Wilson v. Office of Civilian Health & Med. Programs of the Uniformed Servs., 65 F.3d 361 (4th Cir. 1995) – decided September 15, 1995 – Untied States Court of Appeals for the Fourth Circuit – Robert E. Hoskins

I represented Wilson. This case is one of many cases from the 1990s where I represented a woman suffering from breast cancer whose physician had prescribed high dose chemotherapy supported by a peripheral stem cell rescue (HDC/PSCR) to treat her cancer only to have the health insurer deny coverage. Wilson was an important case and it is included in this section even though technically the case did not involve either ERISA or insurance. OCHAMPUS stands for the Office of Civilian Health & Medical Programs of the Uniformed Services. OCHAMPUS is a federal program “that provides medical benefits for dependents of active duty and retired members of the United States Military”. Because it is a federal program, it is not subject to ERISA. (See 29 U.S.C. § 1003 excepting from ERISA’s applicability governmental plans.) So, the case was not governed by ERISA. Likewise, as the court noted, “Although (CHAMPUS) resembles insurance, (it) is not an insurance program in that it does not involve a contract guaranteeing the indemnification of an insured party against a specified loss in return for a premium paid”. So, technically the case did not involve ERISA or insurance, but it was a situation where a person sought coverage from a federal program for a medical procedure and, therefore, it was directly akin to a denied insurance claim. Therefore, I have included it in this section. Back in the 1990s, CHAMPUS determined that HDC/PSCR for the treatment of breast cancer was experimental and that it should not be reimbursed through the CHAMPUS. The district court ruled with me. (Click here to see the district court opinion) CHAMPUS appealed to the United States Court of Appeals for the Fourth Circuit and argued that because the proposed procedure was still the subject of phase III clinical trials that CHAMPUS should not have to pay for the procedure. The court rejected that argument holding that, given the specific language of the regulations governing CHAMPUS, Wilson was entitled to coverage for HDC/PSCR. The court stated:

“However, nothing in the Code of Federal Regulations or the CHAMPUS policy manual indicates that published, phase III clinical trial results are required before a benefit can be provided. Without doubt, a therapy could become standard practice in the medical community before it had been proven more effective than traditional treatments. Cf. Pirozzi v. Blue Cross-Blue Shield, 741 F. Supp. 586, 593 (E.D. Va. 1990) (“Many treatments become accepted without phase III studies . . . .”). Such would be the case, for instance, where a highly promising treatment for a terminal illness is known to be harmless, but has yet to be proven efficacious in prospective, randomizing testing.

In the record before us, there is considerable evidence that Phase III clinical trials are not the clinical aspect in determining whether a therapy has become “generally accepted” within the medical community. CHAMPUS’s expert witness, Dr. Bruce Cheson, who is the Medical Director of the Clinical Trial Division of the National Cancer Institute, acknowledged that the American Society of Clinical Oncology recently published a paper “taking the proposition that third-party payers should be paying for certain treatments administered during the course of a clinical trial.” Joint Appendix at 332. Dr. Cheson also indicated that a patient “has a very high certainty of getting the best available care if one participates in a clinical trial.” Id. Moreover, he agreed with Wilson’s counsel that, assuming HDC/PSCR was limited to the context of a peer-reviewed clinical trial with which Cheson was familiar, HDC/PSCR “is accepted treatment and it should be mentioned by oncologists as an alternative to their patients.” Id. at 337. Furthermore, at his deposition, even Dr. Bogner recognized the existence of what is commonly known as “home run treatments” - - those “that prove themselves so significantly that phase III trials are not necessary.” Id. at 404. In addition to overemphasizing the necessity of Phase III clinical trials, CHAMPUS ignored abundant evidence that HDC/PSCR is gaining widespread acceptance within the medical community. For example, a letter from some of the country’s premier oncologists noted that “the evidence to support the efficacy of these procedures is far in excess of many commonly used and reimbursed medical treatments.” Id. at 266. These physicians also cited the “explosive growth of the use of this procedure in the United States” as “suggesting that a broad consensus of physicians recognize this efficacy.” Id. Even CHAMPUS has conceded that “there is ample scientific background for vigorous clinical investigation in the area of high-dose chemotherapy treatment for breast cancer.” Brief for the Federal Appellants at 16 (citing 12 J. CLINICAL ONCOLOGY 226, 229 (Jan. 1994), included in Joint Appendix at 614, 618). Moreover, while the omission is not dispositive, the agency failed to list HDC/PSCR as “experimental or investigational procedure” in its own policy manual. Joint Appendix at 424-48.

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Despite this evidence, CHAMPUS relied on an unwritten agency policy mandating Phase III trials before a treatment is provided. In contrast, federal regulations require only that a therapy be generally accepted, see id. § 199.2(b), not that it prospectively be proven to have a statistically significant effect in curing a disease. While the two categories certainly overlap to a substantial degree, they are not co-extensive, and CHAMPUS wrongly ignored the distinctions between them. Effectively, CHAMPUS imposed a requirement beyond those in the applicable regulations by creating an informal, but nonetheless binding, prerequisite that a treatment pass Phase III trials. The agency did so despite regulations mandating that CHAMPUS pay benefits “subject to all applicable definitions, conditions, limitations or exclusions specified.” 32 C.F.R. § 199.4(c)(1). We therefore concluded that CHAMPUS acted arbitrarily and capriciously in denying coverage to Wilson. See Bedford County Memorial Hosp. v. Health & Human Services, 769 F.2d 1017, 1022 (4th

