RECALIBRATING "EXPERIMENTAL TREATMENT EXCLUSION":
AN EMPIRICAL ANALYSIS
Won Bok Lee*
Health insurers usually exclude treatments without proven safety and
effectiveness. When a claim is denied on such grounds and the denial is
disputed in court, it is generally believed that the insurersface an uphill
battle in front of sympathetic judges. Some ,suggest that the insurers'
perceived odds in adjudications in turn make them hesitant to deny
coverage of experimental treatments in thefirst place, which may not be
socially desirable. Through an empirical analysis of all experimental
exclusion litigationsince 2003, this article will address thatperception.
In addition, through contents analysis, this article will show that the
courts have become more sophisticated in judging experimental
treatmentexclusion cases than in the past.
The results of this analysis have policy implications. As the new federal
regulations under the Affordable Care Act require internal appeal and
external review process, there will be a likely increase of coverage
disputes. If health insurers and policy holders become more aware of
the recent trends in court, their preference for settlement may shift.
More importantly, the results of this study have bearingon the evidencebased coverage policy in general. If health insurers still consider the
court as the bottleneck to adopting evidence-based coverage policye.g., cost-effectiveness-it may be time for reassessment and
recalibration.
I.Introduction ........................................................................................
II. Experimental Exclusion and Dispute ..............................................
III. Recent Trend in Experimental Exclusion Litigation: An
Em pirical Analysis .....................................................................
A . Data & M ethods ....................................................................
B . R esu lts ...................................................................................
C. Reason for Rejecting Experimental Exclusion .....................
D . Study Lim itations ..................................................................
E. Recalibrating Experimental Exclusion Litigation .................
IV. Role of Experimental Exclusion in New Technology, Insurance
172
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178
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183
188
195
196
* Associate Professor of Law, Ewha Womans University School of Law. I thank Steven
Shavell, Louis Kaplow, Aaron Kesselheim, Glen I. Cohen, Christopher Robertson and participants at the
Law and Economics Seminar at Harvard Law School for helpful comments. All errors remain mine.
This work was supported by the National Research Foundation of Korea Grant funded by the korean
Government (NRF-2012S 1A5B8A03034450).
UNIVERSITY OF CINCINNATI LAW REVIEW
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Coverage & Health Care Spending Triad ..................................
A. New Grievance Process Requirement under the Patient
Protection and Affordable Care Act .....................................
B. Big Picture: Experimental Exclusion & Health Care
Spending ...............................................................................
V . C onclusion .......................................................................................
196
196
198
20 1
I. INTRODUCTION
Health insurer's denial of coverage is plentiful.1 Yet, coverage denial
of treatments with unproven safety and efficacy, also known as
experimental treatments, 2 has not only created headline-grabbing jury
verdicts, 3 but also present important policy implications.
If a treatment, whether drug, medical device, or surgical procedure, 4
does not have proven safety and efficacy as defined by the Food, Drug,
and Cosmetic Act, why would the treating physician prescribe it or
perform it in the first place?
A treating physician prescribes
experimental treatments when a patient is suffering from a terminal
illness and has run out of standard treatment options; experimental
treatment may be the only possibility of recovery. In other cases, there
may be other treatment options but the physician may believe that
emerging technology is promising and better than standard treatments.5
Do health insurers readily pay for experimental treatment?
Unfortunately, health insurers usually exclude experimental treatments
1. One survey estimates that the aggregate rate of (partial or full) coverage denial ranges from
OFFICE, GAO- 11-268, PRIVATE
HEALTH INSURANCE: DATA ON APPLICATION AND COVERAGE DENIALS (2011).
2. Throughout this article, "experimental," "investigational," and "unproven" will be used
interchangeably.
3. E.g.,Erik Eckholm, $89 Million Awarded Family Who Sued H.MO., N.Y. TIMES (Dec. 30,
1993), http://www.nytimes.com/1993/12/30/us/89-million-awarded-family-who-sued-hmo.html.
4. Under the Food, Drug and Cosmetic Act, drugs and certain medical devices cannot be
marketed until they have proven safety and efficacy. That does not foreclose physicians from
prescribing FDA-approved drugs and devices for indications that were not approved by the FDA.
Prescription of a drug or medical device for a non-FDA approved indication is called "off-label" use.
"Off-label" treatments are often treated as experimental by health insurers, as they lack safety and
efficacy data. See infra text accompanying note 68.
5. Sometimes physicians based their belief on uncontrolled, observational reports. Without a
control group, observational reports of only treated patients can fail to assess the true benefit of the
treatment masked by 'placebo effect'. A. G. Johnson, Surgery as a Placebo, 344 LANCET 1140 (1994).
The long list of treatments that were accepted based on uncontrolled, observational studies later to be
found to be ineffective or even harmful include liberation therapy for chronic cerebrospinal venous
insufficiency in multiple sclerosis, vertebroplasty for osteoporotic vertebral fracture, arthroscopic
surgery for arthritis, high dose chemotherapy/autologous bone marrow transplant for breast cancer,
radical mastectomy for breast cancer, extracranial/intracranial arterial bypass for atherosclerosis,
jejunoileal (intestinal) bypass for weight reduction, gastric freezing for peptic ulcer, internal mammary
artery ligation for angina, colectomy for epilepsy and nephropexy for "floating-kidney."
11% to 24% of all claims. UNITED STATES GOV'T ACCOUNTABILITY
2014] RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
173
from their provided coverage because they do not rise to the standard of
care, the cost involved, and the uncertainty of safety. By excluding
experimental technology from coverage, insurers aim to strike a balance
between providing adequate coverage to their policy holders and
preventing actuarially uncalculated payout that can undermine the
financial stability of the insurer and force increases in insurance
premiums. If the policy holder believes the adverse determination was
unwarranted, litigation will ensue. As will be closely examined below,
scholars have believed that health insurers particularly fare badly in
courts in litigating coverage denial of experimental treatment, not least
due to sympathetic judges. This article addresses that belief against
empirical data. The issue warrants a closer look in light of the new
regulations implementing the Patient Protection and Affordable Care
Act (Affordable Care Act).6
Part II of this article will map out the overall landscape of disputes
between health insurers and policy holders when coverage is denied
because the treatment is experimental in addition to exploring the
dominant perception in literature that health insurers have difficulty
justifying their coverage denial in experimental treatment litigation.
That perception is tested in Part III through an empirical analysis of all
experimental exclusion litigation since 2003. Part IV will examine the
policy implications of the analysis in light of the new federal regulations
requiring external review of experimental exclusions. It will also
examine the implication on the much broader issue of evidence-based
coverage criteria that health insurers may consider.
II.
EXPERIMENTAL EXCLUSION AND DISPUTE
Experimental technology is usually carved out from health insurance
coverage through an exclusionary provision that requires one or more of
the following validations for coverage: safety and efficacy proven
through clinical trials (as reported in peer-reviewed medical literature),
general acceptance as safe and effective treatment by the medical
community, and/or Food and Drug Administration (FDA) approval
when applicable. 7 Below is an example definition of "experimental"
6. Pub. L. 111-148.
7. Experimental treatments were at first excluded based on the general "medical necessity"
clause, but a separate "experimental exclusion" provision began to be used in the 1970s when insurers
were unsuccessful in excluding experimental technology simply based on the broad "medical necessity"
requirement. Mark A. Hall and Gerard F. Anderson, Health Insurers'Assessment of Medical Necessity,
140 U. PA. L. REv. 1637, 1644-47 (1992). For the difference in function between "experimental
exclusion" and "medical necessity," see Mary Ader, Access to InvestigationalTreatments, 6 HEALTH
MATRIX 187, 190 (1996). Medicare, on the other hand, does not have a stand-alone exclusionary
provision and relies on the "reasonable necessity" standard instead to exclude experimental treatment
UNIVERSITY OF CINCINNATI LAW REVIEW
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from an actual case8:
"[E]xperimental or investigational of for research purposes" is
defined as a drug, biological product, device, treatment or
procedure that meets any one of the following criteria, as
determined by us:
- Cannot be lawfully marketed without the final approval of the
United States Food and Drug Administration (FDA) and which
lacks such final FDA approval for the use or proposed use, unless
(a) found to be accepted for that use in the most recently
published edition of the United States Pharmacopeia-Drug
Information for Healthcare Professional (USP-DI) or in the most
recently published edition of the American Hospital Formulary
Service (AHFS) Drug Information, or
(b) identified as safe, widely used and generally accepted as
effective for that use as reported in nationally recognized peer
reviewed medical literature published in the English language as of
the date of service; or
(c) is mandated by state law;
* Is a device required to receive Premarket Approval (PMA) or
510K approval by the FDA but has not received a PMA or 510K
approval;
- Is not identified as safe, widely used and generally accepted
as effective for the proposed use as reported in nationally
recognized peer reviewed medical literature published in the
English language as of the date of service;
- Is the subject of a National Cancer Institute (NCI) Phase I, II
or III trial or a treatment protocol comparable to a NCI Phase I, II
or III trial, or any trial not recognized by NCI regardless of phase;
or
* Is identified as not covered by the Centers for Medicare and
Medicaid Services (CMS) Medicare Coverage Issues Manual, a
CMS Operational Policy Letter or a CMS National Coverage
Decision, except as required by state or federal law.
How often are coverage claims denied on account of experimental or
investigational treatment exclusion? According to one report, 9.59%
and 5.77% of all claims denied by two major health insurers were coded
as experimental exclusion and investigational treatment exclusion,
respectively. 9
from coverage. 42 U.S.C. § 1395y(a)(1)(A).
8. Boldon v. Humana Ins. Co., 466 F.Supp.2d 1199, 1204-05 (D. Ariz. 2006).
9. AM. MED. ASS'N, NATIONAL HEALTH INSURER REPORT CARD 2013 (2013), available at
http://www.nhxs.com/docs/files/File/2013-nhirc-results.pdf. The exact statistics are hard to come by, as
2014]
RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
175
When the policy holder cannot agree with the adverse determination
by the insurer based on experimental exclusion, he or she can pursue a
grievance process with the insurer and, if unsuccessful, further challenge
the denial in litigation. The grievance process that a beneficiary can
pursue with the insurer after claim denial includes internal appeal and
external review. In an internal appeal, the claim denial is reviewed by
the health insurer's internal personnel, while external review is handled
by an outside party independent from the health insurer.
