Interpreting An Insurance Policy

Insurance lawyers will always ask for a copy of the policy when an insured complains that their claim for benefits has been denied and the reason for denial is based on the language in the policy.  In Texas, insurance companies are required to explain to a policy holder the reason for denial of benefits.  Whether or not the reason for denial is proper is usually based on the language in the policy as applied to the facts of the particular case.

A 2020, opinion from the Southern District of Texas, Galveston Division, provides some insight as to how the Courts interpret policies.  The case is styled, Louise Odom Hayes v. Blue Cross and Blue Shield of Texas, Inc. and Health Care Service Corporation.

Hayes sued Blue Cross for breach of the health insurance policy Hayes had purchased from Blue Cross wherein Blue Cross refused to pay for additional benefits Hayes claims she should have received.  Blue Cross filed a motion for summary judgment based on its contention that its determination of benefits was consistent with its contractual obligations to Hayes.

This Court spent considerable time discussing the requirements of a summary judgment motion and the response to same.  This will be discussed at a later time.

According to the policy’s benefit booklet, Blue Cross has the right to determine the day-supply limit for covered drugs, and benefits will be denied for drugs dispensed above the maximum day-supply limit.  Blue Cross publishes the dispensing limits that apply to all its insurance policies.  The published dispensing limit for Lumigan in 2014 was 2.5 milliliters for every 30 days.  If an insured’s doctor prescribes a greater quantity of medication than provided for in the dispensing limits, the insured is responsible for the full cost beyond what the dispensing-limit coverage allows.  Blue Cross’s pharmacy system was set up to allow a maximum of 7.5 milliliters for 90 days for a maintenance medication such as Lumigan, consistent with the published dispensing limit “up to a 90-day supply” for maintenance drugs ordered through the mail order pharmacy.

Blue Cross based its Lumigan dispensing limit on guidance from the Food and Drug Administration (“FDA”) and from Allergan, the drug’s manufacturer.  The FDA’s recommended dosage for Lumigan is one drop in each affected eye once daily in the evening.  More frequent administration of Lumigan is not recommended.  According to Allergan, Lumigan dispenses approximately 30 drops per milliliter.  Therefore, there are 75 drops in a 2.5-milliliter bottle and 225 drops in a 7.5-milliliter bottle of Lumigan.  In light of this guidance, Blue Cross set its dispensing limit for Lumigan at 2.5 milliliters for 30 days, providing 75 drops (more than one drop per eye per day) for the time period.

The amount of Lumigan that Blue Cross approved as a covered benefit for Odum was consistent with the policy.  On March 18, 2014, Blue Cross approved Odum’s first 2014 claim for Lumigan as a covered benefit.  At that time, Blue Cross allowed 5 milliliters of Lumigan, less than the dispensing limit of 7.5 milliliters for 90 days.  In other words, Odum was eligible for another 2.5 milliliter of Lumigan for the 90-day period from March 18 to June 16.  On May 5, 2014, Blue Cross covered 2.5 milliliters of Lumigan, reaching the dispensing limit for the 90-day period ending June 16.  For the next two 90-day periods—June 16 to September 14 and September 14 to December 13—Blue Cross covered up to the dispensing limit for Lumigan in several 2.5-milliliter doses: Odom was dispensed 2.5 milliliters of Lumigan on the following dates for the remainder of 2014—June 8, July 15, August 23, September 26, November 2 and December 6.

If an insured’s provider wants Blue Cross to cover more medication than the dispensing limit, Blue Cross allows the provider to submit a Quantity Exception Request to Blue Cross for consideration.  Blue Cross received no calls from Odum related to her Lumigan dosing and received no Quantity Exception Request from either Odum or her provider.  As a result, it had no basis or opportunity to consider whether Odum should receive Lumigan at quantities in excess of the dispensing limitation.

The Court granted the Blue Cross motion for summary judgment.

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