An eleven year old girl contracted spinal meningitis, which necessitated the amputation of her hands at the wrists and her legs below the knees. For the first six years after the amputation she used body-powered/cable and harness upper-extremity prostheses. A body-powered prosthesis has a hook at the end of the arm that the wearer operates by moving the muscles of the residual limb.
When she was a senior in high school she was fitted for myoelectric upper-extremity prostheses. A myoelectric prosthesis uses electromyography signals or potentials from voluntarily contracted muscles within a person's residual limb via the surface of the skin to control the movements of the prosthesis, such as wrist supination/pronation or hand opening/closing of the fingers. The myoelectric prostheses allowed her to live independently, obtain a college degree, and to work full time.
Her employer offered health care coverage through an insurer, which the woman selected because it allowed her to receive treatment from the same doctors and prosthetic specialists she had been seeing under her father's policy with a different insurer. A few years later her myoelectric prostheses began to fail, so her physician submitted a replacement request to the independent practice association (IPA) under contract with the insurer. The IPA denied the physician's request because myoelectronic prosthetics were not a benefit covered under her health plan. The woman appealed the decision to the insurer, which upheld the denial of coverage on the basis of a specific benefit exclusion per the woman's Evidence of Coverage document, which stated that myoelectric prosthetics were not covered. The insurer did not dispute that the woman's physician-prescribed myoelectric devices were medically necessary.
The woman filed a grievance with the California Department of Managed Health Care (“DMHC”). DMHC determined that it did not find a violation of the California health plan law regarding this issue. The woman brought an action in the Central District of California under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.A. §§ 1132(a)(1)(B), 1132(a)(3), alleging that the insurer's benefit exclusion was contrary to California Health & Safety Code § 1367.18.
California Health & Safety Code § 1367.18 was enacted in 1985 and amended in 1991 and 2006. The original statute read:
Every health care service plan, except a specialized health care service plan, that covers hospital, medical, or surgical expenses on a group basis shall offer coverage for orthotic and prosthetic devices and services under the terms and conditions that may be agreed upon between the group subscriber and the plan. Every plan shall communicate the availability of that coverage to all group contractholders and to all prospective group contractholders with whom they are negotiating.
In 1991, the following language was added:
Any coverage for prosthetic devices shall include original and replacement devices, as prescribed by a physician. Any coverage for orthotic devices shall provide for coverage when the device, including original and replacement devices, is prescribed by a physician, or is ordered by a licensed health care provider acting within the scope of his or her license. Every plan shall have the right to conduct a utilization review to determine medical necessity prior to authorizing these services.
In 2006, the statute was again amended, with the existing language being designated as subpart (a) and the following language being designated as subpart (b):
Notwithstanding subdivision (a), on and after July 1, 2007, the amount of the benefit for orthotic and prosthetic devices and services shall be no less than the annual and lifetime benefit maximums applicable to the basic health care services required to be provided under Section 1367. If the contract does not include any annual or lifetime benefit maximums applicable to basic health care services, the amount of the benefit for orthotic and prosthetic devices and services shall not be subject to an annual or lifetime maximum benefit level. Any copayment, coinsurance, deductible, and maximum out-of-pocket amount applied to the benefit for orthotic and prosthetic devices and services shall be no more than the most common amounts applied to the basic health care services required to be provided under Section 1367.
The United States District Court for the Central District of California granted summary judgment in favor of the insurer. The woman appealed. On appeal, the insurer maintained that it denied the woman’s claim based solely on an express exclusion in its policy; it did not contest the medical necessity of myoelectric prosthetic devices for her medical condition. The woman agreed the plan expressly excluded coverage for myoelectric prosthetic devices, but she argued that § 1367.18(a) requires plans to cover any prosthetic device if it is medically necessary and prescribed by a physician.
The Ninth Circuit United States Court of Appeals affirmed. The court held that the insurance company's categorical exclusion of myoelectric prosthetics from a health insurance plan did not violate California Health & Safety Code § 1367.18.
The exclusion in the employer's group health insurance plan for myoelectric prosthetic devices did not violate the California statute governing coverage for prosthetic devices. The original version of the statute only required plans to offer coverage for prosthetic devices. The statute afforded complete discretion to the plans to negotiate the terms and conditions of prosthetics coverage. The 2006 amendment limited the ability of plans to cap the amount of benefits for prosthetic devices; it did not address the scope of coverage, i.e., the type or types of devices that plans must offer, or cover. The 1991 amendment must be viewed in the context of the original statute because the legislature did not replace the 1985 language; it retained the original statutory language and added a new provision to it. Section 1367.18 has always required that prosthetic coverage must be offered on terms and conditions mutually agreed upon. The 1991 amendment only required that whatever coverage was offered must extend to both original and replacement devices.
The Ninth Circuit United States Court of Appeals affirmed the district court’s grant of summary judgment in favor of the insurer.
See: Garcia v. PacifiCare of California, Inc., 2014 WL 1814180, 14 Cal. Daily Op. Serv. 5108, 2014 Daily Journal D.A.R. 5877 (C.A.9 (Cal.), May 8, 2014) (not designated for publication).