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DOZSA v. CRUM & FORSTER INS. CO.

May 8, 1989

NICOLAE DOZSA, Plaintiff,
v.
CRUM & FORSTER INSURANCE CO. and PRUDENTIAL PROPERTY AND CASUALTY INSURANCE CO., Defendants



The opinion of the court was delivered by: DEBEVOISE

 I. The Proceedings.

 Plaintiff, Nicolae Dozsa, husband of an employee of Crum and Forster, Inc., is covered by the Crum and Forster, Inc. Medical Plan (the "Plan" or the "Medical Plan"). Defendants are Crum and Forster and/or the Plan and The Prudential Insurance Company of America, which is a plan administrator.

 Plaintiff has been diagnosed as suffering from a type of cancer known as multiple myeloma. He has undergone intensive chemotherapy treatment which has ceased to be effective. His physician Stephen Davis M.D., a specialist in oncology, referred him to the oncology department of the Johns Hopkins Medical Center in Baltimore, Maryland, where it was concluded the greatest likelihood of successful control of plaintiff's illness is administration of a procedure known as autologous bone marrow transplant ("ABMT"). The cost of such treatment is $ 75,000 to $ 125,000. Without such treatment plaintiff will in all probability die within six months. There is no other treatment with any promise of effectiveness.

 The Plan and Prudential have concluded that ABMT is a medical expense not covered by the Plan. Consequently the Plan and Prudential refused to certify to Johns Hopkins that the Plan would pay for plaintiff's ABMT. Without such certification Johns Hopkins refused to perform the procedure. Plaintiff has no funds with which to pay for the procedure himself. Unless the procedure is performed fairly soon, plaintiff's condition will deteriorate to the point where he will no longer be a suitable candidate for ABMT.

 Plaintiff instituted a proceeding in the New Jersey Superior Court seeking a judgment declaring that plaintiff is entitled to coverage and benefits for ABMT treatment. Defendants removed the action to this Court on the grounds that it involved a federal question, that is, the question of coverage under an employee welfare benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. Section 1001, et seq.

 On April 28, 1989 I signed an order requiring defendants to show cause why they should not be enjoined from denying coverage for the proposed ABMT procedure. In view of the emergent nature of the application a hearing was held during the evenings of May 2nd and May 3rd. Plaintiff and defendants each presented the testimony of two unusually knowledgeable physicians.

 II. The Facts.

 The terms of the Plan are set forth in a detailed Summary Plan Description. It is designed to provide medical care for Crum and Forster employees and their dependents. The benefits and exclusions are described in the Summary.

 The Plan is funded through two sources: (i) elective contributions and allocations of benefit credits out of the compensation paid to employees of the sponsoring employer, and (ii) contributions of the employer.

 Crum and Forster is designated under the terms of the Medical Plan as the "plan administrator," within the meaning of Section 3(16)(A) of ERISA, 29 U.S.C. Section 1002(16)(A), and because of its authority with respect to the Medical Plan under the terms of that plan, it is also a fiduciary within the meaning of Section 3(21)(A) of ERISA, 29 U.S.C. Section 1002(21)(A).

 The Plan provides for certain hospitalization pre-screening and early determination of services under the Prudential Patient Advisory Support Service Program - Pre-Admission and Concurrent Review Service ("PACRS"). For purposes of administrative functions and early determinations of need under PACRS, the terms of the Plan delegate initial administrative and determination authority to Prudential, and with respect to those services Prudential acts as a plan administrator. Prudential performs the above mentioned services under an administrative services agreement with Crum and Forster.

 Stephen Davis, M.D., is an oncologist who has had extensive training and experience in that field. He has taught and written extensively on the subject and has an extensive practice. Dr. Davis started treating plaintiff for multiple myeloma in November 1984. He administered chemotherapy in standard doses and pursuant to the standard regimen. Initially plaintiff responded well. After he suffered a relapse Dr. Davis administered chemotherapy using different agents. Plaintiff entered into a period of partial remission.

 In 1988 plaintiff became resistant to standard chemotherapy, relapsing after receiving the standard doses. In the fall of 1988 Dr. Davis stopped chemotherapy for the reason that it was no longer effective. He recommended that plaintiff go to Johns Hopkins Medical Center to determine whether he would be a suitable candidate for ABMT. In Dr. Davis' opinion ABMT was the only treatment available to plaintiff, and that unless he were given such treatment he would soon die.

 ABMT is a medical technique for treating various types of cancer. It has been used extensively and effectively in treating leukemia, Hodgkin's Disease, lymphoma and breast cancer. More recently it has been used at a number of highly respected ABMT centers to treat multiple myeloma.

 ABMT is a procedure pursuant to which a patient's bone marrow is removed and, at Johns Hopkins, purified of cancer cells. Meanwhile the patient is given substantially greater levels of chemotherapy than he or she could have withstood if the bone marrow had remained in place. Thereafter the purified bone marrow is restored to the patient. Since there is a direct correlation between the level of chemotherapy administered to a patient and the curative or controlling effect of the chemotherapy, a patient who is able to withstand the higher level of chemotherapy has a higher likelihood of effectively controlling the disease. By performing ABMT, toxicity is avoided.

 John R. Wingard, M.D., is a physician practicing medicine at the Johns Hopkins Oncology Center. He's an associate professor of oncology and assistant professor of medicine.

 Dr. Wingard and his associates at Johns Hopkins to whom Dr. Davis referred plaintiff, reviewed plaintiff's case. They concurred with Dr. Davis' recommendation that plaintiff undergo high-dose chemotherapy and an ABMT as his best option for providing long-term control of the disease. They also were of the opinion that time was of the essence with respect to the treatment, because there was a window of time during which the treatment could be rendered. They found that plaintiff was a suitable candidate for the treatment, but if he reached an excessive state of toxicity or if the multiple myeloma progressed significantly by the time he submitted to the transplant, he would become ineligible to have the transplant performed. Death would ensue.

 The Crum and Forster Medical Plan contains a procedure for early determination of need for hospital confinement. This is designated as Pre-admission and Concurrent Review Service ("PACRS"). As stated in the Plan:

 
"Eligible expenses do not include expenses for services or supplies which are not 'reasonably necessary' for medical care of a diagnosed sickness or injury. To be considered 'reasonably necessary,' a service or supply including a hospital confinement, must meet the test described in the section 'Medical Expenses Not Covered' on page 18. Prudential will make a Determination of Need for each day of an in-patient hospital confinement. That Determination of Need is solely for the purpose of determining Eligible Expenses under the Plan and is not medical advice."

 Plan at pages 13 and 14.

 Medical expenses not covered are defined as follows:

 
"Services and supplies not reasonably necessary for the care and treatment of a diagnosed injury or sickness. To be considered medically necessary a service or supply must meet all of these tests.
 
"a. It is ordered by a doctor.
 
"b. It is commonly and customarily recognized throughout the doctor's profession as appropriate in the treatment of the sickness or injury.
 
"c. It is neither educational nor experimental in nature nor provided primarily for research purposes.
 
"d. In the case of hospital confinement it is not allocable to scholastic education or vocational ...

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