Whitley v. Carolina Care Plan, Inc., 2006 U.S. Dist. LEXIS 93802 (D.S.C. 2006) – decided December 27, 2006 – United States District Court for the District of South Carolina – Robert E. Hoskins

I represented Jerry Whitley in this case.  This case also involves what is probably the most egregious and baseless health insurance claim denial I have ever seen.  The opinion by the Honorable Cameron McGowan Currie weighs in at a whopping 46 pages.  Obviously, in that many pages, the court covered a number of topics in holding that the insurance company’s decision that the subject medical treatment was excluded was an abuse of discretion.  The procedure at issue was a left ventricular assistance device (LVAD).  The LVAD procedure was administered at Duke University Medical Center and resulted in charges of $369,775.75.  Whitley was insured with Carolina Care Plan through her husband’s employer.  The plan denied coverage for the LVAD procedure asserting that it was “experimental” at the time of service and, therefore, subject to a plan exclusion for “experimental, investigational, or unproven services”.  Second, the insurer, CCP, asserted that it had not been provided proper notice that the procedure was going to be rendered.  The court did not find either basis for denial compelling in the least bit.  The real key point to the opinion, in my view, has to do with the experimental issue.  In asserting that the LVAD procedure was experimental, the insurer, CCP, relied upon a medical rating tool known as a HAYES report.  A HAYES report is a creation of Hayes, Inc. and purports to evaluate the status of various medical procedures based upon medical literature.  Hayes, Inc. issues “health technology assessment reports” on various medical procedures.  In Whitley, the insurer, CCP, relied solely upon a HAYES report that CCP contended established that the LVAD procedure was “experimental”.  The court did not agree and issued an excellent opinion addressing the “HAYES report”.  In relevant part, the court wrote:

"Certainly, the HAYES rating is not, itself, either a "well-conducted randomized controlled trial" or a "well-conducted cohort study".  Rather HAYES is a third-party service which apparently takes such trials and studies, as well as other evidence, into consideration in reaching its rating decisions.  Whether HAYES considered such trials and studies, how it did so, and the weight given to which trials and studies is not, however, revealed by the limited documents provided to the court. n57

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n57 The printout of the HAYES Rating explaining that the HAYES Rating system "reflects the strength of the evidence regarding efficacy and safety of a medical technology, its impact on health outcomes, indications for use, patient selection criteria, medical consensus, and comparison to alternative technologies."  AR p. 66.  What specific "evidence" is considered and how it is evaluated or weighed is not revealed.

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As in Weaver, therefore, it appears the Plan has relied on standards established not by the Plan but by a third party.  See Weaver, 990 F.2d at 159 (discussed supra Conclusions of Law § A.1.).  While there is evidence that HAYES considers some of the same criteria as the Plan, it is far from clear that the HAYES Rating considers all of the same criteria and in the same way.  Thus, it cannot fairly be said that the HAYES Rating is the equivalent of any one of the Plan's criteria or all of them.

Even if the criteria on which HAYES relied in establishing its rating were wholly consistent with the criteria listed in Plan documents, the Plan's absolute reliance on the HAYES Rating would constitute an abrogation of the Plan's fiduciary responsibility.  This is because reliance on a rating (or other decision) solely under the control of a third party prevents Plan participants from any meaningful opportunity to present evidence and seek a fair review of any rating with which they disagree.  n58.

. . ."  (Whitley, 2006 U.S. Dist. LEXIS 93802, *103, 104, 106) (Click here to see the entire opinion.)

As of March 2008, Whitley had been cited at least one time in an excellent opinion written by the Honorable Paige Gossett in another case of mine before the South Carolina Administrative Law Court, Antonelli v. South Carolina Budget and Control Board, Employee Insurance Program, Docket No. 07-ALJ-30-00034-AP.  Like Judge Currie, Judge Gossett found that reliance upon a HAYES report, by itself, was not a substantial basis for a medical claim decision.  The Antonelli case dealt with a health insurance claim denial based an “experimental” exclusion for a procedure known as the Charité artificial disc.  In Antonelli, the court found that the Charité artificial disc was not experimental and dismissed the HAYES rating as a legitimate basis for the assertion that it was experimental.  The court stated:

“Antonelli argues that the Hayes Brief relied upon by EIP does not constitute reliable and probative evidence that ADR is investigational under the Plan criteria.  The court agrees. 

The criterion used by the Hayes Brief is whether ADR is “more efficacious” than fusion.  (R. at 182).  However, as previously addressed, the Plan only requires equal effectiveness.  Therefore, the Hayes Brief does not employ the same criterion as the Plan.  Notably, the Hayes Brief, like the TEC Assessment, contains a disclaimer stating that it “is not to be used as the sole basis for determining coverage policy.”  Id.  In Whitley v. Carolina Care Plan, Inc., No. 3:06-257-CMC, 2006 WL 3827503, slip op. (D.S.C. Dec. 28, 2006), the District Court for the District of South Carolina held that an insurer’s reliance upon a Hayes Brief alone to conclude that a particular procedure was “experimental” was an abuse of discretion for a number of reasons.  The Hayes Brief in this case does not indicate whether it properly applied the Plan definition of “investigational” or even used that definition in rendering its opinion.  Further, it is not clear what evidence was considered or referenced in forming the opinions found in the Hayes Brief.  See Whitley, 2006 WL 3827503, at *32 (“While there is evidence that HAYES considers some of the same criteria as the Plan, it is far from clear that the HAYES Rating considers all of the same criteria and in the same way.  Thus, it cannot fairly be said that the HAYES Rating is the equivalent of any one of the Plan’s criteria or all of them.”).  For these reasons, the Hayes Brief does not constitute substantial evidence support EIP’s decision.”  (Click here to see the entire opinion)