Once the policy holder has exhausted the internal appeal and external
review, the policy holder can file a lawsuit to challenge the claim denial.
When an experimental exclusion case is brought to the court, literature
tends to show that health insurers face an uphill battle, '0 with
sympathetic judges often siding with the patient and creating "judgemade" coverage of experimental technology."
This rather pessimistic view of health insurers' fate in experimental
exclusion litigation finds support in a series of litigation in the late
1980s through the early 2000s arising from insurer's denial of coverage
for one particular cancer therapy: high-dose chemotherapy and
autologous bone marrow transplant (HDC/ABMT) for advanced breast
cancer. 12 In a HDC/ABMT procedure, bone marrow is harvested from
the cancer patient, and an intensified dose of cancer-killing alkylating
agents is subsequently administered to the patient.1 3 The bone marrow
is then salvaged by transfusing the pre-harvested bone marrow of the
patient. The dose intensification of chemotherapy is designed to kill a
not all insurers will strictly and consistently adhere to the administrative codes.
10. E.g., Grace Powers Monaco & Rebecca L. Burke, Insurer as Gatekeeper - Part Two: Policy
Obstacles in Unproven Methods Litigation, 20 FORUM 400 (1984); Lee N. Newcomer, Defining
Experimental Therapy - A Third-PartyPayer's Dilemma, 323 NEW ENGL. J. MED. 1702 (1990); Frank
P. James, The Experimental Treatment Exclusion Clause, 12 J. LEGAL MED. 359 (1991); Paul J. Molino,
Reimbursement Disputes Involving Experimental Medical Treatment, 24 J. HEALTH HOsP. L. 329
(1991); Hall & Anderson, supra note 7; Richard S. Saver, Reimbursing New Technologies: Why Are the
Courts Judging Experimental Medicine?, 44 STAN. L. REV. 1095 (1992); M. Dubinsky & J.H. Ferguson
, Court-Ordered Reimbursement for Unproven Medical Technology: Circumventing Technology
Assessment, 269 JAMA 2116 (1993); Lee N. Newcomer, Technology Assessment, Benefit Coverage,
and the Courts, in ADOPTING NEW MEDICAL TECHNOLOGY (Annetine Gelijns and Holly V. Dawkins
ed., 1994); Ader, supra note 7; Natalie L. Regoli, Insurance Roulette: The Experimental Treatment
Exclusion and DesperatePatients, 22 QUtIPIAC L. REV. 697 (2003); Peter D. Jacobson & Shannon
Brownlee, The Health Insurance Industry and the Media: Why the Insurers Aren't Always Wrong, 5
Hous. J. HEALTH L. & POL'Y 235 (2005).
11. Michelle M. Mello & Troyen A. Brennan, The Controversy Over High-Dose Chemotherapy
With Autologous Bone Marrow TransplantForBreast Cancer,20 HEALTH AFF. 101, 109 (2001).
12. This ill-fated procedure provided fodder large enough for numerous articles and a 350 pagesplus tome to be written about it. RICHARD A RETTIG ET AL., FALSE HOPE: BONE MARROW
TRANSPLANTATION FOR BREAST CANCER (2007).
13. Raymond B. Weiss, The Randomized Trials of Dose-Intensive Therapyfor Breast Cancer:
What Do They Mean for Patient Care and Where Do We Go From Here?, 4 ONCOLOGIST 450, 451
(1999).
UNIVERSITY OF CINCINNATI LAW REVIEW
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greater number of cancer cells than regular dosage would, but, at the
same time, it eradicates stem cells in the bone marrow, an otherwise
lethal outcome but for the bone marrow transplant.
Based on
inconclusive evidence of the superiority of this treatment, 14
HDC/ABMT gained rapid acceptance in the 1990s.
HDC/ABMT was an expensive procedure.
It typically costs
anywhere from $80,000 to $150,000, whereas conventional therapy
costs between $15,000 and $40,000.15 Many health insurers initially
denied coverage of the treatment on the ground that the technology had
not fully proven its effectiveness through clinical trials.
Inevitably, lawsuits followed, and courts were divided and outcome
unpredictable.' 6 A number of factors influenced the court in deciding
whether HDC/ABMT for breast cancer should fall under "experimental"
treatment. These factors included whether the experimental exclusion
clause was clearly defined in the insurance policy; whether the insurer
had taken reasonable steps in arriving at its coverage denial; whether the
medical community generally accepted HDC/ABMT for breast cancer;
and whether the insurer's denial
of coverage was solely driven by the
17
insurer's pecuniary interest.
Under the threat of litigation as well as the mounting public
14. E.g., W.P. Peters et al., High-Dose Chemotherapyand Autologous Bone Marrow Support as
Consolidation After Standard-Dose Adjuvant Therapy for High-Risk Primary Breast Cancer, II J.
CLINICAL ONCOLOGY 1132 (1993). This phase 2 clinical trial used historical results as control, rather
than a prospective randomized controlled study. Id.
15. U.S. GEN. ACCOUNTING OFFICE, HEHS-96-83, COVERAGE OF AUTOLOGOUS BONE
MARROW TRANSPLANTATION FOR BREAST CANCER 3 (1996).
16. Michelle M. Mello & Troyen A. Brennan, supra note 11, at 108-09 For example, the court
ordered payment in Kekis v. Blue Cross & Blue Shield, 815 F. Supp. 571 (N.D.N.Y. 1993); Wilson v.
Group Hospitalization & Medical Services., Inc., 791 F. Supp. 309 (D.D.C. 1992); Kulakowski v.
Rochester Hosp. Serv. Corp., 779 F. Supp. 710 (W.D.N.Y. 1991); White v. Caterpillar, Inc., 765 F.
Supp. 1418 (W.D. Mo. 1991); Bucci v. Blue Cross-Blue Shield of Connecticut, Inc., 764 F. Supp. 728
(D. Conn. 1991); Adams v. Blue Cross & Blue Shield of Maryland, Inc., 757 F. Supp. 661 (D.Md.
1991); Pirozzi v. Blue Cross-Blue Shield of Virginia, 741 F. Supp. 586 (E.D.Va. 1990); Bailey v. Blue
Cross/Blue Shield of Virginia, 866 F. Supp. 277 (E.D.Va. 1994), aff'd 67 F.3d 53 (4th Cir. 1995),
Scalamandre v. Oxford Health Plans, Inc., 834 F. Supp. 1050 (E.D.N.Y. 1993), Simkins v. Nevadacare,
229 F.3d 729 (9th Cir. 2000), Henderson v. Bodine Aluminum, Inc., 70 F.3d 958 (8th Cir. 1995).
On the other hand, the court denied payment in Fuja v. Benefit Trust Life Ins. Co., 809 F. Supp. 1333
(N.D. Ill. 1992), rev'd, 18 F.3d 1405 (7th Cir. 1994); Nesseim v. Mail Handlers Benefit Plan, 792 F.
Supp. 674 (D.S.D. 1992), rev'd 995 F.2d 804 (8th Cir. 1993); Caudill v. Blue Cross-Blue Shield of
North Carolina, 1992 WL 486661 (E.D.N.C. 1992), affrd 999 F.2d 74 (4th Cir. 1993); Harris v. Mutual
of Omaha Cos., 992 WL 421489 (S.D. Ind. Aug. 26, 1992), aff'd 992 F.2d 706 (7th Cir. 1993); Clark v.
K-Mart, No. 91-3723, 1992 WL 106935 (3rd Cir. 1992); Holder v. Prudential Ins. Co., 951 F.2d 89 (5th
Cir. 1992); Boland v. King County Medical Blue Shield, 798 F. Supp. 638 (W.D. Wash. 1992); Thomas
v. Gulf Health Plan, Inc., 688 F. Supp. 590 (S.D. Ala. 1988); Peruzzi v. Summa Medical Plan, 137 F.3d
431 (6th Cir. 1998).
17. Denise S. Wolf, Who Should Payfor "Experimental" Treatments?Breast Cancer Patients v.
Their Insurers,44 AM. U. L. REV. 2029 (1995).
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
177
pressure, 18 many health insurers acquiesced and reluctantly started to
cover HDC/ABMT. 19 An estimated 42,680 HDC/ABMT procedures
were performed on breast cancer patients during the 1990's and cost
probably more than $3.4 billion.20
The controversy within the medical community surrounding the true
benefit of the procedure, however, never subsided, due to the lack of any
definitive results from statistically robust, randomized controlled clinical
trials. After much difficulty-partly because breast cancer patients
preferred to receive HDC/ABMT rather than enroll in a clinical trial in
which they stood a chance of being assigned to the placebo control
group--large-scale randomized controlled studies with statistical
robustness only became available in the late 1990s. 21 Dashing hopes of
many breast cancer patients and their families, these studies concluded
that patients undergoing HDC/ABMT did not survive any longer than
those that received conventional chemotherapy. 22 To make matters
worse, patients who underwent HDC/ABMT suffered more serious side
effects, such as infection, diarrhea, and vomiting.23 Subsequently, the
procedure was gradually phased out as treatment for advanced breast
cancer.
The dramatic rise and fall of HDC/ABMT has left behind
lessons for the medical community, insurers, patient advocacy groups,
policy makers, and the courts.24
Over a decade has passed since the HDC/ABMT controversy. Is
18. If litigation was an effort to force health insurers to pay for the experimental HDC/ABMT
procedure on an individual basis, a campaign with a far wider reach and more lasting effects on health
insurance coverage for this experimental procedure was rolled out by the breast cancer patients and
advocacy groups through legislative lobbying. On this battle front, the breast cancer advocacy groups
were very successful. Many states passed legislation requiring health insurers to cover HDC/ABMT for
breast cancer. Id. at 2094-2102. In addition, Office of Personal Management required that all Federal
Employees Health Benefits Program cover the procedure. U.S. GENERAL ACCOUNTING OFFICE, supra
note 15, at 3. These legislations went into effect before any conclusive evaluation of the procedure
through randomized, controlled clinical trials had been completed.
