Bishop v. CHAMPUS

• Decision Date: 05 March 1996
• Docket Number: No. CS-96-0045-AAM.,CS-96-0045-AAM.
• Citation: 917 F. Supp. 1469
• Parties: Catherine S. BISHOP, Plaintiff, v. The OFFICE OF CIVILIAN HEALTH AND MEDICAL PROGRAMS OF the UNIFORMED SERVICES, (CHAMPUS), a subdivision of the Department of Defense of the United States of America, and William Perry, in his official capacity as the Secretary of Defense for the United States, Defendants.
• Court: U.S. District Court — District of Washington

917 F. Supp. 1469

Catherine S. BISHOP, Plaintiff, v. The OFFICE OF CIVILIAN HEALTH AND MEDICAL PROGRAMS OF the UNIFORMED SERVICES, (CHAMPUS), a subdivision of the Department of Defense of the United States of America, and William Perry, in his official capacity as the Secretary of Defense for the United States, Defendants.

No. CS-96-0045-AAM.

United States District Court, E.D. Washington.

March 5, 1996.

COPYRIGHT MATERIAL OMITTED

William F. Etter and David J. Groesbeck of Etter, McMahon & Lamberson, Spokane, Washington, for plaintiff.

Assistant United States Attorney William Beatty, Spokane, Washington, for defendants.

ORDER GRANTING PERMANENT INJUNCTION AND DECLARATORY RELIEF

McDONALD, District Judge.

Before the Court is plaintiff's claim for permanent injunction and declaratory relief. Plaintiff was represented by William Etter and David Groesbeck of Etter, McMahon & Lamberson, Spokane, Washington. Defendant was represented by Assistant United States Attorney William Beatty, Spokane, Washington. Upon consideration of the record, the Court enters the following order.

I. BACKGROUND

A. Parties

Catherine Bishop is a 57-year-old woman with Stage IV metastatic breast cancer. Bishop's husband, Henry, is retired from the Air Force. As former military personnel, Henry Bishop maintains medical coverage for himself and his family with the Office of Civilian Health and Medical Programs of the Uniformed Services (CHAMPUS), a subdivision of the United States Department of Defense.

CHAMPUS is a health benefits program established by Congress. 10 U.S.C. § 1071, et. seq. CHAMPUS is not identical to an insurance company, although it provides health care coverage. See 32 C.F.R. § 199.1(d); Wilson v. CHAMPUS, 65 F.3d 361, 363 (4th Cir.1995). Beneficiaries do not pay insurance premiums; rather, Congress annually appropriates funds to CHAMPUS. 32 C.F.R. § 199.1(e). Beneficiaries must make co-payments as specified by Congress. See 10 U.S.C. §§ 1079(b), (c), (e), 1086(b).

Recently, the Secretary of the Department of Defense implemented the TRICARE program. See 32 C.F.R. § 199.17; 60 Fed.Reg. 52078, 52095. This program establishes and implements comprehensive managed health care programs for CHAMPUS beneficiaries through managed care support contracts. 32 C.F.R. § 199.17(a)(1); 60 Fed.Reg. at 52095. Foundation Health Federal Services (Foundation) is the managed care contractor for CHAMPUS in the Pacific Northwest TRICARE region. Affidavit of David Bogner, M.D., Medical Director of CHAMPUS, at 1.

B. Facts and Procedural History

Bishop was initially diagnosed with breast cancer in 1984. Treatment was successful and she remained healthy until 1994. Bishop's condition quickly deteriorated, and in June 1995, she was diagnosed with Stage IV high-risk metastatic breast cancer. Bishop's treating physician, Dr. Andrew Hertler, recommended an aggressive treatment known as high-dose chemotherapy (HDC) with peripheral stem cell rescue (PSCR).

HDC treatment involves the administration of dose-intensive chemotherapy, considered more effective in killing cancerous cells than conventional chemotherapy. Necessarily, the higher doses of chemotherapeutic agents also kill healthy white blood cells. Two support therapies that accompany HDC protect the patient from otherwise lethal effects of HDC. In PSCR, healthy stem cells are harvested from the patient's bloodstream. Similarly, an autologous bone marrow transplant (ABMT) harvests stem cells from the patient's bone marrow. In both therapies, the cells are stored and reinfused into the patient's blood after receiving HDC.¹ HDC with PSCR is the treatment at issue in this case.

HDC/PSCR treatment is comprised of several stages. First, the patient is given low doses of chemotherapeutic agents, followed by moderate doses of standard chemotherapeutic agents. During the second stage of treatment, the patient's system produces surplus blood components known as stem cells. The surplus stem cells are removed immediately following the second stage and frozen for storage.

In the next stage, the patient receives high doses of chemotherapeutic agents. This stage of treatment kills the cancerous cells, as well as healthy white blood stem cells. After the third stage of treatment, the previously collected stem cells are thawed and reinjected into the bloodstream to rebuild the depleted stem cell count. Extended hospitalization is almost certain.

