farley's treatment met three of the relevant criteria. We affirm the trial court as to all issues.

I.

The provisions defining "medically necessary" treatment and limiting benefits only to such treatment are included in a document styled "Amendment Number 8." In April, 1987, this document was sent by Benefit Trust to Thiel Tool, Mr. Farley's employer, along with two other documents, styled "Amendment Number 6" and "Amendment Number 7." The letter accompanying those documents indicates that all three are "Amendments to your Contracts showing revisions to the Schedule of Benefits, as well as the addition of medical benefits and provisions, to be effective as of May 1, 1987." The letter asks Thiel Tool to "accept by signing where indicated, keep the originals to be attached to your Master Contracts and return the copy to us for our files."

On the last page of Amendment Number 6 is a signature line signed by Arnold Munson, assistant secretary, for Benefit Trust. Also included on the last page of Amendment Number 6 are signature lines for an authorized agent of Benefit Trust and for Thiel Tool. There is no equivalent text on Amendment Number 7 or Amendment Number 8. It is apparently undisputed that a...

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