Wheeler v. Dynamic Engineering, Inc.

• Decision Date: 04 April 1994
• Docket Number: No. 4:94cv16.,4:94cv16.
• Citation: 850 F. Supp. 459
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Frances C. WHEELER, Plaintiff, v. DYNAMIC ENGINEERING, INC. and Office of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), Defendants.

850 F. Supp. 459

Frances C. WHEELER, Plaintiff, v. DYNAMIC ENGINEERING, INC. and Office of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), Defendants.

No. 4:94cv16.

United States District Court, E.D. Virginia, Newport News Division.

April 4, 1994.

Timothy G. Clancy, Cummings, Hatchett, Moschel & Patrick, Hampton, VA and Robert E. Hoskins, Foster & Foster, Greenville, SC, for plaintiff Frances C. Wheeler.

Robert J. Barry and Richard C. Mapp, III, Kaufman & Canoles, Norfolk, VA, for defendant Dynamic Engineering, Inc.

Michael A. Rhine, U.S. Attys. Office, Norfolk, VA, for defendants Office of Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

MEMORANDUM OPINION & ORDER

CLARKE, District Judge.

In this case Plaintiff, a victim of advanced breast cancer, seeks a declaratory judgment that her health insurance covers a treatment recommended by her oncologist which may eradicate her cancer and save her life: high dose chemotherapy with peripheral stem cell rescue (HDC/PSCR).

Plaintiff has her primary health insurance coverage through the Defendant Dynamic Engineering, Inc. ("Dynamic") her husband's employer. Plaintiff's secondary health insurance coverage is through the Defendant Civilian Health and Medical Program of the Uniformed Services ("CHAMPUS") due to her husband's prior military service. Plaintiff claims that she is entitled to coverage for the HDC/PSCR treatment from either Dynamic, or alternatively, from CHAMPUS.¹

Dynamic contends that it amended the terms of its employee health plan as of January 1, 1994 and in doing so eliminated coverage for HDC/PSCR treatment. The Court concludes that the modification, which was implemented after Plaintiff had been diagnosed with Stage IV breast cancer and after she had commenced the multi-stage HDC/PSCR therapy, could not be applied retroactively to deny coverage for Plaintiff's treatment.

CHAMPUS claims that HDC/PSCR for the treatment of Stage IV breast cancer is an investigational procedure and, as such, is not covered by its policy which excludes investigational treatment.² The Court finds that Dynamic and CHAMPUS denied coverage for the Plaintiff's treatment in an unreasonable, arbitrary and capricious manner. Accordingly, the Court GRANTS Plaintiff the declaratory relief she seeks against both Defendants.

I. Proceedings to Date

Plaintiff filed this action pursuant to 29 U.S.C. § 1132 seeking temporary and permanent injunctive relief on February 23, 1994.³ On March 8, 1994, this Court held a hearing on Plaintiff's motion for a preliminary injunction. At that time, the Court did not rule on Plaintiff's motion. Instead, the court expedited the trial and scheduled a hearing on the merits for March 24, 1994.

As scheduled, the trial commenced on March 24, 1994 and lasted two days. Plaintiff presented testimony from six witnesses, including four experts, and introduced documentary evidence. Plaintiff's experts were: Dr. Bruce W. Booth, the Plaintiff's treating oncologist, Dr. William H. West, Dr. Elizabeth Ann Harden, and Dr. Laurence M. Lewkow. The latter three doctors are expert oncologists. Plaintiff, her husband, Terry Wheeler and Dr. Booth testified as fact witnesses.

Dynamic did not introduce any expert testimony, however, in addition to Dynamic's documentary evidence, James E. Marchesani, Dynamic's Director of Administration and Tracy McElligot, a Blue Cross/Blue Shield of Virginia representative testified as fact witnesses. Defendant CHAMPUS introduced the de bene esse depositions of Dr. Thomas V. Holohan, M.D., Director of the Office of Health Technology Assessment and Dr. Bruce D. Cheson, M.D. of the National Cancer Institute in addition to its documentary evidence.

II. Facts

The Court finds from a preponderance of the evidence the following facts. Plaintiff, Frances Wheeler, is a fifty-one year old woman who suffers from advanced breast cancer. In 1985, Plaintiff was initially diagnosed as having breast cancer. Soon afterwards, Plaintiff had a mastectomy and follow-up chemotherapy treatments and became asymptomatic. Plaintiff managed the disease relatively well until November, 1993 at which time she was diagnosed as having Stage IV breast cancer, i.e., cancer which has spread through many areas of her body.

In November, 1993, Plaintiff's treating physician, Dr. Bruce W. Booth, advised Plaintiff that her best chance for survival and management of the disease was to receive HDC/PSCR treatment. This treatment is quite expensive and typically costs between $90,000 and $150,000.

