ERISA: Denial of Benefits on Experimental Procedure Affirmed in Tenth Circuit-Healthcare America Plans, Inc. V. Bossemeyer

ERISA: Denial of Benefits on Experimental Procedure Affirmed in Tenth Circuit-Healthcare America Plans, Inc. v. Bossemeyer1-The U.S. Court of Appeals for the Tenth Circuit affirmed a declaratory judgment entered in favor of a denial of coverage for benefits by Healthcare America Plans, Inc.2 The court found that high-dose chemotherapy breast cancer treatment was appropriately classified as "experimental" and therefore appropriately denied by the plaintiff's health plan. Plaintiff Constance Bossemeyer sued defendant Healthcare America, the administrator of a group health plan.3 Under the Employee Retirement Income Security Act (ERISA),4 the group health plan is an employee welfare benefit plan, and the defendant, because it exercises discretion over the administration of the plan, is a fiduciary under ERISA. The terms of the plaintiff's health care coverage are described in a Certificate of Coverage, which provides that "medical, surgical [and] psychiatric procedures, organ transplants, and pharmacological regimens . . . which are considered to be experimental" are not covered by the plan.5 Experimental is defined under the plan as "those procedures and/or treatments that are not generally accepted by the medical community."6 Following plaintiff's diagnosis of breast cancer, she underwent surgery and standard-dose chemotherapy treatment, all covered by Group Health Plan. Bossemeyer's oncologist determined that because of the widespread development of her disease, "her best chance for long-term survival required the administration of a high-dose chemotherapy with peripheral blood stem cell rescue procedure."7 On request by Bossemeyer's physicians for coverage of the procedure, the defendant classified her proposed treatment as a transplant and therefore denied coverage according to the terms of her policy. The plaintiff filed a grievance in response to its decision, which the defendant's Patient Care Committee denied coverage, this time classifying the procedure as both a transplant and "experimental and investigational."8 Bossemeyer's request for further reconsideration was also denied. The plaintiff then appealed the decision to the defendant's board of directors, which conducted its own investigation of this procedure's status in the medical community.9 The board held a grievance hearing attended by four directors, all of whom owned stock in or had options to buy stock in the defendant's parent company. The board affirmed the committee's decision and denied coverage. The plaintiff then brought an action in district court, under ERISA, for recovery of the benefits she was denied.10 The court held that the defendant's "denial of coverage on grounds that the treatment was experimental, was not arbitrary and capricious, despite the existence of a conflict of interest due to fact that the fiduciary had also issued the policy."11 She appealed the decision. On review before the Tenth Circuit were two questions. First, the court had to decide whether the defendant's decision to deny coverage was arbitrary and capricious. Second, the court was required to review the lower court's conclusion that the defendant was operating under a conflict of interest. As to the first question, the district court found, as a matter of law, that "the Group Health Plan conferred discretion on Healthcare America to determine whether procedures were experimental, unproven, or investigational."12 The standard of review for a denial of benefits under ERISA is de novo unless the administrator of the plan has some discretion in determining eligibility for benefits.13 Examining the language of the Certificate of Coverage, the court found that it "clearly confers discretion on the plan administrator" and therefore the applicable standard of review is arbitrary and capricious. According to the court's analysis, when reviewing a discretionary decision in which there also exists a conflict of interest, the court should follow a "sliding scale" approach. …