FOOTNOTES

We have found no authority on this issue from other federal appellate courts. The decision above, however, is consistent with that in at least four district court cases (in addition to the one before us) holding that CHAMPUS’s decision to deny coverage of HDC/PSCR was arbitrary and capricious. See Hawkins v. Mail Handlers Benefit Plan & CHAMPUS, No. 1:94-CV6, 1994 WL 214262 (W.D.N.C. Jan. 28, 1994), (click here to see a discussion of this case where I represented the plaintiff); Gripkey v. Mail Handlers Benefit Plan & CHAMPUS, N. 3:94-378-0, 1994 WL 276265 (D.S.C. Feb. 14, 1994), (click here to see a discussion of this case where I represented the plaintiff); Wheeler v. Dynamic Eng’g & CHAMPUS, 850 F.Supp. 459 (E.D. Va. 1994), aff’d on other grounds, (click here to see a discussion of this case where I represented the plaintiff); Mashburn v. Mail Handlers Benefit Plan & CHAMPUS, No. 3:94-0549, 1994 U.S. Dist. LEXIS 19779, 1994 WL 715962 (M.D. Tenn. Aug 4, 1994), (click here to see a discussion of this case where I represented the plaintiff).

Cir. 1985) (nothing that “agency action is arbitrary and capricious if the agency relies on factors that Congress did not intend for it to consider”).”

(Click here to see the Fourth Circuit’s decision in Wilson)

The four cases cited to at the end of the above excerpt are all my cases. I had a very good run against CHAMPUS in the 1990s and did not lose any cases against them regarding coverage for HDC/PSCR. However, the United States Court of Appeals for the Seventh Circuit issued a ruling shortly after Wilson which was directly contrary. In Smith v. Office of Civilian Health & Med. Program of the Uniformed Servs., 97 F.3d 950 (7th Cir. 1996), the Seventh Circuit held that CHAMPUS’ denial of coverage for HDC/PSCR was proper because the treatment was “experimental”. Clearly, there was a split in the circuits regarding the relevant issue. The Supreme Court never resolved the split. Wilson has been cited over 30 times (as of March 2008) by other courts and has even been cited in briefs to the United States Supreme Court.

As an interesting end note to this case and all of the cases where I represented individuals seeking health insurance coverage for individuals to undergo HDC/PSCR in the 1990s, I would highly recommend the article “We Were All Sold A Bill of Goods: “Litigating the Science of Breast Cancer Treatment””, Jacobson and Doebler, 52 Wayne L. Rev. 43, Spring 2006. In that article, the authors provide an excellent discussion about the litigation boom over HDC/PSCR for breast cancer in the late 1980s and particularly in the 1990s. They cite to six or seven of my cases which are discussed in this case log in analyzing the causation of the 1990s litigation boom. The article begins:

“In the late 1980s and 1990s, thousands of women elected to undergo high-dose chemotherapy with autologous bone marrow transplant (HDC-ABMT) as a last chance treatment for breast cancer, despite the fact that the procedure cost upwards of $100,000 and was also expensive in terms of risks and side effects. When their health insurers refused to cover the treatment, many women sought payment through the judicial system. The result was a series of nearly a hundred courtroom battles, not to mention thousands of settlement negotiations, in which judges and juries were forced to determine whether women would have access to a new procedure that offered their only hope for survivial. Without it they would almost certainly die. By the time studies were published conclusively showing that the procedure was ineffective, more than 30,000 women had already received the treatment, which often shortened their lives and added to their suffering, at a total cost of approximately $3 billion.

What went wrong? Howe could so much money have been spent and such suffering imposed for no apparent benefit? The natural reaction to these devastating accounts is to assign blame. Depending on one’s political and philosophical views, blame might be apportioned in the following ways. First, in their quest to slash costs and raise the bottom-line, health insurers and managed care organizations ignored the needs of their policyholders. Second, physicians pressured their patients into undergoing a procedure with essentially unknown risks and benefits, in a desperate attempt to give them at least a few more years of life. Third, plaintiffs’ attorneys saw the opportunity to make the insurers pay - - both literally and figuratively - - for their cold-heartedness and pursued these cases aggressively. Finally, courts, moved by the plight of the dying women who came before them, let sympathy trump the law.

These attempts to apportion blame are certainly plausible and accord with the conventional wisdom which views lawyers and the courts as especially culpable. In this Article, we question the conventional system. We examine the role that attorneys and the court system played in this unfortunate set of outcomes and explores alternatives to avoid replicating these results in the future.” (52 Wayne L. Rev. 43, 44, 45)

Personally, I am very pleased that the authors concluded:

“In the end, it is hard to blame the attorneys for what occurred. Each attorney represented his or her client in a manner that professional ethics demands and each acted with the best of intentions. Was their advocacy overly aggressive under the circumstances? Arguably so. But keep in mind the reality that the patient had what amounted to a death sentence and chose to undertake a risky procedure as a last chance.

As a society, we have yet to reach a balance between individual access to last chance therapies and the costs to society. The nation’s culture of technology is embedded too deeply to accept limits very easily. Like it or not, the legal system performed as it is designed to do-to protect individual litigants - - even if the judiciary is not the best forum for resolving controversial clinical scientific disputes. Are we prepared instead to delegate that responsibility to insurers? We doubt it. A much better alternative is for policymakers to focus on improving the technology assessment process and funding randomized control trials to determine a procedure’s effectiveness before its widespread diffusion into medical practice.” (52 Wayne L. Rev. 43, 111, 112)