James Linn v. BCBSM, Inc.
2017 Minn. App. LEXIS 21, 890 N.W.2d 160 (2017)
Rule of Law:
Under Minnesota law, a determination of medical necessity made during a statutory external-review process is binding on a health insurer and supersedes any conflicting definition of medical necessity contained within the insurance contract.
Facts:
- James and Gloria Linn purchased a health insurance plan from BCBSM (Blue Cross) that covered 'medically necessary' services but excluded 'investigative' care.
- The insurance contract specifically listed proton-beam radiation therapy as 'investigative' (and thus excluded) for cancers located on the thoracic spine, though it was covered for other locations.
- James Linn was diagnosed with chondrosarcoma, a type of bone cancer, on his thoracic spine.
- Following surgery, Linn's doctors recommended proton-beam radiation therapy to minimize damage to his heart, lungs, and kidneys.
- Blue Cross denied the request for coverage multiple times, adhering to the contract's definition that the therapy was investigative for Linn's specific tumor location.
- Linn's condition worsened, requiring emergency surgery while the coverage dispute was ongoing.
- Linn invoked his statutory right to an external review, where an independent entity (MAXIMUS) determined the therapy was medically necessary to prevent organ damage.
- Following the external reviewer's decision, Blue Cross paid for the therapy.
Procedural Posture:
- The Linns sued Blue Cross in Ramsey County District Court for breach of contract and other claims.
- The District Court dismissed the tort claims but allowed the contract claim to proceed.
- Both parties moved for summary judgment on the breach of contract claim.
- The District Court granted summary judgment in favor of Blue Cross, ruling that no breach occurred because the contract excluded the therapy and Blue Cross eventually paid.
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Issue:
Is a statutory external-review determination that a treatment is medically necessary binding on a health insurer for purposes of interpreting the insurance contract, even if the policy explicitly categorizes the treatment as investigative or excluded?
Opinions:
Majority - Judge Jesson
Yes, a statutory external-review determination effectively rewrites the contractual obligations regarding medical necessity. The court reasoned that Minnesota Statute § 62Q.73 explicitly states that external-review decisions are 'binding' on the health plan company. The court rejected Blue Cross's argument that the decision was binding only regarding the obligation to pay, but not regarding the contractual definition of medical necessity. Relying on the plain meaning of 'binding' and the U.S. Supreme Court's reasoning in Rush Prudential HMO, Inc. v. Moran, the court held that the independent reviewer's medical judgment replaces the insurer's judgment. Therefore, once the external reviewer deemed the treatment necessary, Blue Cross could not rely on its contract's exclusion to argue no breach occurred. The court reversed the summary judgment and remanded the case to determine if Blue Cross breached the contract's 'timeliness' provision by initially denying the care.
Analysis:
This decision significantly shifts the balance of power from insurance companies to patients and independent medical reviewers. By holding that an external review overrides the specific definitions in an insurance contract, the court prevents insurers from shielding themselves from liability using strict policy exclusions when independent medical judgment dictates otherwise. This ruling opens the door for insured parties to sue for consequential damages resulting from delays in treatment, even if the insurer eventually pays the claim after losing an external review. It emphasizes that 'medically necessary' is a dynamic standard determined by medical professionals, not a static definition locked in a policy document.
