EMAIL TO A FRIEND COMMENT

 

Insurer Not Liable for Failure to Warn of Medication Risks; Off-Label Use


An insured entered into a contract with an insurer to provide health insurance. The contract provided benefits for eligible prescription medications and excluded benefits for dental services, except in limited circumstances.

 

The insured suffered from chronic pain. His pain management physician began prescribing him the medication Actiq, a solid form of the pain reliever fentanyl citrate that is placed on a plastic stick for absorption through the mouth. Actiq was a Schedule II controlled substance the FDA had approved “only for the management of breakthrough cancer pain in patients with malignancies who are already receiving and who are tolerant to around-the-clock opioid therapy for their underlying persistent cancer pain.” Because the insured did not have cancer, the prescription of Actiq was considered “off-label.” Although the insurance contract only provided coverage for prescription medications approved by the FDA for the diagnosis for which a medication was prescribed, the insurer nevertheless paid the insured's pharmacy claims for Actiq for about four years.

 

About two and a half years after the insured started using Actiq, his dentist informed the insurer that he had severe dental breakdown, with acute and chronic infection. The dentist stated the long-standing nature of the decay was “typical of that seen in individuals [who] use sugar containing lozenges,” and he requested that the insurer authorize dental repair or replacement of nearly all of his teeth. The insurer determined the dental services were not covered by the contract and denied the request.

 

The insured sued the insurer, alleging the insurer breached the contract and the implied covenant of good faith and fair dealing by paying the insured's pharmacy claims for Actiq and refusing to pay for his dental services. The Superior Court in Maricopa County granted summary judgment in favor of the insurer on all of the insured’s claims.

 

The Court of Appeals of Arizona, Division 1, affirmed. The court held that because the insurer had no contractual obligation to refuse to pay for Actiq and merely retained the right to refuse to pay for the medication, it did not breach the contract by paying for Actiq; the insurer did not breach the contract by refusing to pay for certain dental services; the insurer did not breach the implied covenant of good faith and fair dealing by failing to investigate and discover that the insured's pain management physician was not prescribing him Actiq for the treatment of cancer pain; and the insurer did not act in bad faith by not timely evaluating Actiq to determine whether to require precertification for the medication.

 

Because the insurer had no contractual obligation to refuse to pay for Actiq and merely retained the right to refuse to pay for the medication, it did not breach the contract by paying for Actiq. The contract imposed a duty on the insurer to pay for covered benefits, but it did not conversely require the insurer to refuse to pay for excluded benefits. Instead, by describing the instances in which the insurer had no contractual obligation to pay, the contract reserved the right of the insurer to decline to pay for uncovered benefits for the benefit of the insurer, not for the benefit of the insured. Because the insurer made no commitment to the insured to refrain from paying for prescription medications that were not eligible for coverage, the payments did not constitute a breach of the contract. The court rejected the insured’s argument that, by promising to pay for certain medications, the insurer assumed a corresponding obligation to refuse to pay for medications that were not eligible for coverage. The court noted that the contract did not contain that term.

 

The insurer did not breach the contract by refusing to pay for certain dental services. The contract specifically excluded benefits for dental services, except in limited circumstances: (1) the repair of sound teeth damaged by accidental injury, and (2) dental services integral to medical services. The contract provided coverage only for injuries caused by an external force or element such as a blow or fall. A “blow” was defined as a forcible stroke delivered with a part of the body (as the fist or head) or with an instrument (as a hammer), and a “fall” was defined as “the act of dropping or descending by the force of gravity.” Long-standing decay allegedly resulting from the use of Actiq over several months or years was not a sudden, traumatic event in the nature of a “blow or fall.” The treatment was also not “integral to medical services.” Although poor dental health may affect a patient's overall health and increase the risks associated with invasive medical procedures, the contract did not cover all dental services necessary for good health, only those “medically necessary and an integral part of” covered medical services.

 

The insurer did not breach the implied covenant of good faith and fair dealing by failing to investigate and discover that the insured's pain management physician was not prescribing him Actiq for the treatment of cancer pain. The court held that a breach of implied covenant claim arises only when the insurer acts in a manner that damages the very protection or security which the insured sought to gain by buying insurance. The insurer did not breach the implied covenant of good faith and fair dealing or otherwise act in bad faith in its administration of the contract's prescription benefits, either by paying for Actiq or by not monitoring the insured's treatment. The insured contracted with the insurer for payment of expenses incurred for covered health care services, as set forth in the contract, and although the insurer retained the right to refuse to pay for off-label prescriptions, the contract did not obligate the insurer to do so. The insurer did not expressly or impliedly assume the obligation of protecting the insured from the decisions of his medical providers or otherwise interfering with his medical care. The contract disclaimed any responsibility by the insurer for medical decisions made by the insured’s medical providers. The contract did not require the insurer to evaluate the decisions of the insured's health care professionals or otherwise protect him from the adverse effects of his prescribed treatment. The insurer did not breach the implied covenant of good faith and fair dealing by failing to investigate and discover the insured was using Actiq for a use not approved by the FDA or failing to warn the insured that Actiq had dangerous side effects.

 

The insurer did not act in bad faith by not timely evaluating Actiq to determine whether to require precertification for the medication. As the contract did not require the insurer to implement a precertification process for any or all covered medications, the insurer did not deprive the insured of his expected benefits under the contract by failing to evaluate Actiq for precertification within a prescribed period of time.

 

The Court of Appeals of Arizona, Division 1, affirmed the trial court’s grant of summary judgment in favor of the insurer on the insured’s claims for breach of contract and breach of the implied covenant of good faith and fair dealing.

 

See: Tavilla v. Blue Cross and Blue Shield of Arizona, Inc., 2014 WL 4473638 (Ariz.App. Div. 1, September 11, 2014) (not designated for publication).

 

See also Medical Law Perspectives, January 2014 Report: Prescription Painkillers: Risks for Patients, Pharmacists, and Physicians

 

See also Medical Law Perspectives, May 2013 Report: Drugs, Dosage, and Damage: Physician Liability for Prescribing or Administering Medication

 

See also Medical Law Perspectives, March 2012 Report: Off-Label Use of Prescriptions: When is this Medical Malpractice? Is the Pharmaceutical Company Liable for Overpromotion?

 

 

REPRINTS & PERMISSIONS COMMENT