19. U.S. GENERAL ACCOUNTING OFFICE, supra note 15, at 8-9.
20. Mello & Brennan, supranote 11, at 110.
21. Sjoerd Rodenhuis et al., Randomised Trial of High-Dose Chemotherapy and Haemopoietic
Progenitor-CellSupport in Operable Breast Cancer with Extensive Axillary Lymph-Node Involvement,
352 LANCET 515 (1998); Edward A. Stadtmauer et al., Conventional-Dose Chemotherapy Compared
with High-Dose Chemotherapy Plus Autologous Hematopoietic Stem-Cell Transplantation for
Metastatic Breast Cancer, 342 1069 (2000); Gabriel N. Hortobagyi et al., Randomized Trial of HighDose Chemotherapyand Blood Cell Autografts for High-Risk Primary Breast Carcinoma,92 J. NAT'L
CANCER INST. 225 (2000).
22. One South African physician reported positive results from randomized, controlled clinical
trials of HDC/ABMT on breast cancer patients. His studies, however, were later found to be based on
serious scientific misconduct. Raymond B. Weiss et al., High-Dose Chemotherapy for High-Risk
PrimaryBreast Cancer:An on-Site Review of the Bezwoda Study, 355 LANCET 999 (2000).
23. Edward A. Stadtmauer et al., supra note 21, at 1074-75. •
24. E.g., Mello & Brennan, supranote 11; Peter D. Jacobson and Stefanie A. Doebler, We Were
All Sold a Bill of Goods: Litigating the Science of Breast Cancer Treatment, 52 WAYNE L. REV. 43
(2006).
UNIVERSITY OF CINCINNATI LAW REVIEW
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experimental exclusion still vulnerable to reversal by judges, as
literature seems to believe? 25 How often do courts disagree with an
insurer's findings that a technology-whether procedure, drug, or
medical device-is experimental? When the court reverses the insurer's
experimental exclusion, what is the reasoning behind the court's
decision? In the next part, I will try to answer these questions by
looking into court opinions in experimental exclusion litigation since
2003.
III. RECENT TREND
IN EXPERIMENTAL EXCLUSION LITIGATION: AN
EMPIRICAL ANALYSIS
The purpose of this empirical analysis is to assess the frequency and
reasoning in the courts' disagreement with health insurer's
determination of experimental technology.
A. Data & Method
26
All data in this empirical study were collected using the advanced
search in WestLaw Next. First, a WestLaw Next search string was built
to capture all cases since 2003 in which insurance coverage was denied
by an insurer or a third-party payer on the ground that the treatment
technology involved was "experimental,"
"investigational" or
"unproven." The year 2003 was selected as the cut-off in light of the
fact that HDC/ABMT litigation for breast cancer largely disappeared by
2003.27 The HDC/ABMT litigation has been chosen for comparison for
a couple of reasons: (1) there have been studies that looked into the
HDC/ABMT litigation data and (2) the HDC/ABMT could have been
the turning point of the court's attitude towards experimental treatment.
The following was the search string used in WestLaw:
DA(aft 01-01-2003 & bef 08-31-2013) & OP((experimental
investigational unproven) /s (procedure drug device therapy
treatment transplant) and (deni! /4 (cover! benefit! reimburs!
authoriz! claim claims 28)))
25. E.g., Mello & Brennan, supra note 11, at 112-14; P. D. Jacobson et al., Litigating the
Science of Breast CancerTreatment, 32 J. HEALTH POL. POL'Y & L. 785, 809-10 (2007).
26. For methodologies on case selection and coding for content analysis in general, see Mark A.
Hall and Ronald F. Wright, Systematic Content Analysis of Judicial Opinions, 96 CALIF. L. REV. 63
(2008).
27. As late as 2002, HDC/ABMT coverage denial was still litigated. E.g., Zervos v. Verizon
New York, Inc. 277 F.3d 635 (2d Cir. 2002).
28. WestLaw has recently banned a wild card use of the word "claim" as in "claim!".
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
179
The initial search resulted in a total of 597 opinions, 29 of which 519 were
classified by WestLaw Next as civil cases and 155 as criminal. 30 The vast
majority of the civil cases were disability cases, employee benefit cases, or
patent cases containing all search keywords or quoting a precedent in
which all of the search keywords were included. This required skimming
all 519 civil cases to select only those in which experimental exclusion was
actually disputed, 3' netting 135 cases of genuine experimental exclusion
dispute.32 I further applied additional inclusion and exclusion criteria to
these 135 experimental exclusion cases.
Excluded from the analysis were cases in which the court did not
review the merit of the insurer's experimental exclusion. For example,
cases decided purely on a defect in the insurer's grievance proceduresuch as the insurer's failure to send proper notification-were
excluded.33 By the same rationale, Medicare cases in which the decision
was based on the exclusionary rule-making process of the program,
rather than on the third-party payer's proper application of the
exclusionary rule, were excluded.34
On the other hand, opinions that did not dispose of the case-i.e.,
opinions that did not result in a "win" for either the plaintiff or the
defendant-were included, as long as the opinion provided the court's
substantive reasoning for either accepting or rejecting the insurer's
For example, a decision to deny the
experimental exclusion.
defendant's motion to dismiss and instead to send the case to trial would
be included if the opinion passed its judgment on the insurer's
application of the experimental exclusion, even though the case was not
disposed of. 35 Similarly, decisions that remanded the case to the insurer
for further review consistent with the court's opinion were retained.
Also included were both trial and appellate court decisions of the
29. As WestLaw constantly adds cases to their database, running the same search string may turn
up different results depending on when the search is run. The data in this study are based on the search
results as of November 1, 2013. Upon inquiry, the author will provide the list of the 519 civil cases
categorized into (1) non-experimental exclusion cases, (2) experimental exclusion cases without
relevance, and (3) experimental exclusion cases with relevance for this study.
30. The sum of these two categories exceeds 597, because some of the cases were categorized as
both civil and criminal by WestLaw.
31. Because this determination of relevance requires judgment of the researcher, it may affect the
general reproducibility of the study. The reasonably objective case selection criteria somewhat
mitigates that risk. Hall & Wright, supra note 26, at 106.
32. One case where the defendant was an external review agency but the result was imputed to the
insurer was also included. Vellios v. IPRO, External Review Agent, 765 N.Y.S.2d 222 (Sup. Ct. 2003).
33. E.g., Zalduondo v. Aetna Life Ins. Co., 941 F. Supp. 2d 125 (D.D.C. 2013).
34. For example, the plaintiff may challenge an exclusionary provision in the federal regulation
itself (e.g., 42 C.F.R. § 411.15(k)(1)) rather than challenge the interpretation or application of that rule.
E.g., Yale-New Haven Hosp. v. Leavitt, 470 F.3d 71 (2d Cir. 2006).
35. E.g., Chapman v. Anthem Health Plans of New Hampshire, Inc., no. 03-CV-480-PB, 2005
WL 1123949 (D.N.H. May 12, 2005).
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same case, if both reviewed the merits of the insurer's coverage denial.36
To avoid "double-counting" of the same case in the analyses below,
however, only the highest-level opinion is tallied when the dependent
37
variable being examined is the reversal of the insurer's determination.
Lastly, a few first-party insurance disputes were also included, in
which the treatment's experimental nature was advanced as defense for
non-coverage by the insurer, even in the absence of a specific
experimental exclusionary provision in the policy. Although they are
not technically health insurance litigation, they nonetheless qualify as
reflection of the courts' reasoning on the appropriateness of the insurer's
determination of experimental medical technology.
Applying these exclusion and inclusion criteria resulted in sixty-three
court opinions, representing fifty-seven unique cases when multiple
opinions (e.g., district court opinion and appellate court opinion) of the
same case are counted as one. The final results of the selection process
are compiled in Table 1.
Figure 1 Case Selection Process
Initial Search
I(nm697)I
36. By the same token, both preliminary injunction opinion and the subsequent opinion on the
merits of the same case would have been included, but there was no such case.
37. Mark A Hall et al., JudicialProtectionof Managed Care Consumers: An EmpiricalStudy of
Insurance Coverage Disputes, 26 SETON HALL L. REV. 1055 (1995) took this approach and included the
highest-level decision when appeals resulted in multiple decisions from a single case.
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
181
Table 1 Total Number of Opinions Found
Published
Unpublished
Total
Federal
14
36
50
State
7
6
13
Total
21
42
63
1. Coding
All selected opinions were then coded according to a code book for
content analysis. 38 The code book contained variables that identified the
case (title, citation, court, date of decision, reporter), parties (plaintiff
type, insurer type 3 9), technology in dispute (description of technology,
target disease, seriousness of the disease, technology category, 41
validation of technology at the time of coverage denial 42), procedural
attributes (granularity of experimental definition in the policy, preauthorization, initial coverage reviewer, 4 3 number of appeals, appeal
reviewers, 44 state-mandated reviews), court's decision (standard of
review, judgment & relief 45), and court's reasoning.46 The coding was
performed solely by the author to ensure consistency. 47 It turns out that
many opinions did not contain sufficient information to fill all the
variables in the code book. Consequently, not all variables were utilized
in the ensuing analyses.
38. Copies of the code sheet and the raw data used in this study are on file with the author and
available by request.
39. The vast majority were health plans under ERISA, but some were public programs such as
Medicare or Medicaid. As mentioned earlier, first-party insurance disputes are also included to the
extent the court passed its judgment on the insurer's denial of benefit based on experimental exclusion.
40. This variable had a Boolean value of either true or false and would have "True" value if the
disease is a life-threatening disease such as cancer.
41. Drug, device, procedure or combination.
42. Under clinical trials, safety/efficacy proven for other indication, or unproven.
43. Internal or external.
44. Internal or external.
45. The options for this variable include "judgment in favor of plaintiff/defendant," "remand to
insurer for further review consistent with the court's opinion," "send to trial," "preliminary injunction
granted/denied," and "plaintiff prevails on experimental exclusion but loses on other ground."
