Physicians and insurers are pitted against each other in litigation being played out in Los Angeles over questions of what constitutes proper treatment, and a conflict over the definition of a medical necessity. The outcome of this dispute may have a rippling impact nationwide.
The tension is over what Rocky Delgadillo, CEO of the Los Angeles County Medical Association tells HealthLeaders Media is the "next frontier of patient rights." His organization represents more than 6,500 physicians, and has joined in a patient lawsuit against the California-based insurer, Health Net.
Among the questions being posed: What if the doctor rejects the procedure an insurer believes should be used for a rare surgery, opting instead for a more technically advanced procedure? What if doctors insist, 'This must be done to save a life,' but the insurers still say, "No"?
The LA story starts out simply enough: Two patients sued the insurer Health Net over procedures the company would not pay for. That doesn't seem unusual. Patients have battled insurers for years over reimbursement for procedures. But with the backing of the physician organization, this case takes on a slightly different tenor.
LACMA says that Health Net and other insurers are undermining medically necessary care by denying payments for technologically advanced, life-saving procedures. The lawsuit seeks injunctive relief to end what the LACMA describes as unlawful business practices by Health Net, and damages for the patients.
While Health Net is the focus of the litigation, LACMA says it aims to end wrongful conduct of "all California health insurers" that prevents doctors from providing proper treatment for patients. Thousands of health insurance claims are routinely denied every year based on insurers' definition of medical necessity that conflicts with California law, according to Delgadillo.
"Health Net is dictating medical care from the boardroom," Delgadillo said in a press statement. "Patient care should be decided by doctors, not business suits."
In a conversation the other day, he elaborated: "We can no longer sit back and wait for other people to solve problems where patients don't have the economic might to solve them, and neither do physicians. But collectively we can. We have to stand up for the rights of patients and that's what physicians have taken an oath to do."
The issue of patient needs for innovative, life-saving procedures is at the heart of the LA case, Delgadillo says.
One of the plaintiffs, Robert Mendoza, 59, was diagnosed with a rare form of prostate cancer, adenocarcinoma with signet ring cells, and his chances of survival were deemed very low. His was one of some 50 cases in the world, Delgadillo says.
Mendoza's physician advised minimally invasive, robotic-assisted surgery that Health Net was willing to cover, a $14,000 cost, Delgadillo says. Mendoza received a second opinion from Gary Lieskovsky, MD, former head of the University of Southern California Norris Cancer Hospital, who recommended that Delgadillo needed a radical procedure, not robotic surgery, to save his life.
Mendoza worked with Dr. Lieskovsky to obtain a pre-authorization from Health Net for the procedure, which would have cost twice as much as the robotic surgery. Health Net denied the claim, stating the procedure was not medically necessary, according to the lawsuit.
Mendoza paid for the $30,000 surgery out-of-pocket because he believed it gave him the best chance for survival, according to the court papers. To pay his medical bills, he said he cashed in his wife's life insurance policy and used money he had set aside to pay his income taxes as a self-employed court interpreter. Eventually, Lieskovsky performed the surgery, and Mendoza now has a good prognosis, Delgadillo said.
"All this was done very quickly, from when the insurance was denied to when the surgery had taken place," Delgadillo says.
"My life was at stake with months to live. I had no time to fight the bureaucratic red tape with Health Net," Mendoza said in statement. "It's a shame and inhumane that it wouldn't even approve a procedure that could have saved my life. A procedure that cost a fraction of the premiums I paid."
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."
The regulatory procedures allow Health Net members to "seek review of Health Net decisions by medical professionals who are not affiliated with Health Net," according to the statement, provided by Health Net spokesman Brad Kieffer.
Health Net, through its subsidiaries, provides and administers health benefits to approximately 5.5 million individuals across the country, including 2.3 million members in California. Based in Woodland Hills, Health Net reported $11.9 billion in revenues last year.
This isn't the first time that Delgadillo has initiated a significant lawsuit against insures. Delgadillo reminded me that as Los Angeles city attorney a few years ago, he started litigation that upended several of the procedures that now have an impact on insurers.
In late 2011, Blue Shield of California agreed to pay $2 million to the city and county of Los Angeles to settle claims that the company improperly rescinded coverage from hundreds of sick members before 2008. Degadillo's Los Angeles City Attorney's Office sued Blue Shield and other insurers in 2008.
The Patient Protection and Affordable Care Act has made it illegal for insurers to rescind coverage except in cases of internal fraud, Delgadillo says.
The inevitable impact of the latest lawsuit against insurers remains to be seen.
"All I can hope is that history repeats itself," Delgadillo says, referring to the Blue Shield case that ended in his favor. "It's like Margaret Mead said, 'a small group can change the world'."
Joe Cantlupe is a senior editor with HealthLeaders Media Online.