Prior to filing suit, Bishop had undergone two stages of treatment. It was necessary for Bishop to proceed with HDC/PSCR on or about February 3, 1996. According to Dr. Hertler, a patient has a "narrow window of time" in which the surplus stem cells can be collected. After that time passes, no further opportunities exist to collect the cells and administer the high doses of chemotherapy. Declaration of Andrew A. Hertler at 6. Dr. Hertler asserts that HDC/PSCR is Bishop's best chance for long-term survival. Without this treatment, Dr. Hertler believes that Bishop could very likely die. Id. at 4.

The clinic in which Bishop is scheduled to undergo HDC/PSCR therapy requires preauthorization of insurance benefits before the treatment may proceed. If a patient does not have insurance, the clinic requires prepayment or execution of "an agreement sufficient to guarantee payment." Affidavit of William Poppy at 2. Apparently, the treatment costs between $60,000 and $100,000. Affidavit of Catherine (Kay) Bishop at 2. Bishop claims that she and her husband cannot obtain the amount necessary for the treatment. Id. at 3.

Bishop requested a pre-treatment coverage commitment from CHAMPUS. Foundation, as the TRICARE contractor for CHAMPUS, denied Bishop's claim, stating that HDC/PSCR was not "appropriate or effective" under the terms of its plan. Bishop requested an expedited review of that decision from CHAMPUS. Bishop submitted evidence in support of her claim, but CHAMPUS did not respond.

On January 19, 1996, Bishop filed suit against CHAMPUS, requesting preliminary and permanent injunctions enjoining CHAMPUS from denying coverage for HDC/PSCR treatment, in addition to a declaratory judgment that CHAMPUS covers HDC/PSCR treatment.² Bishop also seeks attorneys fees under the Equal Access to Justice Act, 28 U.S.C. § 2412. Upon hearing with oral argument, the court granted Bishop's motion for preliminary injunction on January 26, 1996. During oral argument, counsel for both parties agreed that judicial review of CHAMPUS' denial of coverage was limited to the administrative record. The parties requested that the Court determine the merits of Bishop's claim without further briefing or motion from either party.

The Court construes the parties' requests as cross-motions for summary judgment based on the record and filings presently before the Court. Although neither party officially moved for summary judgment or submitted an LR 56 statement of facts, no issue of material fact is contested; the issue is solely a question of law. Thus, the Court will proceed under summary judgment analysis.

II. JOINDER

An initial question arises as to whether the necessary parties are before the Court. Bishop alleges that CHAMPUS unlawfully denied medical coverage for HDC/PSCR; however, CHAMPUS did not initially deny coverage for the treatment. Rather, Foundation, as a managed care contractor for CHAMPUS, made the decision to deny CHAMPUS benefits. Affidavit of Dr. Bogner at 1. During oral argument on the motion for preliminary injunction, counsel for CHAMPUS expressed concern that Foundation was not named as a defendant.

A party must be joined in an action if "in the party's absence complete relief cannot be accorded among those already present." Fed.R.Civ.P. 19(a)(1).³ Therefore, the question is whether Bishop can obtain complete relief from CHAMPUS alone.

Under regulations governing CHAMPUS policy and procedures, a fiscal intermediary has authority to deny or approve benefits on behalf of CHAMPUS. 32 C.F.R. § 199.4(a)(3). A fiscal intermediary is defined as an "organization with which the Director, CHAMPUS Office of CHAMPUS has entered into a contract for the adjudication and processing of CHAMPUS claims and the performance of related support activities." 32 C.F.R. § 199.2. Foundation is a "Managed Care Contractor authorized by CHAMPUS to review transplant and transplant related services." Letter from Jack Dutzar, M.D., Vice President of Medical Affairs, dated December 6, 1996. Dr. Bogner confirms that Foundation is the care contractor for CHAMPUS in the Northwest TRICARE region. Affidavit of Dr. Bogner at 1. As such, Foundation implements CHAMPUS policy directives.

As stated at oral argument, Foundation's denial of coverage for Bishop's treatment is based on CHAMPUS policy. Moreover, Dr. Bogner, medical director of CHAMPUS, asserts that Foundation's determination was consistent with CHAMPUS policy. Affidavit of Dr. Bogner at 1. No evidence suggests that Foundation exercises independent decision-making authority regarding CHAMPUS medical coverage. Eligibility and coverage policies are defined by CHAMPUS. Foundation, as a fiscal intermediary, simply determines Bishop's eligibility for benefits on behalf of CHAMPUS. If the Court finds that Bishop is entitled to CHAMPUS benefits, Foundation must provide coverage for Bishop's treatment. Accordingly, joinder of Foundation is not required.

III. STANDARD FOR SUMMARY JUDGMENT

The purpose of summary judgment is to avoid unnecessary trials when there is no dispute as to the facts before the court. Zweig v. Hearst Corp., 521 F.2d 1129 (9th Cir.), cert. denied, 423 U.S. 1025, 96 S.Ct. 469, 46 L.Ed.2d 399 (1975). A party is entitled to summary judgment where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Semegen v. Weidner, 780 F.2d 727 (9th Cir.1985).

The moving party has the initial burden to prove that no genuine issue of...