46. The options for this variable include "interpretation of the policy by insurer rejected," "other
studies supporting the technology at issue," "expert opinions," "treating physician's opinion," "general
acceptance in medical community," "other insurer's coverage," "irregularity in insurer's past
determination." "insurer's burden to prove experimental nature not met," and "miscellaneous."
47. Reproducibility of coding is an important issue in content analysis. Mark A. Hall & Ronald
F. Wright, Systematic Content Analysis of Judicial Opinions, 96 CALIF. L. REv. 63, 112-16 (2008).
Since most of the coding variables used in this study are meant to capture objective characteristics of the
opinions, a separate statistical testing of the reliability of subjective coding was not conducted.
UNIVERSITY OF CINCINNATI LAW REVIEW
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2. Why No Statistical Tests?
Not all opinions written by judges are published in the official court
reporters, such as the Federal Reporter. When the authoring judge
believes that the opinion does not have precedential value, he or she can
suppress publication. 48 "Unpublished" does not mean "unavailable,"
however. Commercial legal databases such as WestLaw carry a large
number of "unpublished" court opinions, both federal and state, in
addition to all published opinions. 49 WestLaw chooses which
unpublished opinions will be made available on their database based on
certain proprietary metrics, including the importance of the decision. 50
Unpublished federal court opinions are said to be more widely available
than unpublished state court opinions in commercial legal databases.51
Overall, both published opinions and unpublished opinions available
on WestLaw are "selected" based on certain criteria by judges in the
former and by WestLaw personnel in the latter. Consequently, the
opinions available on WestLaw-the sum of published opinions and
Westlaw-available-unpublished opinions-may not share the same traits
as the rest of all written opinions. It follows that making an inference to
the population of interest in this analysis-all court opinions between
2003 and 2013-from the WestLaw-available opinions using a formal
statistical test is likely inappropriate and potentially misleading. That is
the reason this study presents only descriptive analyses and does not
attempt to make statistical inferences.
48. Andrew T. Solomon, Making Unpublished Opinions Precedential:A Recipe for Ethical
Problems & Legal Malpractice,26 MIss. C. L. REV. 185, 189-191 (2006). "Unpublished federal circuit
opinion" has actually become a misnomer because, since 2005, even those opinions chosen to become
"unpublished" by the court are now published in the FederalAppendix. Id. at 207-08.
49. Unreported
Decisions,
ZIMMERMAN'S
RESEARCH
GUIDE,
http://Iaw.lexisnexis.com/infopro/zimmermans/disp.aspx?z=208 (last visited Apr. 1, 2014).
50. E-mail from WestLaw representative to author (June, 2013) (on file with the author).
51. Solomon, supra note 48, at 210. (citing two reasons for the less availability of state
unpublished opinions: (1) less interest in aggregating state unpublished opinions on the part of
commercial legal database vendors, and (2) no comprehensive statutory requirement, like the federal EGovernment Act of 2002, Pub. L. No. 107-347, for the state courts to provide online access to opinions
at the state level).
2014]
RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
183
B. Results
1.Overall Trend
Table 2 Overall Outcomes
E~rimento!
Eprmental
Detwniarop
00tDulnaion
2003
2
1
3
2004
1
8
9
2005
3
3
6
2006
4
4
8
2007
1
1
2
2008
1
5
6
2009
1
4
S
2010
1
3
4
2011
1
8
9
2012
1
4
5
Year
Total
16 (2Z.1%)
41 71.9%)
Total
57
Table 2 is a break-down of opinions in the data by the year in which
each opinion was rendered. 52 It counts only the highest-level opinion if
multiple opinions of the same case are available, as mentioned above.5 3
There is no noticeable increase or decrease in the number of cases
during the ten-year period. No previous study gathered the results of
experimental exclusion litigation in a similar manner, but Jacobson's
study of reported cases of HDC/ABMT litigation between 1988 and
2002 provides meaningful comparison.54 During that period, patients
won forty-four cases and insurers won forty-three out of a total of 87
HDC/ABMT cases, providing a more even split between patients and
52. In Table 2 and Table 3, caution is warranted in interpreting the "experimental determination
rejected" and "experimental determination upheld" columns. As the column legends read, the
categorization is based on whether the courts reversed the insurer's determination that some treatment
was experimental. As such, the numbers under the "experimental determination rejected" column do
not necessarily mean "wins" for the patient. For example, in one rare instance, the court rejected the
insurer's determination of the technology at issue as experimental but still found for the insurer on some
other ground. McHenry v. PacificSource Health Plans, 679 F. Supp. 2d 1226 (D. Or. 2010). In
addition, one case was remanded back to the insurer for redetermination of coverage, which ultimately
may or may not have reversed the initial exclusion, and another was sent to trial.
53. This explains why the total number of opinions below are slightly smaller than the total
tallied in Table 1.
54. P. D. Jacobson et al., Litigatingthe Science of Breast Cancer Treatment, 32 J. HEALTH POL.
POL'Y & L. 785, 790-92 (2007).
UNIVERSITY OF CINCINNATI LAW REVIEW
[VOL. 83
insurers. 55 In contrast, as can be seen above, the results from the more
recent ten-year period are far more favorable to the insurers.
Table 3 is a tabulation of the results segmented by various
independent variables.
Table 3 Analysis of Experimental Exclusion Cases
Experimental
Determination
Rejected
16 (28.1%)
Total
U _
-h-ed
blJ~*
Published
Experimental
Determination
Upheld
41 (71 SM)
Total
67
-------
Unpublished
10 (50.0%)
6 (16.2%)
10 (50%)
31 (83.8%)
20
37
Federal
12 (26.7%)
33 (73.3%)
45
4(33.%)
8(66.7%)
12
6 (71A%)
10 (83.3%)
24(66.7%)
1 (100.0%)
1 (100l0%)
7
12
36
State
Device
Drug
Procedure
Device & Procedure
Drug & Procedure
2(28.6%)
2 (16.7%)
12(33.3%)
Ufe-Threaening
Not Life-Threatening
6 (30.0%)
10 (27.0%)
14 (70.0%)
27 (73.0%)
20
37
ERISA Self-insured
ERISA Non-Self Insured
2 (22.2%)
10 (313%)
7 (77Z%)
22[68.8%)
9
32
1
1
Other Prvate
2(100.0%)
2
First-Party Insurer
Medicare
Other Federa Programs
I 110.0%)
3 (100A0%)
1 500%)
I
3
2
(26.0%)
3 (76A%)
4
1 (33-3%)
1 (100.0%)
2 (66.7%)
3
1
Medicaid
Other State Programs
Not clear
1 (50.0%)
2. Published vs. Unpublished
Unpublished opinions available on WestLaw, both federal and state,
were included in this study for three reasons. 56 First, for content
55. Id. Jacobson et al. also included only reported cases in which the court addressed substantive
legal questions and excluded those cases decided on procedural issues.
56. The citation format for the unpublished opinions in this study contains the designation "WL,"
2014]
RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
185
analysis that examines the reasoning behind the ruling, the lack of
precedential value should not be as important. Second, one of the
objectives of this study is to test the belief found in literature that
experimental exclusion determined by insurers is vulnerable to reversal
by the court. 57 Since past literature on experimental exclusion cases
cited both published and unpublished opinions, it is only appropriate to
include unpublished opinions in this study as well. Last, inclusion of
unpublished opinions would mitigate publication biases that may arise if
only published opinions are used in the analysis. 58 By including as
many opinions as available in the analysis, the data will gain more
resemblance to the population of all written opinions.
As referenced in Table 3, the publication status of the case is the only
independent variable which seems to affect the overall outcome. For all
other independent variables, the outcome is roughly 3:7 in favor of the
insurer, unless the sample size is too small. In previous studies
exploring other types of litigation, published opinions as a whole had
different outcomes from the unpublished opinions. 59 The discrepancy
between the published opinions and the unpublished ones is probably
the result of selection bias-i.e., a case where an individual defeats a
corporate insurer is more likely to interest judges and commercial
database vendors for publication. This raises the possibility that
unpublished opinions unavailable on WestLaw are more likely to be in
favor of the insurer than the patient. If that is the case, the actual
outcome of all experimental exclusion litigation would be even more
favorable towards insurers than the numbers suggest in this study.
3. Federal Court Opinions vs. State Court Opinions
The data in this study contain far more federal court opinions than
state court opinions.60 The difference can easily be explained with the
which stands for WestLaw.
57. See supra note 25.
58. W.M. Sage, Judicial Opinions Involving Health Insurance Coverage: Trompe L 'Oeil or
Window on the World, 31 IND. L. REv. 49, 65-66 (1998); Michelle M. Mello & Kathryn Zeiler,
Empirical Health Law Scholarship: The State of the Field, 96 GEO. L. J. 649, 658 (2007). Previous
empirical analyses of health insurer's denial of coverage relied on published opinions only. See Mark A
Hall et al., Judicial Protection of Managed Care Consumers: An Empirical Study of Insurance
Coverage Disputes, 26 SETON HALL L. REv. 1055 (1995) (coverage disputes in general); P.D. Jacobson
et al., The Role of the Courts in Shaping Health Policy: An EmpiricalAnalysis, 29 J.L. MED. & ETHICS
278 (2001) (litigation against managed care organizations in general).
59. See Peter Siegelman & John J. Donohue, Studying the Icebergfrom Its Tip: A Comparisonof
Published and Unpublished Employment Discrimination Cases, 24 LAW & Soc'Y REv. 1133 (1990)
(discovering difference in patterns between published and unpublished opinions in employment
discrimination cases).
60. This finding is shared by two previous empirical studies on health insurance litigation. See
UNIVERSITY OF CINCINNATI LAW REVIEW
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preemption under the federal Employee Retirement Income Security Act
(ERISA) for employer-sponsored health insurance. 6 1 Adding to the
difference is WestLaw's tendency to catalogue federal court opinions
more extensively. In Table 3, reversal rates between federal and state
courts are very close. In ERISA litigation, coverage denial is usually
reviewed under an abuse of discretion standard, rather than the more
strict de novo standard, if the claim administrator has discretion to
interpret the plan. 62 Under the abuse of discretion standard, the court
considers whether-the denial to provide a benefit was arbitrary and
capricious, as opposed to whether the court would have reached the
same conclusion as the claim administrator for the insurer. The abuse of
discretion standard thus makes it somewhat more difficult for the
plaintiff to reverse the administrator's denial of coverage.6 3 In light of
the abuse of discretion standard that many of the 64
federal ERISA cases
applied, the similar reversal rate is very interesting.
