Using the Courts to Move Insurance Coverage Goals Part I


Written by Tim Rozelle, Esq.

In July, August, October and December 2015, Kantor & Kantor filed class action lawsuits against Anthem Blue Cross Life and Health Insurance Company (and 26 other Anthem, Inc.-affiliated health plans nationwide), UnitedHealthcare Insurance Company (and 31 other United-affiliated health plans nationwide) and HealthNet respectively regarding the insurers’ categorical denials of Harvoni drug treatment for Hepatitis C. In denying treatment, the insurers told their insureds that their liver must reach a certain level of scarring (F3 or F4 on an F0-F4 scale) before treatment becomes necessary and would be approved.  In these respective lawsuits, our clients allege that the named insurers violated the Employee Retirement Income Security Act (ERISA) (or allege that the insureds breached insurance contracts) by using internal coverage guidelines (ICGs) to overrule providers’ determinations of appropriate medical treatment. Our clients claimed that the insurers forced them to live with a serious health problem and related issues until their livers became sufficiently deteriorated to approve treatment.

In October 2014 the U.S. Food and Drug Administration approved Harvoni to treat Hepatitis C, which can cause cancer and infections of the liver. While studies showed that Harvoni has a 95 percent to 99 percent success rate in curing Hepatitis C, the 12-week treatment had a price tag of roughly $99,000. Before Harvoni’s approval by the FDA, a three-drug combination (the old standard of care in the medical community for the treatment of Hepatitis C) was used to treat the disease, which caused severe side effects. Harvoni is more effective than the combination and has no side effects.  Notwithstanding the life-saving treatment offered by Harvoni, insurers unlawfully limited our clients’ and class members’ access to this drug by developing arbitrary Harvoni ICGs.

Between December 17, 2015 and April 11, 2016, following the filing of these class action lawsuits, Anthem, United and Blue Shield each made the decision to change their Harvoni ICGs removing the unlawful coverage restrictions which had previously limited access to Harvoni only to individuals with verifiable diagnoses of F3 to F4 liver fibrosis scores. In fact, only HealthNet has persisted in its refusal to change its restrictive Harvoni ICG.

The welcome change of these ICGs unfortunately has come at a price as insureds continued to experience the daily, debilitating symptoms arising from a life with Hepatitis C.  Insureds were forced to wait for excruciatingly long periods to gain access to a curing drug.  In fact, a 2014 study found that of the cohort of patients making pre-authorization requests between October 11, 2014 and December 31, 2014, nearly one in four were denied initial approval, representing a barrier to care of Hepatitis C treatment.[1] This rate of denial is actually lower in the general population as this particular retrospective study included a substantially high population of patients with liver cirrhosis (60.5%). A significantly higher proportion of patients with Medicare/Medicaid coverage were initially approved compared to those with private insurance.  The study also measured time to approval or denial for Harvoni by private insurance carriers which overestimated access to Harvoni due to the fact that the study’s cohort included insured patients having already completed a series of pre-treatment evaluations (i.e., Fibrosure tests) and designated within a formal liver fibrosis staging score.

A more comprehensive June 2016 study examined Harvoni coverage patterns for a cohort of almost 4,000 publicly and privately insured individuals seeking prior authorization for Harvoni between November 1, 2014 and April 30, 2015.  Among the roughly 2,400 patients not excluded from the study, 377 were absolutely denied Harvoni, including 104 of the 1,023 commercial insurance insureds. The most frequent basis of denial was lack of medical necessity (fibrosis staging scores of F0 to F2).  The study found that carriers began to relax criteria for reimbursement over time. Perhaps, the primary reason for this gradual relaxing of its ICG restrictions was that insurers could no longer rely upon inaccurate and disingenuous interpretations of the practice guidelines issued by the American Association for the Study of Liver Diseases and Infectious Diseases Society of America (AASLD).

