Metropolitan Life Case Brings A New Standard to Decisions
From The Bench – The Self-Insurer Volume 26* August 2009
By John H. Eggertsen, Esq. and Michael Friedman, Esq.
After the U.S. Supreme Court’s recent decision in Metropolitan Life Ins. Co. v. Glenn ___ U.S.___, 128 S. Ct. 2343 (2008), many circuit courts have been applying a magnifying glass to their prior standard of review decisions, and making whatever adjustments they feel are necessary in light of this most recent guidance. We have discussed some of those cases in the past, and may do so again if circumstances warrant. In this discussion, however, we turn to a notable trend that had been emerging pre-Glenn, is continuing unabated and may be accelerating post-Glenn – that trend is the tendency of the courts to examine in greater detail the actual evidence on which claims determinations are based and the administrators’ rationales for making their determinations based on that evidence. Even under an arbitrary and capricious standard of review, generally held to be the most deferential standard, the courts are more willing to take the administrators’ word at face value. In addition, courts are scrutinizing claim determinations with an eye towards ERISA’s procedural requirements, and striking down those that fail to comply. The two cases discussed here are clear evidence of both these trends.
I. Messy Claims Procedure Leads Court to Overturn Claim Denial
From a quick summary of the claims procedure in Klein v. Central States Health Plan, 2009 WL 1416048 (N.D. Ohio), it would appear that this was a fairly straightforward denial of a sophisticated cancer treatment because it was experimental and/or not medically necessary. But the Court’s assessment of how the claim was reviewed led it to find that determination to be arbitrary and capricious. Following the trail of evidence relied on by the claims administrators and how they assessed that evidence, provides valuable lessons on some very basic claims adjudication do’s and don’ts.
Michael Klein suffered from chronic lymphocytic leukemia (“CLL”), and after standard chemotherapy treatments and his participation in a clinical study of an experimental drug GRN- 163L (which had been approved for coverage), his disease had continued to progress. Dr. Andritsos, Klein’s treating physician sought approval from the Central States Health Plan for an allogenic bone marrow transplant from his brother, who was a perfect match. Medical Mutual, on behalf of the Central States Plan, consulted an independent reviewer, and denied coverage on the grounds that the treatment was experimental. The report was not part of the administrative record. Dr. Andritsos appealed and Medical Mutual again consulted and independent reviewer, and again consulted an independent reviewer, and again denied by claim as experimental. The second reviewer’s report was also not in the administrative record. Dr. Andritsos, in accordance with Ohio law, then submitted his request to three more independent reviewers, two of which said that coverage should be denied, which Medical Mutual did for a third time.
At this stage, Dr. Andritsos appealed to the Plan’s Appeal Committee which denied the claim on the basis of Section 4.02 of the Plan, which said in pertinent part that:
“A covered Indvidual shall not be entitled to payment for any charges for care,
treatment, services or supplies which are not medically necessary or are not
uniformly and professionally endorsed by the general medical community as
Standard medical Care, Treatment, services or Supplies.”
Dr. Andritsos appealed to the Plan again. The Plan consulted with yet another independent physician reviewer, Dr. Howard Fingert, who concluded that the procedure was experimental and not medically necessary. Dr. Andritsos then appealed to the Trustee Appellate Review committee of the plan, which again denied the claim, citing Section 4.02.
At this point the claim had been adjudicated six times, had been reviewed by six independent reviewers, and all but five of whom had concluded that the claim should be denied. So what led the court to reach the conclusion that the determination had been arbitrary and capricious?
As an initial matter, the Court noted that the Plan placed the burden of providing entitlement to benefits on the claimant. The claimant argued that despite the language of Section 4.2, cited above, his claim should have been determined under Section 4.17 which specifically addressed transplants, and which provided only that the procedure would be paid if the recipient provides requested documentation to the Trustee before the procedure and the Trustees approve it. The court noted that neither Section 4.02 nor 4.17 expands an individuals’ right to treatment, and while section 4.17 provides specific requirements for transplants, nothing in that section makes transplant treatment payable if it is otherwise barred by the general exclusion in Section 4.02. Thus, the Court found that the Plan was correct in deciding the claim under Section 4.02, and then went on to consider whether its denial under Section 4.02 was proper.
In denying his claim, the Plan cited the following fro the administrative record: (1) Dr. Fingert’s report, (2) statements of Dr. Andritsos, (3) statements of the reviewers relied on by Medical Mutual, and (4) statements in correspondence from Medical Mutual to Dr. Andritsos. In addition the administrative record had a number of medical journal articles, and had gone through an Ohio law review process. The Court addressed each of these.