4. By Technology Type
Categorization of the disputed technology into either drug, device or
procedure can be tricky in certain situations. The boundary between one
technology category and another becomes blurred when multiple
technologies are involved. In such cases, the coding was based on the
most salient experimental aspect of the treatment. For example, intraarterial delivery of radioactive element ittrium-90 to treat liver cancera "procedure" using a new "device"-was categorized as a "device"
Hall et al., supra note 37; Peter D. Jacobson, Role of ERISA Preemption in Health Reform:
Opportunitiesand Limits, 37 J. L. MED. & ETHICs 88 (2009).
61. 29 U.S.C. § 1144(a); see also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) (finding
that ERISA preempts state law tort and contract claims for improper processing of a benefit claim). The
ERISA preemption has also helped the availability of written opinions by foreclosing jury trials.
Although ERISA does not expressly state whether the beneficiary is entitled to jury trial, it has been
generally viewed by the courts that recovery of denied benefit under 29 U.S.C. §§ 1132(a)(l)(B) and
1132(a)(3)(B) is equitable in nature and not eligible for jury trial. Sage, supra note 58, at 54-55; but
see Donald T. Bogan, ERISA: Re-Thinking Firestonein Light of Great-West - Implicationsfor Standard
of Review and the Right to a Jury Trial in Welfare Benefit Claims, 37 J. MARSHALL L. REv. 629 (2003).
For a primer on ERISA preemption of health insurance coverage litigation, see Jacobson, supra note 60.
62. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 (1989). Jacobson, supranote 60, at
90-91; Patricia C Kuszler, FinancingClinical Research and ExperimentalTherapies: Payment Due, but
from Whom, 3 DEPAUL J. HEALTH CARE L. 441, 470-74 (1999).
63. P. D. Jacobson et al., Litigatingthe Science of Breast Cancer Treatment, 32 J. HEALTH POL.
POL'Y & L. 785, 792-795 (2007); E. Haavi Morreim, Benefits Decisions in ERISA Plans: Diminishing
Deference to Fiduciariesand an Emerging Problemfor Provider-SponsoredOrganizations,65 TENN.
L. REv. 511,517-23 (1998).
64. However, during the HDC/ABMT litigation in the late 1980s through the early 2000s, the
plaintiffs did slightly better than the defendants even in ERISA cases - winning 31 cases and losing 25
cases between 1988 and 2002, many of which were presumably reviewed under the abuse of discretion
standard also. Jacobson et al., supranote 54, at 793.
2014]
RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
187
case, because the effectiveness of the radioactive element on liver
cancer had not been validated, whereas the delivery method was not
experimental per se. 65 If a case equally involved multiple treatments of
different categories, then multiple categories were assigned to the
variable.66
While some scholars suggest that the lack of regulatory governance of
clinical procedures is partly to blame for the large number of
HDC/ABMT disputes, 67 off-label utilization of drugs and medical
devices, which do have to receive regulatory clearance, still represent
one-third of all cases as shown in Table 3. In almost all of the cases
where the disputed technology was a drug or a device, they were an
FDA-approved drug or device, prescribed by the treating physician for
off-label use, rather than an experimental drug without any FDAapproved indication. 68 The reversal rate is very similar across all types
of technologies.
5. Life-Threatening Condition
Experimental exclusion cases often deal with life-threatening
situations for the patient who runs out of conventional treatment options
and has to resort to unproven technology as a last hope. In that
situation, the court may lend a sympathetic ear to the plaintiff.69 One
possible measurement of the court's sympathy towards the patients'
agony is the correlation between the seriousness of the patient's
condition and the outcome of the case. According to the data in this
study, whether the patient's condition was life-threatening or not does
not seem to have affected the outcome. An earlier empirical
study
70
examining "medical necessity" disputes reported similar results.
65. See Boldon v. Humana Ins. Co., 466 F. Supp. 2d 1199 (D. Ariz., 2006).
66. In Jacobs v. Guardian Life Ins. Co. of Am., 730 F. Supp. 2d 830 (N.D. IT1.,2010), both
experimental procedure (intensity modulated radiation therapy) and off-label use of drugs (Avastin and
Abraxane) were at issue.
67. E.g., Jacobson et al., supra note 54, at 796.
68. There was only one case in which the drug had not received approval for any indication at all
at the time of litigation. It was Dr. Burzynski's antineoplaston in Emerson v. Medical Mutual of Ohio,
2004-Ohio-3892 (Ohio App. July 23, 2004). Dr. Burzynski's confrontation with the FDA is welldocumented in U.S. v. Burzynski Cancer Research Inst., 819 F.2d 1301 (5th Cir. 1987).
69. See Mark A. Hall & Gerard F. Anderson, Health Insurers'Assessment of Medical Necessity,
140 U. PA. L. REv. 1637, 1657-1662 (1992) (arguing that the court's sympathy can lead to undesirable
consequences, such as pricing policy holders out of the market by raising premiums and discouraging
insurers from cost-containing efforts).
70. Mark A. Hall et al., JudicialProtection ofManaged Care Consumers: An Empirical Study of
Insurance Coverage Disputes, 26 SETON HALL L. REV. 1055, 1064-65 (1995) (concluding from sample
data that the likelihood of death did not have consistent effect on the outcome in litigation involving
managed care's medical necessity cases).
UNIVERSITY OF CINCINNATI LAW REVIEW
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6. By Insurer Type
Since health insurance companies are sometimes vilified as profitoriented businesses, 71 one may wonder if not-for-profit insurers will be
viewed more generously by the court. For example, in self-insured
group health plans sponsored by employer, the financial risk is born by
the plan, not by an insurer, although an insurance company may still
handle claims and benefit determination as an administrator. Likewise,
public programs like Medicare or Medicaid are not businesses and may
escape any possible bias of the court.
From Table 3, it is difficult to tell if any type of insurer fares better or
worse than the other. Self-insured ERISA plans do not seem to have
done better than health plans fully funded by health insurers, although
statistical significance is unavailable. Likewise, public programs do not
appear to have had their decisions accepted by the court more often,
although Medicare prevailed in all three cases.
C. Reasonfor Rejecting ExperimentalExclusion
This subpart analyzes the reasoning of the court in all of the opinions
in which the court disagreed with the insurer's experimental exclusion.72
In total, there were eighteen cases in which the court rejected the
insurer's experimental exclusion. When more than one type of
reasoning was employed in an opinion, all of them were counted. The
reasons are further grouped into: (1) rejection of insurer's interpretation
of the exclusionary provision in the policy; 74 (2) evidentiary grounds;
and (3) other reasons.
71. Peter D. Jacobson & Shannon Brownlee, supranote 10, at 235. In one of the opinions in the
data set, the court expressed distaste for the way coverage was denied based on experimental exclusion.
Czarnopys v. Crystal Flash L.P., 200 F.Supp.2d 780, 781 (W.D. Mich. 2002) ("Let this case stand as
notice, health care plans do deny coverage for life saving procedures with nary a care for the carnage
left in their wake."). Incidentally, the defendant in this case was a self-insured employer-sponsored
health plan.
72. For this analysis, multiple (i.e., both lower and appellate) opinions of the same case are
counted, whereas in the preceding analyses only the highest-level opinion was counted. A larger pool of
opinions, regardless of whether or not they were upheld on appeal, will facilitate the objective of this
exercise, which is to analyze the reasoning of the court whenever it reverses the insurer's experimental
exclusion. By similar logic, one opinion that disagreed with the insurer's determination of experimental
nature of the therapy but still ruled in favor of the insurer on some other ground is also included.
McHenry v. PacificSource Health Plans, 679 F. Supp. 2d 1226 (D. Or. 2010).
73. This explains why the numerical sums of the reasons exceed 20.
74. This group includes Medicare or Medicaid cases, in which the court turned on the proper
interpretation of the governing statute on the benefit coverage. E.g., Edmonds v. Levine, 417 F. Supp.
2d 1323 (S.D. Fla. 2006).
75. These include coverage of the same technology by other insurer, a balancing between the
likelihood of success on the merits and irreparable harm in preliminary injunction cases, lack of
individualized determination, FDA approval obtained during dispute, etc.
2014]
189
RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
Table 4 is a summary chart of this break-down, and Table 5 shows
what reason(s) the court provided for reversing the insurer's exclusion in
each case.
Table 4 Reasons for Overturning Insurer's "Experimental" Exclusion
Court rejected insurer's interpretation of experimental exclusion provision
Burden of proof not met by insurer
Other studies supporting effectiveness of treatment
4 (22.2%)
7 (38.9%)
Wide use/general acceptance
5 (27.8%)
Expert opinion
3 (16.7%)
Treating physician's opinion
Other reasons
7 (38.9%)
11 (61.1%)
Evidence on safety/efficacy of technology at issue
1 (5.6%)
2 (11.1%)
During the HDC/ABMT litigation era prior to 2003, the dispute
centered around the interpretation of the insurance policy. The key issue
was usually whether terms such as "experimental" or "unproven" were
ambiguous and should be interpreted against the drafter under the
doctrine of contra preferentum or not. 76 In contrast, in the data set
examined by this study, the interpretational question of the underlying
insurance policy was the decisive factor in only seven cases,
representing 38.9% of all cases in which the experimental exclusion was
rejected by the court.77 Why is the interpretation less of an issue now
than during the HDC/ABMT days? One possible answer is that the
insurers may have learned from past litigation and refined the vulnerable
parts of the insurance policy, such as the definition of "experimental,"
leaving little room for court to maneuvering around semantics. 7' But
considering that the court can always find its way around even a very
detailed exclusionary provision if it chooses to, which it sometimes did
in HDC/ABMT litigation, 79 a more accurate assessment is that courts in
general do not strain the interpretation to provide coverage to patients as
76. Michelle M. Mello & Troyen A. Brennan, The Controversy Over High-Dose Chemotherapy
With Autologous Bone Marrow TransplantFor Breast Cancer, 20 HEALTH AFF. 101, 108-09 (2001).
