HMO Ordered to Pay $12.1 Million for Denying Treatment

In a verdict that could have broad implications for health care insurers, a Riverside Superior Court jury has ordered Health Net of Woodland Hills to pay $12.1 million in compensatory damages for refusing to pay for a controversial bone marrow transplant to treat breast cancer, an attorney in the case said Monday.

Mark Hiepler, an Oxnard attorney for the plaintiff, Nelene Fox, said the jury took just three hours last Thursday to come to a unanimous conclusion that the health maintenance organization’s refusal constituted a bad faith breach of contract, causing “reckless infliction of emotional distress” on Fox and her family.

The Riverside jury is expected to reconvene today to consider punitive damages, Hiepler said.

Don Prial, spokesman for Health Net, the state’s second-largest HMO, declined to comment Monday, saying the case was not resolved.

Fox, of Temecula, was diagnosed with breast cancer shortly after her 38th birthday in June, 1991. She had Health Net coverage through her husband’s job as a schoolteacher, but Health Net said it did not pay for “investigational” procedures. Fox filed suit in June, 1992, and through the help of 1,700 contributors, Fox and her family raised $210,000, enabling her to undertake the treatment.

Fox died last April, but her husband, Jim, pursued the suit. The case went to trial early this month.

The jury’s award to Fox, one of the largest in Riverside County history, could have repercussions for the health care field, because the case is thought to be the first of its kind to go to trial.

Hiepler said he currently represents two other women who have been denied payment for the treatment by Health Net. Experts say scores of women nationwide have filed suit or have threatened to sue Health Net and other medical insurers for refusing to pay for the procedure, known as an autologous bone marrow transplant.

Health Net and some other insurers say they refuse to pay for the procedure because they view it as experimental. Lawyers representing women with breast cancer argue that payment is denied to save money.

Such transplants typically cost about $150,000. The procedure carries high risk to the patient because it involves the drainage of bone marrow followed by massive doses of chemotherapy. Some doctors say that the transplants offer as much as a 20% chance for long-term survival, but others note that it can be fatal and that conclusive data is lacking.

Hiepler said, “I hope the case will change the behavior of companies and will send a message that this procedure is no longer experimental.”