1. The Fingert Report. Dr. Fingert not only did not examine the patient, but he did not examine the whole administrative record. He stated that he had reviewed only the ‘referral form and clinical highlights” in reaching his conclusions. Citing a 6th Circuit case, Spangler v. Lockheed Martin Energy Systems, Inc, the Court said that “An ERISA plan administrator acts arbitrarily and capriciously by relying on an expert report based on a ‘cherry-picked’ medical.”
2. Statements of Dr. Andritsos. The Plan claimed that Klein’s treating the physician admitted that the allogenic stem cell transplants are experimental when he said in a letter that “after completion of therapy, as well as progressive disease requiring salvage therapy with experimental therapeutics, an allogenic stem cell transplant was recommended to the patient.” The Court contended that a grammatically correct reading of this language indicates, not that the allogenic stem cell therapy was experimental, but that it was recommended only after the prior “salvage therapy with experimental therapeutics” proved unsuccessful. Reading the letter as the Defendants’ did, the Court concluded, was arbitrary and capricious. Moreover, the Defendants ignored Dr. Andritsos’ statements as to the effectiveness of this treatment and that it was “far superior to any commercially available chemo-therapy-based regime.”
3. The Three-Doctor Review Under Ohio Law. The Court openly noted that this procedure was neither required by the Plan document, and was likely preempted under ERISA, but did not reject it on these bases. Rather the Court found that these reviewers were not asked to determine whether the treatments were experimental or medically necessary under the Plan. They were never provided with a copy of Section 4.02. Rather, they addressed the issue prescribed under Ohio law, which focused on whether other treatments were superior to that proposed by the treating physician, and nothing more. Thus, reliance on these reports were not proper, especially when one reviewer disagreed with Defendants’ denials, and one other had commented that the treatment is appropriate for certain patients with Klein’s condition, a statement that was simply ignored.
4. Medical Mutual’s Correspondence with Dr. Andritsos. Medical Mutual cited two excerpts from its letters to Dr. Andritsos that it claimed supported its conclusions that the procedure was experimental. The Court found, however, that the letters did not quote from independent experts to that effect, but merely made conclusory assertions that this was the result of a “comprehensive review process.” In the Court’s view, the excerpts merely communicated Medical Mutual’s ultimate rationale, but did not cite any independent authority for it and could not be used as evidence for its conclusions.
5. Medical Journal Articles. Though these articles were not cited by any Defendants, they were in the record and the Court reviewed them. “I have read the articles. Though admittedly not medically trained, I conclude – and I think as a layman, I fairly can do so on reading these articles – that none clearly indicates that the proposed allogenic stem cell treatment is experimental for CLL. Indeed, most recommend this treatment at least for certain CLL cases.”
Finally, the Court looked at a letter from an attorney in the Plan’s law department which said that “I do not believe it would be arbitrary and capricious for the Fund’s Trustees to deny Mr. Klein’s request.” The Court’s response was blunt:
“Whether a decision would later be viewed as arbitrary and capricious should not be a part of the Trustee’s consideration. This is the legal standard for judicial review of the medical decision. The Plan Administrator may only deny a claim on the basis of terms set forth in the plan Documents. If the Trustees considered a standard other than that set forth in the Plan Documents, they acted arbitrarily.”
Faced with this analysis of the basis for the denial of Klein’s claim, the Court rejected it as arbitrary and capricious, and, given the critical nature of Klein’s condition, the unwarranted extension of the review process by a “detour for apparently extraneous review under Ohio law,” and the Trustees providing their reviewing physician with inadequate information, the Court felt there had been enough delay, and awarded benefits directly.
So what is to be gleaned from this? First and foremost, claims administrators must pay attention to the Plan documents. Second, merely referring medical decisions to independent review does not of itself insulate the decision from judicial scrutiny. Third, when referring the matter for an independent medical review, the reviewer should be given access to all relevant material in the patient’s file. Fourth, the claims administrator should pay attention to what the reviewers actually say, and not simply parrot the favorable conclusion while ignoring the unfavorable ones, or overlooking the rationale expressed for the conclusion if it muddies or complicates the result. Fifth, avoid unnecessary appeal steps not sanctioned by the Plan documents. Sixth, when it comes to the administrative record, it is the quality of the materials, not their quantity, that matters. Finally, assess the claim on the basis of the evidence presented, and not on the likelihood of what a reviewing court might say. Indeed, trying to outguess some judge who might be looking over your shoulder at some point in the future is a recipe for failure. Careful attention to the Plan documents, carefully reviewing and analyzing the whole of the administrative record, and basing the decision firmly on those documents with clear explanations linking the claim determination to those parts of the record on which it based is the surest way to influence a court to uphold the decision.
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