Martin v. Blue Cross & Blue Shield of Virginia, Inc.

• Decision Date: 23 June 1997
• Docket Number: No. 96-1534,96-1534
• Citation: 115 F.3d 1201
• Parties: 21 Employee Benefits Cas. 1250, Pens. Plan Guide (CCH) P 23935U Nancy MARTIN, Plaintiff-Appellee, v. BLUE CROSS & BLUE SHIELD OF VIRGINIA, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1201

115 F.3d 1201

21 Employee Benefits Cas. 1250,

Pens. Plan Guide (CCH) P 23935U

Nancy MARTIN, Plaintiff-Appellee, v. BLUE CROSS & BLUE SHIELD OF VIRGINIA, INC., Defendant-Appellant.

No. 96-1534.

United States Court of Appeals, Fourth Circuit.

Argued April 7, 1997.

Decided June 23, 1997.

ARGUED: Thomas E. Spahn, McGuire, Woods, Battle & Boothe, L.L.P., Richmond, VA, for Appellant. Richard Dennis Carter, Hudgins, Carter & Coleman, Alexandria, VA, for Appellee. ON BRIEF: Joel H. Trotter, McGuire, Woods, Battle & Boothe, L.L.P., Richmond, Virginia; Jeanette D. Rogers, Litigation Department, Blue Cross & Blue Shield Of Virginia, Richmond, VA, for Appellant. Jacqueline E. Bennett, Mercedes J. Madole, Hudgins, Carter & Coleman, Alexandria, VA, for Appellee.

Before LUTTIG and WILLIAMS, Circuit Judges, and DUFFY, United States District Court Judge for the District of South Carolina, sitting by designation.

Reversed by published opinion. Judge WILLIAMS wrote the opinion, in which Judge LUTTIG and Judge DUFFY joined.

OPINION

WILLIAMS, Circuit Judge:

In this case, we consider Nancy Cornelius Martin's claim under the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1001-1461 (West 1985 & Supp.1997), to obtain insurance benefits for the autologous bone marrow transplant procedure she underwent as treatment for her epithelial ovarian cancer. The magistrate judge ¹ concluded that the summary plan description (SPD) issued by Blue Cross & Blue Shield of Virginia (Blue Cross) did not exclude the high-dose chemotherapy and peripheral stem cell rescue elements of Mrs. Martin's procedure and issued a declaratory judgment that Blue Cross must therefore cover those elements of the procedure. Because we conclude that the magistrate judge erred in finding that the procedure was not experimental or investigative, we reverse. We also hold that ERISA permits recovery of attorneys' fees only by prevailing parties, and thus reverse the award of attorneys' fees in favor of Mrs. Martin.

I.

Ronald W. Martin, Mrs. Martin's husband, was one of the owners of a business known as Ray Fisher and Ron Martin, Incorporated (the Company). During its twenty-eight years of operations, the Company maintained a welfare benefit plan for its employees. Mrs. Martin, as Mr. Martin's wife, was a beneficiary of the health insurance coverage established and maintained by the Company. On behalf of the Company, Mr. Martin often changed health insurance policies to minimize costs, although in recent years he changed policies less often. In October 1993, Mr. Martin contracted with Blue Cross to provide the Company's health insurance and to administer the plan. Mrs. Martin claims that although the Company received copies of the SPD, Blue Cross never provided the Company with a copy of the insurance contract itself (the Plan).

Around this same time, Mrs. Martin was diagnosed with epithelial ovarian cancer. In 1994, Mrs. Martin was referred to Dr. Steven Wolff, an oncologist at Vanderbilt University Medical Center (Vanderbilt). Dr. Wolff recommended that, to treat her ovarian cancer, Mrs. Martin undergo a regimen of high-dose chemotherapy coupled with stem cell rescue and autologous bone marrow transplant. The parties do not dispute that the procedure at issue consists of three phases. The first of these, stem cell rescue, involves the harvesting of the patient's bone marrow cells. ² Then, while the harvested cells are frozen and stored, the second stage--high-dose chemotherapy--is conducted. The dosage is so strong that the patient's remaining bone marrow cells are destroyed or damaged so severely that they grow back slowly. The third stage involves the reinfusion of the harvested cells into the patient. This reinfusion is necessary to save the patient's immune system, which would otherwise be crippled by the damage to the bone marrow cells during the high-dose chemotherapy stage. Dr. Wolff, Mrs. Martin's treating physician and expert witness, described the entire procedure as "the administration of cytotoxic therapy of such magnitude that the bone marrow, the organ of the body that makes all the blood cells, is substantially injured necessitating the administration or transfusion of additional bone marrow cells to aid in the recovery of bone marrow function induced by the damage of the chemotherapy or radiation therapy." (J.A. at 595.) There is evidence in the record that the term "autologous bone marrow transplant" is often used to describe not only the third stage of the process, but also the entire procedure, including stem cell rescue and high-dose chemotherapy.

