Physicians, Insurers Clash Over Medical Necessity in CA

Another California plaintiff, Kalana Penner, suffered from occipital neuralgia, a medical condition characterized by intense chronic pain in the upper neck, back of the head and behind the eyes. Over time, her condition deteriorated, despite at least 30 treatments and 60 medications, according to the lawsuit. 

Penner was referred to Jamie Henderson, MD, director of neurosurgery at Stanford Hospital for a trial procedure—which was approved by Health Net—to deal with her pain. The company, however then rejected a proposed surgical procedure, although the physician claimed it was safe and effective. Six months later, The California Department of Insurance ruled that Health Net's denial was improper and overturned the insurer. The surgery was carried out, and now Penne says she is pain free, according to the lawsuit. She is seeking damages from the insurer for stress, anxiety and trauma.

Delgadillo says the success of the procedures, in the midst of patients and physicians' wrangling with insurers, raises questions about differing definitions of medical necessity in the state statute. He indicates that the lawsuit may have national implications over the meaning of "medical necessity," which is written interpreted differently by different health plans.

In court papers, the LCMA says that Health Net "crafted a definition of medical necessity, which does not comply with California law and ensures denials of valid medical insurance claims."

In a statement, Health Net has denied LCMA's assertions. "Medical care is complex and sometimes there are differing medical opinions as to what consists of medically necessary care," Health Net said in a statement. "In these instances, Health Net carefully follows the guidelines established by the state of California's two regulators, the Department of Managed Care and the Department of Insurance."