Shumake v. Travelers Insurance
147 Mich. App. 600, 383 N.W.2d 259 (1985)
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Rule of Law:
Ambiguous terms in an insurance policy regarding "necessarily incurred" or "required" medical expenses are construed against the insurer, and a physician's judgment regarding treatment necessity, evaluated in light of medical knowledge existing at the time the decision was rendered, should be accorded deference.
Facts:
- James Shumake was insured under a group health insurance policy issued by Travelers Insurance Company through his former employer, Service Reproduction Company.
- In May 1978, James Shumake underwent surgery for lung cancer, and doctors estimated his chances of survival over the ensuing five years as between 15 and 25 percent.
- Shumake consulted Dr. Philip E. Binzel, who diagnosed a metabolic disorder (primarily based on the presence of cancer) and prescribed a course of treatment involving Laetrile, enzymes, vitamins, and specific nutritional guidelines.
- Travelers Insurance Company paid all expenses associated with this Laetrile treatment and nutritional therapy from June 1978 to January 31, 1981.
- Travelers Insurance Company then notified James Shumake and his spouse that expenses for Laetrile and Laetrile-related nutritional supplements were no longer covered under the policy.
Procedural Posture:
- Plaintiffs James Shumake and his spouse filed a declaratory judgment action in a trial court (court of first instance) seeking reimbursement from Travelers Insurance Company.
- The trial court held that under the terms of the policy, the Shumakes were entitled to reimbursement in the amount of $17,478.20.
- Defendant Travelers Insurance Company appealed the trial court's decision to the Michigan Court of Appeals.
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Issue:
Does an insurance policy providing coverage for "necessarily incurred" and "required" medical expenses, including drugs "covered by written prescription of a physician," require an insurer to reimburse for Laetrile and related nutritional therapy prescribed by a physician for cancer treatment, when the policy terms are ambiguous and there was a viable minority medical opinion supporting the treatment at the time it was rendered?
Opinions:
Majority - Allen, J.
Yes, an insurer must reimburse for Laetrile and related nutritional therapy under such circumstances. The court found that James Shumake was suffering from a "sickness" within the meaning of the policy, despite his cancer being surgically removed, given his poor prognosis and the medical understanding that cancer is not considered cured until five years without incident. The treatment for a "metabolic disorder" was intricately related to his cancer and would not have been prescribed otherwise. The terms "necessarily incurred" and "required" for treatment in the policy were ambiguous, as evidenced by multiple judicial interpretations, and ambiguities in an insurance contract are to be construed against the insurer and in favor of the insured. The court held that a physician's judgment regarding the necessity of a treatment should be accorded deference, and this judgment should be reviewed in light of the medical knowledge that existed at the time the decision was rendered. During the period Shumake received treatment (1978-1981), there was a strong and viable minority in the medical community that believed Laetrile was an effective means of controlling cancer, and there was no definitive scientific or judicial determination of its ineffectiveness. Although a later study (Moertel study, published January 1982) conclusively found Laetrile ineffective, the court deemed Dr. Binzel's decision reasonable given the ongoing scientific controversy and lack of conclusive evidence at the time of Shumake's treatments. Finally, the nutritional supplements were covered because they were covered by Dr. Binzel's written prescriptions, and the policy did not limit coverage to drugs that could only be obtained with a prescription.
Analysis:
This case is significant for establishing an important precedent in insurance contract interpretation, particularly concerning medical necessity and experimental treatments. It mandates that ambiguous policy terms must be interpreted in favor of the insured, reinforcing the insurer's burden to draft clear contracts. Crucially, the court articulated a standard for evaluating a physician's judgment on treatment necessity, deferring to the medical understanding and consensus at the time of treatment, rather than in hindsight. This protects insured individuals who pursue treatments supported by a viable minority medical opinion during periods of scientific evolution or controversy, while acknowledging that coverage for such treatments might cease once they are definitively proven ineffective.