Dr. Wolff testified that, at the time of Mrs. Martin's treatment, fewer than five women had ever undergone the same procedure for epithelial ovarian cancer. In fact, the procedure was classified as a Phase II clinical trial. Such clinical trials are regulated by the Food and Drug Administration and the Department of Health and Human Services and require a protocol document to standardize the procedure. As explained by Dr. Wolff, a protocol explains "what you're doing, why you're doing [it], the rationale, who is eligible for this type of therapy, what the therapy is, how to administer the therapy, how to care for the patients, what the complications of expected nature are and how you could analyze the information that you get." (J.A. at 605.) Such clinical trials also require that each participating patient be advised of the nature of the treatment and its attendant risks.

On April 27, 1994, Dr. Wolff requested pre-authorization from Blue Cross, specifically indicating that he was "requesting authorization for the treatment of this patient with high-dose chemotherapy with autologous stem cell and marrow rescue." (J.A. at 17.) Soon thereafter, on April 29, 1994, Blue Cross denied pre-authorization. The offered reason for the denial was that "[h]igh-dose chemo(radio)therapy is considered investigational in the treatment of epithelial ovarian cancer." (J.A. at 18.) On June 6, 1994, Dr. Wolff again wrote to Blue Cross, appealing its initial coverage decision. On June 9, 1994, Blue Cross reaffirmed its denial of coverage, stating that it "must deny proposed high-dose chemotherapy for diagnosis epithelial ovarian carcinoma from two viewpoints: a) policy denial--considered investigational in diagnosis of epithelial ovarian cancer [and] b) contractually excluded per amendment to group policy--not covered for ovarian cancer other than germ cell tumors." (J.A. at 20.) Mrs. Martin's final appeal to Blue Cross was by a letter from her lawyer on July 6, 1994, which included several medical articles on the effectiveness of the recommended treatment for ovarian cancer. Blue Cross responded on August 2, 1994, explaining that

[t]he Technology Evaluation and Coverage (TEC) program of the Medical Advisory panel of the Blue Cross and Blue Shield Association reviewed all of the scientific published peer reviewed literature on [autologous bone marrow transplant] for treating epithelial ovarian cancer. The treatment modality does not meet our coverage eligibility guidelines. I have enclosed a copy of these guidelines for you.

(J.A. at 1014.) Blue Cross appended to this letter its five-factor analysis for determining if a procedure was experimental or investigative.

In July of 1994, before receiving the final letter from Blue Cross but after receiving both denials of pre-authorization, Mrs. Martin decided to undergo the procedure. Mrs. Martin conceded that she "actually underwent the procedure ... with knowledge that Blue Cross was taking the position it wasn't covered." (J.A. at 297.) The procedure was successful, and she was discharged from the hospital in August of 1994.

On November 28, 1994, Mrs. Martin filed this action against Blue Cross in the United States District Court for the Western District of Virginia. She brought the suit under 29 U.S.C.A. § 1132(a)(1)(B) (West 1985), as a beneficiary of an employee welfare benefit plan. From the beginning of the lawsuit, Mrs. Martin maintained that the Company never received a copy of the Plan and therefore that the SPD controlled. The magistrate judge bifurcated the trial to determine, first, which document--the Plan or the SPD--controlled the analysis and, second, whether under the controlling document, Mrs. Martin's treatment was excluded.

On July 5, 1995, the magistrate judge held a hearing on the first issue and ruled from the bench that the Company never received a copy of the Plan. He therefore concluded that the SPD controlled. Later, on December 13, 1995, the magistrate judge held a second evidentiary hearing to determine if Mrs. Martin's treatment was covered. In a memorandum opinion issued on January 22, 1996, the magistrate judge reaffirmed his earlier ruling from the bench that the procedure was not experimental or investigative within the meaning of the SPD's exclusion. He further concluded that an exclusion for "autologous bone marrow transplants" in the SPD did not exclude the related services of high-dose chemotherapy and stem cell rescue. Therefore, the magistrate judge entered a declaratory judgment of coverage for those two phases of the procedure.

Thereafter, Mrs. Martin petitioned the court for attorneys' fees. The magistrate judge granted the motion and, in an order of final judgment entered on March 13, 1996, awarded attorneys' fees. Blue Cross appeals, claiming that the entire procedure was excluded under the Plan's and the SPD's exclusion for experimental or investigative procedures, as well as under the exclusions in the Plan and the SPD for autologous bone marrow transplants. Blue Cross also challenges the award of attorneys' fees in favor of Mrs. Martin. We conclude that under the terms of the Plan and the SPD, the procedure was experimental or investigative and that Mrs. Martin is not entitled to insurance coverage for any phase of the procedure or to attorneys' fees. Accordingly, we reverse.

II.

Blue...