See also Mark A. Hall & Gerard F. Anderson, Health Insurers'Assessment of Medical Necessity, 140 U.
PA. L. REv. 1637, 1644-57 (1992) (reviewing court opinions that the authors found to have employed
strained logic in order to reverse health insurers' denial of coverage based on lack of medical necessity).
77. Interpretation was a decisive issue in 6 cases, but often in combination with other noninterpretational grounds.
78. Mary Ader, Access to InvestigationalTreatments, 6 HEALTH MATRIX 187, 192 (1996).
79. In one case, the court found the exclusionary phrase "tissue transplant coverage is limited to
allogenic bone marrow only" (allogenic meaning from another person) in the policy would not be
understood by an "average person" to exclude stem cell transplant because an average person would not
understand the term "tissue" to encompass stem cell. Simkins v. NevadaCare, Inc., 229 F.3d 729, 735
(9th Cir. 2000).
UNIVERSITY OF CINCINNATI LAW REVIEW
[VOL. 83
often now.
Even when the court took issue with the insurer's interpretation, the
reasoning was often, though not always, more nuanced. For example, in
one opinion, the insurer tried to equate "a demonstrated value based on
clinical evidence reported by peer-review medical literature or by
generally recognized academic experts" with "standard of care." The
court rejected that construction and instead ruled that a technology
doesn't need to become a standard of care to be considered nonexperimental. 80 Another opinion interpreted the drug reimbursementeligibility criteria under the Medicaid Act which permitted
reimbursement of all compendia-listed drugs, 81 not as being conditional
upon proof of efficacy for the prescribed indication through randomized
controlled clinical trials. 82 In another case, the court rejected the
insurer's argument that scientific evidence of long-term improvement,
as opposed to short-term improvement, is required, if there is no such
83
specific requirement in the policy.
Table 5 Reasons for Rejecting Insurer's Experimental Exclusion
A
B-1
B-2
B-3
B-4
B-5
C
Wheeler v. Aetna Life Ins. Co., 2003 WL
21789029
Vellios v. IPRO, External Review Agent,
1 Misc.3d 468
0
Chambers v. Coventry Health Care of
Louisiana, Inc.,318 F.Supp.2d 382
0
Hospital Authority of Houston County v.
Bohannon, 272 Ga.App. 96
0
0
Chapman v. Anthem Health Plans of New
Hampshire, Inc.,2005 WL 1123949
Tarraferro v. State ex rel. Wyoming
Medical Com'n, 123 P.3d 912
Edmonds v. Levine, 417 F.Supp.2d 1323
0
0
0
Johnson v. Blue Cross & Blue Shield of
Alabama, Inc., 457 F.Supp.2d 1288
Boldon v. Humana Ins. Co., 466
F.Supp.2d 1199
80.
81.
82.
83.
2009).
0
Chambers v. Coventry Health Care of La., Inc., 318 F. Supp. 2d 382, 391 (E.D. La. 2004).
42 U.S.C. § 1396r-8(g)(1)(B)(i).
Edmonds v. Levine, 417 F. Supp. 2d 1323 (S.D. Fla. 2006).
Welch v. HMO Louisiana/Blue Cross, no. 08-4576, 2009 WL 3401046 (E.D. La. Oct. 20,
2014] RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
0
0
Whitley v. Carolina Care Plan, Inc., 2006
WVL 3827503
Pinckney v. Blue Cross Blue Shield of
Tennessee, Inc., 2007 WL 108886
Summers v. Touchpoint Health Plan, Inc.,
309 Wis.2d 78
* Klein v. Central States, Southeast &
Southwest Areas Health & Welfare Plan,
2009 WL 455342
Welch v. HMO Louisiana/Blue Cross,
2009 WL 3401046
0
0
0
0
0
McHenry v. PacificSource Health Plans,
679 F.Supp.2d 1226
* Lafferty v. Providence Health Plans,
706 F.Supp.2d 1104
Prowell v. UPS Flexible Benefits Plan,
2011 WL 5110291
191
O
O
O
0
O
O
0
* Berge v. U.S., 879 F.Supp.2d 98
O
* reversed in appeal
A: Court rejected insurer's interpretation of the exclusionary provision
B-I Burden of proof not met by insurer
B-2 Other studies supporting effectiveness of treatment
B-3: Wide use/general acceptance in the medical community
B-4: Expert opinion
B-5: Treating physician's opinion
C: Other reasons
The courts reversed the insurer's experimental exclusion on
evidentiary grounds rather than on interpretational grounds, when the
court either: (a) did not find sufficient evidence to support the insurer's
determination that the technology at issue was experimental: (b) found
evidence submitted by the plaintiff that supported the non-experimental
nature of the technology; (c) found wide (or general) acceptance of the
technology in the medical community; (d) relied on expert testimony; or
(e) relied on the treating physician's opinion.
Of special interest from a policy perspective is the court's
receptiveness towards expert testimony and the treating physician's
opinion as evidence supporting the non-experimental nature of the
excluded technology, which is widely accepted in the medical
community. In many of the HDC/ABMT cases, the court equated wide
acceptance of the procedure by the medical community with safety and
UNIVERSITY OF CINCINNATI LAW REVIEW
[VOL. 83
effectiveness of the treatment. 84 On one hand, it is difficult to find fault
with the courts for believing a treatment so widely practiced by the
medical community to be safe and effective. 85 Some argue that it is the
medical community that should be responsible for disseminating a
technology before its full validation. 86 In this study's data, wide
acceptance is less often relied on by the courts. When the court ruled
based on the wide acceptance of the technology in the medical
community, 87 it was never the sole ground for the court's ruling; there
were always other reasons, such as interpretational reasons or other
studies supporting safety and effectiveness of the technology. Maybe it
is the court's tacit acknowledgement that "wide acceptance" does not
test the scientific validity of the technology and that it needed additional
reasons to reverse the experimental exclusion in its decision.
1. Expert Witness Testimony
Literature predicts that coverage denial litigation entails "war of
expert witnesses" in an adversarial setting. 88 In the HDC/ABMT
litigation, expert witnesses indeed played a critical role in persuading
courts. 89 Interestingly, however, this study actually discovered paucity
of court's reliance on expert testimony. The unforeseen paucity in the
role of expert witness in experimental exclusion litigation can perhaps
be explained by three factors. The first is the emergence of new
doctrines on expert witness testimony under the three Supreme Court
decisions known as the Daubert Trilogy, 90 which limit the admissibility
91
of expert witnesses' testimony to those that are reliable and relevant.
The Daubert standard, which emerged during the height of the
84. Peter D. Jacobson & Stefanie A. Doebler, We Were All Sold a Bill of Goods: Litigating the
Science of Breast Cancer Treatment, 52 WAYNE L. REv. 43, 93 (2006). The HDC/ABMT for breast
cancer gained wide acceptance before any statistically robust clinical trials validated its safety and
effectiveness. See supra text accompanying notes 12-23.
85. P. D. Jacobson et al., Litigating the Science of Breast Cancer Treatment, 32 J. HEALTH POL.
POL'Y & L. 785, 799-801 (2007).
86. Id. at 815 (arguing that the HDC/ABMT controversy was a reflection of the lack of a good
technology evaluation mechanism in the medical community).
87. From a litigation perspective, what amounts to "wide acceptance in the medical community"
may be critical. The Court relied on expert opinions or literature to determine whether the technology is
in wide use.
88. See e.g., id. at 105; Arnold J. Rosoff, Evidence-Based Medicine and the Law: The Courts
Confront Clinical PracticeGuidelines, 26 J. HEALTH POL. POL'Y & L. 327, 331 (2001); David M. Eddy,
Commentary: The Use of Evidence and Cost Effectiveness by the Courts: How Can It Help Improve
Health Care?, 26 J. HEALTH POL. POL'Y & L. 387, 393 (2001).
89. Jacobson & Doebler, supra note 24, at 66-68.
90. Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993); Gen. Electric Co. v.
Joiner, 522 U.S. 136 (1997); Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999).
91. Daubert, 509 U.S. at 584-87.
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HDC/ABMT litigation, may have placed greater scrutiny on the expert
witnesses' qualification in recent years compared to the HDC/ABMT
litigation era. 92 The second possible explanation is the procedural aspect
of experimental exclusion disputes. When policy holders are entitled to
appeal for denial of coverage,9 3 each side's experts may have had ample
chance to submit letters and opinions, which become part of the
litigation record and lessenes the need to bring the expert witness to the
stand in trial. This exchange of evidence prior to trial may also explain
the predominantly large proportion of cases disposed of by summary
judgment, without going to trial for further fact-finding. A third
explanation has to do with the nature of the central issue in experimental
exclusion litigation-the objective safety and effectiveness of the
technology. This type of validation requires hard, objective data from a
large number of trials or observations that a personal expertise or
experience cannot replace. An expert witness, even if present in the
courtroom, can94 hardly take a role as more than an "interpreter" of
scientific data.
2. The Treating Physician Rule
The courts can also rely on the treating physician's opinion to
determine the safety and effectiveness of technology. In certain
contexts of health care, the treating physician's opinion is sometimes
accorded extra weight, creating what is called the "treating physician
rule." Originally, the Courts of Appeals developed the treating
physician rule as a federal common law in determining disability claims
under the Social Security Act. 95 Under the treating physician rule, the
treating physician's determination of disability will be given more
92. I ran a second search within the 519 cases from the initial search of this study and found only
3 cases in which admissibility of expert witness testimony was debated. The search string used for this
nested search was "(((702 703)/6 (expert evid! rule)) ((admiss! inadmiss! admit! exclud! preclud! strike
stricken unqualifl disqualifl qualifl bar barred barring) /8 (expert /3 (witness testi! affidavit))))" was
adopted from LLOYD DIXON AND BRIAN GILL, CHANGES INTHE STANDARDS FOR ADMITTING EXPERT
EVIDENCE IN FEDERAL CIVIL CASES SINCE THE DAUBERT DECISION (2001). Since many of the
decisions ruling on the admissibility of an expert witness testimony may not have been captured by
WestLaw, it is difficult to tell how often the admissibility of expert witness testimony is challenged in
experimental litigation setting.
