A health plan administrator acted unreasonably in denying coverage of a plan participant's cochlear implant, according to an Oct. 23 ruling by the U.S. Court of Appeals for the Fourth Circuit. The court ruled in Carolina Care Plan Inc. v. McKenzie that the plan abused its discretion in denying the participant's claim.
The ruling appears to be an important victory for patients. But one audiologist who has been long involved in cochlear implants said she is not sure how far-reaching the case may be.
"While I would like to think that this is a victory, indicating that Carolina Care needs to cover this service, I'm not convinced it will set a precedent. They may pay for it and then change their policy," said Abby Connell of the Medical University of South Carolina (Charleston). "I have no concept of how much money they've spent on this case, but am wondering how many cochlear implants it would have paid for," she added.
Steve White, ASHA's director of healthcare economics and advocacy, said, "What will it take to convince Carolina Care that cochlear implants are an important benefit? From our perspective, the outcome couldn't be better."
Carolina Care's exclusion for devices such as cochlear implants was listed under the section for "comfort and convenience," along with items such as telephones, air purifiers, and batteries. The court said that a cochlear implant is different from such items, since it "remedies a disability and enables the recipient to function more fully in the world."
Connell said, "It's potentially a small victory for this particular patient. [Carolina Care] fought this for so long and they seem very adamant in figuring out the best way possible to not pay for a cochlear implant."
Carolyn L. McKenzie participated in Carolina Care Plan Inc.'s health plan through her employer. The administrator denied her application for authorization of a cochlear implant based on two plan exclusions-for devices and computers to assist in communication and speech, and hearing aids. McKenzie's physician argued that a cochlear implant was an implantable prosthetic device to code sounds and replicate them electronically.
McKenzie filed an action in the U.S. District Court for the District of South Carolina, which found that the plan abused its discretion in refusing to authorize her cochlear implant and ordered the plan to provide coverage. Carolina Care Plan appealed.
Plan Language Ambiguous
The appeals court found that although the administrator had discretion to interpret claims, there was modified abuse of discretion because the plan was both the administrator and the insurer, resulting in a conflict of interest. The court noted that health insurance companies benefit financially when they deny claims.
The plan language offered ambiguous support for the administrator's denial, the court said. The plan argued that the cochlear implant was a device to help the recipient hear, and thus the exclusion for devices to assist in communication and speech applied.
The court said the language could be read to exclude devices that helped both communication and speech, which did not apply to cochlear implants. The ruling also noted that under the section for "vision and hearing," the plan specifically excluded hearing aids, but not cochlear implants.
Connell said she was aware of 15 or 20 people who might have benefited from cochlear implants in the last several years. Most were never even evaluated because they listed Carolina Care as their insurance provider. While implants are important for adults, they are especially crucial for children.
"That one-time payment is so miniscule in the life of a child, when you consider the cost of paying for the implant versus what it would cost in state taxes to educate a deaf child," Connell said. "It's the best chance of getting children into mainstream classrooms and improving their literacy."