Fifth Circuit Affirms Insurer Abused Discretion in Denying Cancer Therapy Treatment

On May 3, 2023, in Salim v. Health Svc & Indemnity, the United States Court of Appeals for the Fifth Circuit (the Fifth Circuit) affirmed a lower court ruling that Blue Cross abused its discretion when it denied the plaintiff coverage even when substantial evidence did not support that decision.

The plaintiff, Robert Salim, was a business owner who bought a health insurance plan from Blue Cross to cover himself and his employees. Blue Cross insured the plaintiff when he was diagnosed with throat cancer. The plaintiff sought coverage for proton therapy, but the treatment needed to be preauthorized before the insurer would pay for it. The entity tasked with preauthorizing the treatment denied it, stating that it was not medically necessary and citing outdated clinical guidelines in support of its decision. The plaintiff appealed this decision to Blue Cross. When the insurer (which had full discretionary authority to make determinations regarding benefits) denied that appeal, again based on the same outdated clinical guidelines used to deny the preauthorization, the plaintiff initiated a second-level appeal with Blue Cross by requesting that an independent medical organization review the denial.

In this second-level appeal, the plaintiff’s doctor pointed out that the clinical guidelines Blue Cross relied on had been updated to now support the plaintiff’s claim. Additionally, the doctor cited over a dozen evidence-based publications as support for his conclusion that proton therapy was medically necessary for the plaintiff’s particular diagnosis. An independent reviewer handled the second-level appeal. The reviewer denied the appeal, concluding that more study was needed before determining whether proton therapy was the standard treatment option for this type of cancer and, in any event, the plaintiff did not meet the criteria that would make this treatment necessary.

The plaintiff took Blue Cross to court, alleging that the insurer abused its discretion when it determined that proton therapy was not medically necessary. The court ruled in favor of the plaintiff. Although the plan gives Blue Cross full discretionary authority to make determinations regarding benefits, the court determined that there was no substantial evidence to support the insurer’s decision that the therapy was not medically necessary. Blue Cross appealed to the Fifth Circuit.

The Fifth Circuit agreed with the lower court. The Fifth Circuit noted that in ERISA cases, substantial evidence “is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Although this standard allows the insurer wide latitude in making determinations concerning benefits, its decisions cannot be arbitrary and capricious.

In this case, the entity that promulgated the guidelines that the insurer relied upon when making its determination had updated the guidelines to support proton therapy as medically necessary for the plaintiff’s type of cancer. Although the second-level reviewer relied on additional sources to support its denial, the Fifth Circuit determined that these sources were not enough to outweigh the new guidelines. The Fifth Circuit concluded that Blue Cross abused its discretion by mischaracterizing the guidelines upon which it relied.

This case provides a cautionary tale for plans. Although plans can have broad discretionary authority to make determinations concerning benefits, the determination cannot be made in an arbitrary and capricious manner.

Salim v. Health Svc & Indemnity »