93. Under ERISA, group health plans are required to provide beneficiaries "a reasonable
opportunity for a full and fair review" of adverse benefit determination. 29 C.F.R. § 2560.503-1(h). In
addition ERISA group health plans are prohibited from requiring more than two appeals before the
beneficiary can bring a civil action. 29 C.F.R. § 2560.503-1(c)(2)). Medicare also establishes appeal
process. 42 U.S.C. § 1395ff(b). Under some state laws, a health insurance beneficiary is also entitled to
a state-mandated appeal procedure.
94. Eddy, supra note 89, at 393-94 ("Thus the expert is not there to introduce a different kind of
evidence that is non-empirical, but to introduce the conclusions learned from the empirical evidence.").
95. Black & Decker Disability Plan v. Nord, 538 U.S. 822, 829 (2003).
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weight than the opinions of others who have not treated the subject
patient.
The rule was later formally codified into the federal
regulation. 96 For disability determination under the ERISA, however,
the Supreme Court specifically denied that the physician treating rule
applies, as ERISA-in contrast to the Social Security Act-has not
legislatively adopted the treating physician rule.97 For medical necessity
determination 98 under Medicare, court opinions are split. Some federal
courts show deference to the treating physician's opinion of medical
necessity, 99 while others do not. 100 Still others concede that the answer
is unclear. 10 1 For medical necessity determination under the ERISA, the
02
treating physician rule has been denied by some federal district courts.'
The experimental exclusion presents a slightly different flavor.' 0 3 It
is debatable whether the treating physician should receive any deference
at all as to the scientific validity (i.e., safety and effectiveness) of an
emerging technology that the insurer has classified as experimental.
Validation of technology is different from determining disability or
medical necessity. The correct diagnosis of the patient is not disputed in
an experimental exclusion case. The dispute is about the benefit of a
new technology, given the diagnosis of the patient. Assessment of the
safety, effectiveness and the overall benefit of a new technology is made
in isolation from the patient, mostly based on objective clinical trials
data found in medical literature. The advantage that the treating
physician may have over third-party physicians (i.e., knowledge about
the individual patient) should play little role in determining the benefit
of the technology at issue.
In the cases examined in this study, one court explicitly rejected the
applicability of the treating physician rule.'0 4 Only two out of the sixtythree opinions examined here accorded substantial weight on the
96. 20 C.F.R. §§ 404.1527(c)(2), 416.927(c)(2).
97. Nord, 538 U.S. at 830-31.
98. For example, the medical necessity of certain treatment for a given disease.
99. E.g., Executive Dir. of Office of Vermont Health Access ex rel. Carey v. Sebelius, 698 F.
Supp. 2d 436 (D.Vt. 2010).
100. E.g., Almyv. Sebelius, 749 F. Supp. 2d 315,332 (D. Md. 2010).
101. E.g., Precision Therapeutics v. Sebelius, no. 09-451, 2010 WL 3924323 (W.D. Pa. June 25,
2010).
102. E.g., Cummings v. Union Sec. Ins. Co., No. 1:06cv667WJG-JMR, 2008 WL 410644 (S.D.
Miss. Feb. 11, 2008); Jon N. v. Blue Cross Blue Shield of Mass., 684 F. Supp. 2d 190, 20304 (D. Mass.
2010).
103. Almost without exception, the treating physician recommended the technology at issue in the
cases in this study. Otherwise, the patient would not have been introduced to the technology in the first
place. Emerson v. Medical Mutual of Ohio, 2004 WL 1635604, 2004-Ohio-3892 (Ohio App. July 23,
2004) is an exception in which the patient proactively sought the treatment, although the primary
physician did not recommend it or make a referral.
104. Riley v. Blue Cross & Blue Shield of Miss., No. 3:09CV674HTW-LRA, 2011 WL 2976926
(S.D. Miss. July 21, 2011).
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
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treating physician's opinion against other evidence.' 0 5 The insignificant
role of the treating physician's opinion seen in the cases here represents
another change from the HDC/ABMT litigation from a decade ago, in
which the treating physician was usually the plaintiff's strongest
witness,' 0 6 and,
in some cases, received more deference than a renowned
10 7
academic.
D. Study Limitations
The WestLaw-available opinions are only a fraction of all written
opinions, which represent only a portion of all disputes arising out of the
experimental exclusion. 108 The cases examined in this study, while
carefully coded and analyzed, represent only a small proportion of the
entire universe of similar litigation-or the proverbial tip of the
iceberg. 109 It is an unavoidable limitation of empirical studies based on
opinions available on a commercial database. 110 In its defense, this
study was not meant to explore the entire iceberg to begin with. It was
designed to test the prevailing perception in literature that health
insurers have difficulty defending their determination to deny coverage
of experimental technology." '1
There is a bigger caveat. There is no guarantee that the data obtained
from litigation records at least constitute an accurate representation of
the experimental technologies being used in the medical field. For
example, in the current data set, there are five cases of manipulation
under anesthesia (MUA) and four cases of autism therapies, out of a
total of fifty-seven unique cases. They do not come across as cuttingedge or breakthrough like HDC/ABMT for breast cancer, prone to
controversy and confrontation between patient and insurer. That makes
one wonder if these technologies were also proportionately abundant in
the real world as well, or if these technologies were the kind of
105. Dubaich v. Connecticut General Life Ins. Co., No. CV 11-10570 DMG (AJWx), 2013 WL
3946108 (C.D. Cal. July 31, 2013).
106. Peter D. Jacobson & Stefanie A. Doebler, We Were All Sold a Bill of Goods: Litigating the
Science of Breast Cancer Treatment, 52 WAYNE L. REV. 43, 66 (2006).
107. Id. at 72-73.
108. One study observed a falling proportion of federal civil cases ending by trial from 11.5% in
1962 to 1.8% in 2002. The same study also noted similar decline in the state courts as well. Marc
Galanter, The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State
Courts, I J. OF EMPIRICAL LEGAL STUD. 459 (2004).
109. Peter Siegelman & John J. Donohue, Studying the Iceberg from Its Tip: A Comparison of
Published and Unpublished Employment Discrimination Cases, 24 LAW & SOc'Y REV. 1133, 1146
(1990) (explaining the stages of judicial process from dispute to published opinion).
110. W.M. Sage, Judicial Opinions Involving Health Insurance Coverage: Trompe L'Oeil or
Window on the World, 31 IND. L. REV. 49, 61-68 (1998).
111. See supra note 25.
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technologies that simply happen to be taken to the court more often.
That question is beyond the scope of this study, as electronically
available court opinions are not sufficient to answer it.
E. RecalibratingExperimentalExclusion Litigation
The findings from the empirical analyses show that the results are
quite different from the HDC/ABMT "battle" era and portray a different
litigation landscape than scholars have presumed. The analyses of the
WestLaw-available opinions suggest that third-party payers do not face
particularly harsh review by the courts. Instead, the reasoning provided
by the courts in the small number of cases in which they rejected the
insurer's experimental exclusion tend to indicate that the courts' focus
has shifted towards the evidence of the technology's scientific validity
rather than on interpretational weakness. Courts now place less
deference on expert testimony or a treating physician's opinion, creating
a different litigation environment from the HDC/ABMT era of a decade
ago. Indeed, the changes from the HDC/ABMT litigation appear both
quantitative and qualitative-the courts reject the insurer's experimental
exclusion sparingly and for more sophisticated reasons. What could
have brought about the changes? The HDC/ABMT litigation in the late
1980s through the early 2000s may have catalyzed a shift in
experimental treatment exclusion litigation by heightening the
awareness of the policy implications of experimental exclusion litigation
in patients, insurers, courts, and society. 1 2 Courts are more focused on
the validity of scientific evidence than before. Moreover, experimental
exclusion, the purpose of which is to exclude treatments without proven
benefit, is functioning closer to its design than in the HDC/ABMT years.
IV. ROLE OF EXPERIMENTAL EXCLUSION IN NEW TECHNOLOGY,
INSURANCE COVERAGE & HEALTH CARE SPENDING TRIAD
A. New Grievance Process Requirement under the PatientProtection
and Affordable CareAct
Prior to the promulgation of the Affordable Care Act, some states did
not require internal appeal or external review of health insurance
coverage denial." 3 Even in states that mandated internal appeal and
112. A possible alternative explanation is that the courts have maintained a similar stance all
along, but the HDC/ABMT cases were just outliers.
113. E.g., North Dakota, South Dakota, Alabama, Mississippi and Nebraska had such
requirement. Phil Galewitz, New Rules GuaranteePatients' Right to Appeal Insurance Claim Denials,
KAISER HEALTH NEWS (Jul 22, 2010), www.kaiserhealthnews.org/stories/2010/july/22/insurance-
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
197
external review, certain types of insurances-individual plans and
church-sponsored plans, for example-were often excluded. 114 The
Affordable Care Act amended certain provisions of the Public Health
Service Act (PHS Act) relating to health insurance, and § 2719 of PHS
Act and the regulations implementing it will make internal appeal and
external review available to all types of health insurance.," 5 First, these
regulations require that health insurers implement an effective internal
claims and appeals process, with slightly different requirements between
group insurance and individual insurance.1" 6 In addition, unless the state
in which the health insurer operates legislates its own external review
requirements meeting certain minimum standards, 117 a federal
requirement for independent external review will apply directly to the
insurer. 118 The minimum standards that the state's external review
legislation must meet are largely based on the National Association of
Insurance Commissioners Uniform Health Carrier External Review
Model Act (NAIC Uniform Model Act). 119
Experimental or
investigational exclusion is one of the types of claim denial eligible for
120
external review.