High dose chemotherapy (HDC) treatment involves administering the same chemotherapeutic agents used in standard chemotherapy but at higher dosages. This more potent form of chemotherapy is thought to be more effective than standard dose chemotherapy at killing the disease. The administration of dose-intense chemotherapy, however, is also more likely to kill healthy cells, including white blood cells. White blood cells are the primary component of the body's immune system.

Because of the potential damage to a patient's immune system, HDC may be lethal if not accompanied by one of two alternative support procedures which help the body recover from the onslaught of chemicals. The two procedures are autologous bone marrow transplant support (ABMT) and peripheral stem cell rescue support (PSCR). In HDC/ABMT a patient's stem cells — cells which generate white blood cells — are harvested from the patient's bone marrow and are frozen. The patient is then administered high doses of chemotherapeutic agents to destroy the cancer cells. The frozen stem cells are thawed and reinfused into the patient after the chemicals have been administered.

Stem cells are also located in the circulating, or peripheral, blood. In HDC/PSCR, the procedure at issue in this litigation, stem cells are harvested from a patient's bloodstream rather than from bone marrow. Prior to the administration of the HDC, blood is withdrawn from the patient and stem cells are separated from the blood by a process known as leukapheresis. Stem cells are then frozen and stored until after the administration of the HDC. After the HDC phase, the stem cells are thawed and reinfused into the patient's bloodstream.

On December 15, 1993, Plaintiff began receiving standard dose chemotherapy. Beginning on March 14, 1994, Plaintiff was administered Taxol, a drug that fights cancer in a different manner than standard chemotherapeutic agents. Pursuant to the protocol under which the Plaintiff is being treated, HDC/PSCR patients must receive standard chemotherapy and Taxol prior to the administration of dose intense therapies. Plaintiff's treatment is being administered by Dr. Booth, in a local outpatient setting.

Plaintiff's husband, Terry Wheeler is employed by Dynamic. Dynamic provides health care coverage to its employees and their families by means of a self-funded group insurance plan.⁴ Eligible employees and their families receive health care benefits to the extent of the coverage specified by the plan. Plaintiff has been a beneficiary under Dynamic's employee health plan since her husband began working at the company in 1987.

Until December 31, 1993, E & E Benefit Plans served as claims administrator of Dynamic's plan. Prior to that date, a document entitled "Medical Insurance Plan" had been provided to Dynamic's employees, including the Wheeler's, to explain their health benefits. The Medical Insurance Plan states that coverage is provided for FDA approved drugs, hospital expenses, doctors' charges and other outpatient procedures. On page VII-7 of the document, it states that there is no coverage for "non-prescription or experimental drugs, vitamins and nutrition supplements which do not require a prescription under the law." The document also states:

Medical reimbursement claims should be filed as soon as they are incurred ... claim forms may be obtained from the personnel office or from the office of the employee benefits administrator. Forms should be obtained promptly; in advance of treatment or service if possible.

In early December, 1993, James E. Marchesani, Dynamic's Director of Administration decided not to renew its reinsurance agreement with its 1993 provider and to enter into a new reinsurance agreement with Blue Cross/Blue Shield of Virginia ("Blue Cross"). Mr. Marchesani also decided to modify the coverage available under its health plan in accordance with a design recommended by Blue Cross and memorialized under "Master Group Contract No. 21404."

On December 17, 1993, Tracy McElligot, a Blue Cross representative conducted an orientation meeting for Dynamic's employees to describe the modifications to Dynamic's health plan which was to become effective on January 1, 1994. At the meeting, Ms. McElligot distributed to Dynamic's employees, including Terry Wheeler, a brochure entitled "Key Care II." This brochure contained information concerning the available benefits under the plan, deductible and co-payment amounts and applicable exclusions.

Dynamic claims that effective January 1, 1994, Blue Cross replaced E & E Benefit Plans as Dynamic's claims administrator. The Master Group Contract, which serves as the Dynamic Medical Plan document as well as the reinsurance agreement with Blue Cross, specifically excludes coverage of HDC/PSCR for the treatment of breast cancer. Item 53 of the Master Group Contract's Exclusion section reads as follows:

Benefits for the following will not be provided:

Autologous bone marrow transplants or other forms of stem cell rescue (in which the patient is the donor), together with high dose chemotherapy or radiation, and any resulting medical complications are not covered. The following are exceptions: several diseases are listed; Stage IV breast cancer is not among them.

. . . . .

Autologous bone marrow transplantation or other forms of stem cell rescue, together with high dose chemotherapy and/or radiation, and any resulting

...