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Courts Deny Specific Exclusions in Health Care Insurance Policies

Courts Deny Specific Exclusions in Health Care Insurance Policies

PHILADELPHIA--New court decisions are putting a damper on the
insurance industry's attempts to deny coverage of experimental
treatments by writing specific exclusions into their policies.
These exclusions most often concern high-dose chemotherapy with
autologous bone marrow transplantation (HDC/ABMT), said Karen
L. Illuzzi Gallinari, a partner in the New York-based firm of
Anderson Kill Olick & Oshinsky.

"For example, some policies include language that lists the
only diseases for which high-dose chemotherapy is covered. Breast
cancer may not be on the list," Ms. Gallinari said in a presentation
before a meeting of the Experimental Treatments Working Group
of the National Association of Insurance Commissioners (NAIC).

Insurance companies initially won several lawsuits in which specific
exclusions were used to justify denial of coverage for HDC/ABMT,
she said, but new legal tactics have been developed to fight these
exclusions, resulting in several recent decisions in favor of
patients. Ms. Gallinari pointed to at least three successful strategies
currently being used by lawyers representing policyholders.

Lawyers may argue that policies with specific exclusions for coverage
of medically necessary treatments are illegal disability-based
distinctions. Such exclusions would thus be in violation of the
Americans with Disabilities Act (ADA). In Henderson v Bodine
Aluminum, Inc.
(June 16, 1995), the Eighth Circuit court held
the employer liable for indirectly discriminating under ADA by
insuring its employees under such a policy.

The court held that to justify such an exclusion, an employer
would need to present risk assessment and actuarial data, or reliable
medical evidence, that the treatment (in this case HDC/ABMT for
breast cancer) would not provide any medical benefit. "I
am not aware of any such supportive data available from the insurance
industry," Ms. Gallinari said.

In the second strategy, the lawyers argued that a specific exclusion
for HDC/ABMT for breast cancer violated a federal civil rights
law prohibiting sexual discrimination (Linker v Blue Cross/Blue
Shield
, July 28, 1995).

The third strategy focuses on ambiguities that may still be present
in the language used to draft exclusions. "A lawsuit [Frendreis
v Blue Cross/Blue Shield of Michigan
, January 11, 1995] was
recently decided in favor of a policyholder, in part because even
the specific exclusion was not perfectly clear," she said.

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