of Appeals Office of Appellate Courts
Brandon Schwartz, Michael Schwartz, Schwartz Law Firm,
Oakdale, Minnesota, for respondents.
A. Mintzer, Doreen A. Mohs, Michelle Block, BCBSM, Inc.,
Eagan, Minnesota; and Mahesha P. Subbaraman, Subbaraman PLLC,
Minneapolis, Minnesota, for appellant.
C. Evans, Richard C. Landon, Gray, Plant, Mooty, Mooty &
Bennett, P.A., Minneapolis, Minnesota, for amicus curiae
Minnesota Council of Health Plans.
Hudson, J. Took no part, Lillehaug, Chutich, JJ.
external-review decision under Minn. Stat. § 62Q.73,
subd. 7(c) (2016), is an independent determination of medical
necessity that creates only a statutory obligation, not a
contractual obligation, to pay an insured's claim.
Because there is no genuine issue of material fact regarding
the type and location of the insured's tumor and the
health-plan contract plainly excluded coverage for requested
treatment regarding the type and location of the
insured's tumor, the district court properly granted
summary judgment to the health-plan company.
appeal, we must address the effect of external-review
decisions under Minn. Stat. § 62Q.73, subd. 7(c) (2016).
Appellant BCBSM, Inc. ("Blue Cross") denied
respondent James Linn's insurance claim because the
requested treatment was not considered medically necessary
under the parties' health-plan contract. After Blue Cross
denied the claim, an external-review entity determined that
the treatment was, in fact, medically necessary for
Linn's condition. Blue Cross then paid the claim, but
Linn and his wife sued Blue Cross for breach of contract. The
district court granted summary judgment for Blue Cross,
concluding that the treatment was not medically necessary
under the contract's plain terms and that Blue Cross
fulfilled its contractual obligations when it paid for the
treatment following the external review. The court of appeals
reversed. Because we conclude that (1) external-review
decisions are independent determinations of medical necessity
that do not supersede contractual definitions of medical
necessity, and (2) the health-plan contract plainly excluded
coverage for Linn's claim for treatment, we reverse.
Cross is a nonprofit corporation, organized under Minnesota
Statutes chapter 62C (2016), which contracts with individuals
to provide health insurance. James and Gloria Linn purchased
an Individual BlueAccess Health Plan Contract
("Contract") from Blue Cross. Under the
Contract, Blue Cross agreed to "timely" pay for
covered, medically necessary, services. In other words, Blue
Cross agreed to pay for medically necessary care that was
also covered under the contract; Blue Cross did not agree to
pay for all medically necessary care. Specific
medical policies, which were incorporated into the Contract
by reference, defined when particular treatments were
considered medically necessary under the Contract. The
Contract also notified the Linns of their right to an
internal-appeal process and an optional subsequent
external-review process, as required by Minn. Stat. §
62Q.73 (2016), in the event that a claim was denied because
Blue Cross determined that a requested treatment was not
section 62Q.73, if a health-plan company concludes that
the treatment is not medically necessary and denies coverage,
an insured may request an independent, external review to
determine whether the treatment is medically necessary.
Minnesota adopted its external-review statute in 1999 after
coalitions of patients, providers, and legislators sought to
protect patients from unreasonable insurance denials
resulting from cost-containment methods in managed care, such
as utilization reviews and pre-authorization requirements of
insureds' care by insurers. Act of May 25, 1999, ch. 239,
§ 39, 1999 Minn. Laws 1880, 1897-99; see Aaron
Seth Kesselheim, What's the Appeal? Trying to Control
Managed Care Medical Necessity Decisionmaking Through A
System of External Appeals, 149 U. Pa. L. Rev. 873,
881-99 (2001). Health-plan companies adopted these
cost-containment methods to help stabilize the rising cost of
medical care from an overutilization of care. See
Kesselheim, supra, at 885-99. To protect patients,
external-review statutes added an independent review process
to ensure timely and impartial review of insurance denials.
See Nan D. Hunter, Managed Process, Due Care:
Structures of Accountability in Health Care, 6 Yale J.
Health Pol'y L. & Ethics 93, 121 (2006).
Linn was diagnosed with chondrosarcoma, a type of bone cancer
that affects cartilage, in the thoracic (mid-back) region of
his spine. From March 2014 to December 2014, Linn underwent
several surgeries to remove the cancer. During the course of
his treatment, specialists recommended Proton Beam Radiation
Treatment ("PBRT"), which is a form of radiation
treatment that can be directed and localized to minimize side
effects. Linn's radiation oncologist submitted a letter
to Blue Cross to pre-authorize the use of PBRT, arguing that
PBRT was medically necessary for Linn. Blue Cross timely
denied coverage for PBRT, explaining that under the
Contract's medical policy for PBRT, the treatment was
only medically necessary when used in the "basisphenoid
region" and "cervical spine, " not in the
thoracic spine-the location of Linn's cancer. Linn's
radiation oncologist appealed Blue Cross's denial on
Linn's behalf. But Blue Cross again timely denied
coverage for the treatment.
Linn exhausted Blue Cross's internal-appeal process, he
requested an external review of Blue Cross's denial under
section 62Q.73, subdivision 7(c). The Minnesota Department of
Commerce referred the request to the MAXIMUS Center for
Health Dispute Resolution, a private company that contracts
with the State to conduct external reviews. MAXIMUS
determined that PBRT was medically ...