Section Ten of the NAIC Uniform Model Act,' 2 1 which forms the
minimum standards for state legislation, has very detailed and elaborate
processes for external review of coverage denial on account of
experimental exclusion. For example, the treating physician has to
certify that: (a) standard health care services or treatments have not been
effective in improving the condition of the patient; (b) standard health
care services or treatments are not medically appropriate-for the patient;
or (c) there is no available standard health care service or treatment
denials.aspx.
114. Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal
Claims and Appeals and External Review Processes Under the Patient Protection and Affordable Care
Act, 75 Fed. Reg. 43330, 43336.
115. Id.; Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and
Appeals and External Review Processes, 76 Fed. Reg. 37208.
116. Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal
Claims and Appeals and External Review Processes Under the Patient Protection and Affordable Care
Act, 75 Fed. Reg. 43330, 43332-34.
117. Id. at43334.
118. Initial review by the Department of Health and Human Services concluded that not all State
external review processes provide the minimum consumer protection of the NAIC Uniform Model Act,
leaving the possibility for the federal version to become applicable in those states. Id. at 43336.
119. Id. at 43335. Based on the comments received after the initial regulations, the minimum
requirements for consumer protection have been narrowed in 2011. Group Health Plans and Health
Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes, 76
Fed. Reg. 37208, 37216.
120. Id. at 37229, 37231, 37233.
121. NAIC
Uniform
Model
Act
http://www.dol.gov/ebsa/pdf/extemalreviewmodelact.pdf.
§ 10
(2010),
available
at
UNIVERSITY OF CINCINNATI LAW REVIEW
[VOL. 83
covered by the health carrier that is more beneficial than the
recommended or requested health care service. 122 Treating physicians
must also certify that scientifically valid studies using accepted
protocols demonstrate that the experimental treatment is likely to be
more beneficial to the 23patient than any available standard health care
services or treatments.
As the new federal regulations under the Affordable Care Act require
internal appeal and external review processes, there likely will be an
increase of coverage disputes. If the health insurers and policy holders
become more aware of the recent trends in court that this study has
shown, their strategy going into the grievance procedure prior to
litigation may shift. If health insurers have underestimated their
likelihood of prevailing in litigation, as has been the perception in
scholarship, then they will be more willing to litigate going forward.
B. Big Picture: ExperimentalExclusion & Health Care Spending
Thus far, this article has focused on the mechanism through which
health insurance excludes drugs, devices or procedures without proven
safety and effectiveness. Now this article will explore whether and how
health insurance impacts the development and adoption of health
technology. Some believe that increased health insurance enrollment
may have a positive correlation with the development and utilization of
technology. 124 Consumers will find new technology more affordable
because they only have to pay a portion of the cost. Because new
technology will be more affordable to the consumers, suppliers of new
technology will be motivated to develop new technologies.
On the other hand, the correlation between health insurance
enrollment and new technology may trim out to be negative. Large
health insurers may dampen technological development and25utilization,
using their monopolistic powers to cut reimbursement price. 1
In which direction will increased availability of health insurance
impact development and diffusion of technology in the aggregate? The
question requires empirical research, little of which is available. 126
Regardless of the answer to that empirical question, one thing is clear:
health insurance can affect development and adoption of technology in
122. Id. § 1O.B.(c).
123. Id. § 10.B.(d).
124. Burton A. Weisbrod, The Health Care Quadrilemma:An Essay on Technological Change,
Insurance, Quality of Care,and Cost Containment, 29 J. ECON. LITERATURE 523, 534-41 (1991).
125. Joan Costa-Font et al., The "Weisbrod Quadrilemma" Revisited: Insurance Incentives on
New Health Technologies, 37 GENEVA PAPERS ON RISK & INS. ISSUES & PRAC. 678, 679-80 (2012).
126, Id.
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
199
one direction or another. Anecdotal experience supports that prediction.
For example, when percutaneous transluminal coronary angioplasty
(PTCA) was invented in the late 1970s, it was initially assigned to the
same reimbursement code as surgical coronary angioplasty by Medicare,
although PTCA was less costly to perform than surgery. 127 This extra
financial incentive for PTCA may have made the procedure more
attractive to health providers and aided in the rapid adoption of the
procedure. 128 Cochlear implant succumbed to the opposite fate. It was
regarded as a promising innovation for people with hearing disability
when it obtained FDA approval in 1984. However, due to its below-cost
reimbursement pricing under Medicare, few patients ended up receiving
the transplant,
until the manufacturer stopped its production
29
altogether.1
Technology, in turn, is connected with a bigger issue of today: health
care spending. The soaring health care expenditure in the U.S., which
took up 17.2% of its gross domestic product (GDP) in 2012,130 will be at
an unsustainable level if it continues to rise. Of the factors that have
contributed to the increase in health care spending over the last few
decades, technology-related changes in medical practice are considered
to be very significant-believed by some to be the single biggest
factor. 131 Why is the U.S. so receptive toward new technologies?
Desire for better care, peer pressure, reputation, and pecuniary interest
have been cited as the driving forces behind health providers' decision
to adopt new technologies at an early stage.' 32 Another important factor
is the third-party payers' reimbursement policy.
The empirical data in this study have not shown any collective
tendency of the courts to frustrate the substantive standards for
experimental treatments that health insurers established, by creating
"judge-made" insurance. How does this empirical analysis that can be
127. Ethan A. Halm & Annetine C. Gelijns, An Introduction to the Changing Economics of
Technological Innovation in Medicine, in THE CHANGING ECONOMICS OF MEDICAL TECHNOLOGY 1, 11
(Institute of Medicine ed., 1991).
128. N. T. Kouchoukos, Percutaneous Transluminal Coronary Angioplasty: A Surgeon's View,
72 CIRCULATION 1144, 1146 (1985).
129. Nancy M. Kane and Paul D. Manoukian, The Effect of the Medicare Prospective Payment
System on the Adoption of New Technology, 321 NEW ENG. J. MED. 1378 (1989).
130. Anne B. Martin et al., National Health Spending In 2012: Rate Of Health Spending Growth
Remained Low For The Fourth Consecutive Year, 33 HEALTH AFF. 67 (2014).
131. CBO, through literature review, estimated that roughly half of the health care cost increase
was attributable to technological change. CONG. BUDGET OFFICE, TECHNOLOGICAL CHANGE AND THE
GROWTH OF HEALTH CARE SPENDING (2008). Smith et al. attributed 27-48% of health spending growth
since 1960 to medical technology. Sheila Smith et al., Income, Insurance, And Technology: Why Does
Health Spending Outpace Economic Growth?, 28 HEALTH AFF. 1276, 1281 (2009).
132. John B. McKinlay, From "Promising Report" to "Standard Procedure ": Seven Stages in the
Career of a Medical Innovation, 59 MILBANK Q. 374, 381-382 (1981).
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summarized as "reserved reaction from the courts" relate to the function
of health insurance coverage as a "spigot" of health technology that will
consequently impact health care spending?
First, it opens up the possibility to redefine the "experimental
exclusion." As the new federal regulations on external review of
experimental exclusion-as well as section ten of the NAIC Uniform
Model Act that the regulations refer to--concern only procedural rules,
the substantive standards for "experimental technology" are up to each
insurer or health plan administrator. 133 For example, "wide acceptance
in the medical community' 134 as negating condition for experimental
treatment may be re-considered, as it can be at odds with objective
validation of safety and effectiveness. The weight to be accorded on the
opinion of the treating physician can also be specified in the individual
health insurance or health plan, so as to minimize dispute. Regardless of
whether the experimental exclusion is heightened or relaxed, making
objective data an integral part of the determination can have the salutary
effect of facilitating more evidence-gathering in medical practice and
technology development.
Second, the empirical results of this study should remove
preconception about how new efforts to make efficient use of
technology will be reviewed by the courts. There is nothing in the
empirical data that suggests judicial review adversely foreshadows the
possible implementation 1of
other evidence-based metrics, such as
35
clinical practice guideline.
Cost-effectiveness may warrant re-analysis. Despite the economic
appeal of tying insurance coverage to the cost-effectiveness of
technology, it has not been generally introduced in the U.S. Among the
cited hurdles to the implementation of cost-effectiveness in the U.S. is
the fear of litigation and the courts' possible distaste for coverage
limitation that involve any calculation of cost. 136 However, the outcome
from the empirical analysis of experimental litigation can be interpreted
such that the courts do not foreclose consideration of evidence-based
metrics that can be used to limit health insurance coverage. Instead, the
outcome of this analysis urges health insurers and policy makers to re133. Some state laws may require coverage of certain technologies. For example, Massachusetts
requires health insurers to cover off-label use of certain H1V/AlDS drugs. MASS. GEN. LAWS ch. 175,
§ 47P.
134. See supra text accompanying notes 84-87.
135. Arnold J. Rosoff, Evidence-Based Medicine and the Law: The Courts Confront Clinical
Practice Guidelines, 26 J. HEALTH POL. POL'Y & L. 327,353 (2001).
136. See Stirling Bryan et al., Has the Time Come for Cost-Effectiveness Analysis in US Health
Care?, 4 HEALTH ECONOMICS, POL'Y & L. 425, 437-38 (2009) (finding from survey that litigation risk
is one of the big reasons health insurers hesitate to introduce cost-effectiveness into their coverage
decisions).
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RECALIBRATING EXPERIMENTAL TREATMENT EXCLUSION
201
assess their pessimism towards the judicial fate of evidence-based
coverage determination and to re-engage in the discussion.
V. CONCLUSION
With the roll-out of the individual shared responsibility payment (so
called "individual mandate") under the Affordable Care Act in March of
2014, 137 as well as the implementation of the external review
requirement, it is likely that more disputes will arise out of experimental
exclusion in the coming years. It makes an opportune time to reexamine the disputes arising out of experimental exclusion, and this
article refutes the popular belief that the courts tend to favor policy
holders in experimental exclusion litigation.
Experimental exclusion functions to ensure validation of health
technology with evidence, which in turn will affect the development and
adoption of technology, directly impacting total health care
expenditures. If the court does not act as a bottleneck to such
functioning as far as experimental exclusion is concerned, then health
insurers and policy makers may need to recalibrate their timidity
towards other evidence-based metrics of coverage determination as well
and open up the discussion more actively.
137. 26 U.S.C. § 5000A(b).
i !