Fuja v. Benefit Trust Life Ins. Co.

• Decision Date: 18 April 1994
• Docket Number: No. 93-1150,93-1150
• Citation: 18 F.3d 1405
• Parties: 4 NDLR P 436 Kenneth FUJA, as Personal Representative of the Estate of Grace R. Fuja, deceased, Plaintiff-Appellee, v. BENEFIT TRUST LIFE INSURANCE COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1405

18 F.3d 1405

4 NDLR P 436

Kenneth FUJA, as Personal Representative of the Estate of Grace R. Fuja, deceased, Plaintiff-Appellee, v. BENEFIT TRUST LIFE INSURANCE COMPANY, Defendant-Appellant.

No. 93-1150.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 26, 1993.

Decided March 18, 1994.

Rehearing and Suggestion for Rehearing

En Banc Denied April 18, 1994 ^*.

William F. Conlon, Eugene A. Schoon, Robert A. Downing, Amy D. Mayber (argued), John M. Schloerb, Sidley & Austin, Chicago, IL, for plaintiff-appellee.

Daniel A. Engel (argued), Daniel A. Engel, Peterson & Ross, Chicago, IL, for defendant-appellant.

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

COFFEY, Circuit Judge.

Grace Rodela Fuja, a thirty-seven year-old woman suffering from breast cancer, sued her insurer, the defendant, Benefit Trust Life Insurance Company ("Benefit Trust"), for its refusal to pay for a "high-dose chemotherapy treatment with autologous bone marrow transplantation" ("HDC/ABMT"). Fuja sought injunctive and declaratory relief to prevent the defendant from denying coverage for the treatment under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. Sec. 1132(a)(1)(B) and (a)(3). The court entered judgment for Fuja enjoining the defendant from denying coverage. The defendant Benefit Trust Life Insurance Company, subsequently paid for the treatment but now appeals the judgment. We reverse. ¹

FACTS

In August, 1989, Fuja was diagnosed with breast cancer and underwent a lumpectomy and a modified radical mastectomy. Immediately thereafter, beginning in September 1989, she received six months of standard-dose chemotherapy treatment and seemed to remain in remission until February of 1992 when her oncologist observed that the cancer had spread to both her lungs. From February through December of 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. Thus she prescribed a regimen of HDC/ABMT.

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. At this time, 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 to the patient 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 in the past 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.

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. Fuja brought this suit in federal district court seeking to enjoin Benefit Trust from denying coverage. Following a hearing on December 17, 1992, the court issued a decision ordering the insurer to pay for the treatment, Fuja underwent the treatment in January of 1993. Unfortunately, the treatment was unsuccessful and she expired in April of 1993.

ISSUES

The defendant, Benefit Trust, maintains that the district court erred in ruling that the insurer was liable for coverage of the treatment arguing: (1) that the treatment was provided in connection with medical research, and (2) the treatment is not authorized for reimbursement by the Health Care Financing Administration ("HCFA").

DISCUSSION

We note at the outset that cases of this nature pose most difficult policy questions of who should bear the burden of paying for expensive medical treatments that are at the time of treatment of unknown efficacy. Although we fully realize the heartache Mrs. Fuja's family has endured, as judges we are called upon to resolve the legal question presented in this appeal, i.e., interpreting the Benefit Trust insurance contract. ²

Standard of Review

Under Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 956, 103 L.Ed.2d 80 (1989), this court reviews Benefit Trust's denial of benefits de novo because the insurance plan in question does not grant Benefit Trust discretion to determine eligibility for benefits or construe terms of the insurance agreement. Under Federal Rule of Civil Procedure 52 the district court's findings of fact will not be set aside unless they are clearly erroneous. Rennie v. Dalton, 3 F.3d 1100, 1106 (7th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 1054, 127 L.Ed.2d 375 (1994). Because contract interpretation is a question of law, we review the trial court's finding that the contract was ambiguous de novo. Central States Pension Fund v. Hartlage Truck Serv., 991 F.2d 1357, 1361 (7th Cir.1993). The parties have argued the question of who bears the burden of proving Fuja's entitlement to the insurance coverage. The trial court determined that because the "medically necessary" provision of the insurance contract is set forth in the contract benefits section, as opposed to the "exclusions" section, that Fuja bore the burden of establishing her entitlement to the insurance benefits. We agree with the trial court's determination on this issue. See Farley v. Benefit Trust Life Ins. Co., 979 F.2d 653, 658 (8th Cir.1992) (holding that the claimant had the burden of proof when seeking coverage under the same Benefit Trust policy at issue before us). Thus Fuja must demonstrate that the treatment was medically necessary.

The Contract

To satisfy the plaintiff-appellee's burden and obtain coverage for the HDC/ABMT treatment, Fuja must demonstrate that the treatment is "medically necessary" under all five criteria enumerated in the insurance contract entered into between Benefit Trust and Fuja's employer, Emsco Management Services on behalf of their employees. The contract itself defines medically necessary as:

"required and appropriate for care of the Sickness or the Injury; and that are given in accordance with generally accepted principles of medical practice in the U.S. at the time furnished; and that are approved for reimbursement by the Health Care Financing Administration; and 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 that are not furnished in connection with medical or other research."

(Emphasis added). In this appeal, Benefit Trust is challenging the trial court's ruling on only two of the provisions: (1) whether the treatment is in connection with medical or other research and (2) whether it is approved for reimbursement by HCFA. If Benefit Trust establishes that the treatment is provided in connection with medical research or that it is not approved for reimbursement by HCFA we must reverse the trial court because Fuja has failed to carry her burden of establishing that the treatment is medically necessary under all five criteria. See supra (citing Farley, 979 F.2d at 658).

The district court 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." Hammond v. Fidelity & Guaranty Life Ins. Co., 965 F.2d 428, 430 (7th Cir.1992) (quoting Allstate Ins. Co. v. Ellison, 757 F.2d 1042, 1044 (9th Cir.1985)). The court stated that it was "strictly constru[ing] [the ambiguous term] in favor of the insured," id. at 430, and determined that the phrase "in connection with medical or other research" implies "that the inherent nature of the treatment itself, and not the results of the treatment, must be part and parcel ('in connection with') of a medical research endeavor." Fuja v. Benefit Trust Life Ins. Co., 809 F.Supp. 1333, 1341 (N.D.Ill.1992). The trial court focused on the "inherent "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. Under the court's interpretation of 'in connection with medical or other research,' Fuja has satisfied the Fifth and final requirement of Benefit Trust's 'medically necessary' provision."

nature of the treatment" to preclude the insurer from denying coverage for any treatment that was part of a medical research study where the results of the treatment were being published as research findings. For reasons unexplained in the decision, the court expressed concern that Benefit Trust intended to use the phrase "in connection with medical treatment" "to exclude coverage for a commonplace medical treatment." Id. The court added that:

Id. at 1341-42.

Analysis

The threshold question we are called upon to interpret is whether the phrase "in connection with medical or other research" is ambiguous. As stated above, because...