In September 2014, AASLD recommend antiviral treatment for all patients with chronic Hepatitis C (CHC), but prioritized direct acting antiviral-based CHC treatment for certain subgroups, particularly those with advanced hepatic fibrosis or cirrhosis.[2]  By October 2015, AASLD clarified its recommendation by removing any insinuation of patient prioritization in its guidelines.[3]  The AASLD released a position statement stating that:

Our recent addition to the Guidance prepared by a committee of leading liver experts from AASLD and The Infectious Diseases Society of America (IDSA) proposed that the sickest patients be treated first, but all patients who receive advice from their doctor to take newest medications should not be denied. The decision across the board should be in the hands of the clinician and the patient to make the decision. Unfortunately payers across America are denying treatment when a doctor has prescribed it for their patient. We adamantly disagree with this decision.[4]

Although the Harvoni denial saga has not come to its legal conclusion quite yet, it is clear that the imposition of ICGs by insurance carriers create barriers to access, some of which may be justified in the medical literature and others of which may be woefully lacking in credibility for the purpose of saving the carriers’ bottom lines.  Formulary restrictions have become a standard to manage prescription drug spending. Newer medications are extremely cost-effective treatments for many people with chronic conditions. Unfortunately, many persons are denied access to these medications because of requirements that these drugs be tied to prior authorization or have a preferred status when provided through public and private insurers. Mechanisms for reducing drug spending include prescription limits, “fail-first” policies, and use of generics and tiered copayments. Taken together, such formulary restrictions may lead to adverse health consequences often reflected in greater use of medical services. Drug benefits designed to shift costs to consumers and discourage use of expensive pharmaceuticals may lead to increased morbidity and mortality in high-risk populations such as the poor and the elderly, as well as individuals with certain chronic illnesses such as diabetes, asthma, depression, and schizophrenia.

Happe, Clark, Holliday, and Young (2014) published a systematic review of the literature examining the relationship of managed care formulary restrictions to medication adherence, outcomes, health care utilization, and economic outcomes.[5] Their analysis showed in the majority of the 93 articles they examined 262 separate outcome measures reported negative outcomes (49.6%), and 68.3% of medication adherence outcomes alone were negative. Utilization outcomes were not associated with formulary restrictions for 50% of the outcome measures. This suggests, contrary to carrier practice, that there is no association between economic measures and formulary restrictions.

These authors also acknowledged that “prior authorization” was the subject of only 20 of the 93 articles reviewed. The process for pre-authorization interferes with patient care and subtlety undermines the provider-patient relationship. It can challenge a patient’s faith in his or her provider and treatment plan by creating an impression that the provider has chosen the wrong medication or did not know the correct medication in the first place. While providers wait for a response from an insurance company, patients may interpret this as disinterest, laziness, or negligence. This may be the greatest unintended consequence of insurance prior authorization—patients who may already be nervous and uncertain about the value of health care are faced with additional delays, near-immediate changes to their plan of care, or even eventual denial of services.[6]

Health insurance carriers’ systematic denial of Harvoni treatment is just the most recent episode in insurers’ use and reliance on restrictive ICGs to deny access to all types of medical care—surgical, prescription drug, and mental and behavioral health.  Future blog posts will examine the history of (1) MEDICAL NECESSITY denials and (2) EXPERIMENTAL and INVESTIGATIONAL denials for coverage requests for various treatments. We will examine specifically how proper legal representation in the courts can be utilized to move the goal posts of insurance coverage.


[1] Do A, Mittal Y, Liapakis A, Cohen E, Chau H, Bertuccio C, et al. (2015) Drug Authorization for Sofosbuvir/Ledipasvir (Harvoni) for Chronic HCV Infection in a Real-World Cohort: A New Barrier in the HCV Care Cascade. PLoS ONE 10(8).

[2] American Association for the Study of Liver Diseases/Infectious Diseases Society of America/International Antiviral Society- USA. Recommendations for testing, managing, and treating hepatitis C. Available from:

[3] American Association for the Study of Liver Diseases/InfectiousDiseases Society of America/International Antiviral Society-USA. Hepatitis C guidance underscores the importance of treating HCVinfection: panel recommends direct-acting drugs for nearly all patients with chronic hepatitis C. Available from:

[4] See

[5]  Happe, Clark, Holliday, and Young, (2014) A Systematic Literature Review Assessing the Directional Impact of Managed Care Formulary Restrictions on Medication Adherence, Clinical Outcomes, Economic Outcomes, and Health Care Resource Utilization.  J Manag Care Pharm. 20(7): 677-84.

[6] Quallich, S.A. (2015). The price of prior authorization. Urologic Nursing, 35 (3), 109-110.


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