KEVIN KROHN V HOME-OWNERS INS CO
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STATE OF MICHIGAN
COURT OF APPEALS
KEVIN KROHN,
UNPUBLISHED
January 26, 2010
Plaintiff-Appellee,
v
HOME-OWNERS INSURANCE COMPANY,
No. 283862
Lenawee Circuit Court
LC No. 06-002176-NF
Defendant-Appellant.
Before: Fort Hood, P.J., and Cavanagh and K. F. Kelly, JJ.
PER CURIAM.
In this action to recover first-party no-fault benefits, defendant appeals by right a
judgment, entered after a jury trial, which awarded plaintiff his expenses associated with
experimental stem cell surgery performed in Portugal. Specifically, defendant argues on appeal
that the trial court erred in failing to grant its motion for directed verdict following plaintiff’s
proofs. We agree for two reasons: (1) plaintiff’s treating physician expert witness did not testify
that the experimental stem cell surgery performed in Portugal was either “reasonable” or
“necessary” and (2) the trial court erred in failing to determine the scientific reliability of the
experimental surgery before admitting any testimony regarding the procedure. Accordingly, we
reverse.
I. Basic Facts and Procedural History
On December 11, 2001, plaintiff was involved in a head-on collision with a van on his
way to work. Plaintiff suffered multiple injuries including a severe spinal fracture just below his
mid-chest area. After the accident, plaintiff participated in intensive physical therapy at the
University of Michigan in an attempt to regain function in his chest and mid-level area.
However, plaintiff was not able to regain any sensation below his injury site.
During this time, plaintiff began investigating different treatment options. He learned
about an experimental medical procedure being performed in Portugal which involved surgery,
followed by intensive physical therapy. The surgery involved the transplantation of olfactory
mucosa, a tissue found in the sinus cavities containing stem cells, into the injury site. The theory
behind the procedure is that the stem cells will develop into spinal cord nerves with the right
stimuli. This procedure is not approved by the United States Food and Drug Administration
(FDA) and cannot be performed in the United States. The FDA approval process involves
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extensive review of exiting research, controlled studies, peer review, and publication. No one
has applied for FDA approval of the procedure or to begin a controlled study.
In March 2005, plaintiff went to the Rehabilitation Institute of Michigan (RIM) and
discussed the procedure with Dr. Steven Hinderer, who specializes in physical medicine and
rehabilitation. Dr. Hinderer is the medical director of The Center for Spinal Cord Injury
Recovery Program (CSCIRP). According to the medical literature from CSCIRP regarding the
experimental surgery:
There has been very little scientific data collection of the efficacy and long-term
outcomes of these procedures. As a result, CSCIRP will be offering medical
screening to any individuals who choose to pursue these alternative surgical
procedures. In this way, we can begin to advance scientific knowledge by
enrolling you as a potential research candidate. Following the surgery, patients
will agree to enroll in RIM’s clinical research study to evaluate the effectiveness
of these procedures.
Plaintiff decided to have the procedure done, and submitted a request for coverage to his
primary care insurer, Blue Cross Blue Shield (BCBS). After BCBS denied his request, plaintiff
sought to have defendant cover the cost of the surgery and related travel expenses. Defendant
determined it would cover the costs of testing and physical therapy, but denied coverage for the
surgery because it was experimental, lacked FDA approval, and was unlawful to be performed in
the United States. According to Raymond Marcus, defendant’s claim specialist, defendant was
not under an obligation to fund experimental research where there was no evidence “regarding
the efficacy and long term outcome of the surgery.” Plaintiff elected to travel to Portugal to have
the surgery and he paid for it himself. Plaintiff then filed this suit to recover his out of pocket
costs.
After the proofs were presented at trial, defendant moved for a directed verdict arguing
that the surgery was not covered by the no-fault act because it was not reasonably necessary or
lawfully rendered. The trial court denied the motion and this appeal followed.
II. Standard of Review
We review de novo a trial court’s decision on a motion for a directed verdict. Coble v
Green, 271 Mich App 382, 385; 722 NW2d 898 (2006). This Court reviews the evidence and all
legitimate inferences in the light most favorable to the nonmoving party to determine if the
evidence fails to establish a claim as a matter of law. Sniecinski v Blue Cross & Blue Shield of
Michigan, 469 Mich 124, 131; 666 NW2d 186 (2003). In determining whether a question of fact
existed that would preclude a directed verdict, this Court draws every reasonable inference in
favor of the nonmoving party, while recognizing the trial court’s superior opportunity to observe
witnesses. Coble, supra at 386.
III. Applicable Law
As a matter of public policy of this state, “the existence of no-fault insurance shall not
increase the cost of health care.” Dean v Auto Club Ins Ass’n, 139 Mich App 266, 274; 362
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NW2d 247 (1984). As this Court stated in McGill v Automobile Ass’n of Michigan, 207 Mich
App 402, 407; 526 NW2d 12 (1994):
Indeed, the no-fault act was as concerned with the rising cost of health care as it
was with providing an efficient system of automobile insurance. To that end, the
plain and ordinary language of [MCL 500.3107] requiring no-fault insurance
carriers to pay no more than reasonable medical expenses, clearly evinces the
Legislature’s intent to place a check on health care providers who have no
incentive to keep the doctor bill at a minimum. [Citations and internal quotations
omitted.]
Accordingly, under the no-fault act, an injured person is entitled to payment of personal
protection insurance (PIP) benefits only for “[a]llowable expenses consisting of all reasonable
charges incurred for reasonably necessary products, services, and accommodations for an injured
person’s care, recovery, or rehabilitation.” MCL 500.3107(1)(a). For an expense to qualify as
an “allowable expense” under the no-fault act, (1) the charge must be reasonable, (2) the expense
must be reasonably necessary, (3) the expense must be incurred, and (4) the expense must be for
an injured person’s care, recovery, or rehabilitation. Griffith v State Farm Mut Auto Ins Co, 472
Mich 521, 532 n 8; 697 NW2d 895 (2005); Nasser v Auto Club Ins Ass’n, 435 Mich 33, 50; 457
NW2d 637 (1990). Thus, a no-fault insurer is not liable for medical expenses that are not
reasonably necessary. Nasser, supra at 49. The question whether an expense is reasonably
necessary is generally one of fact for the jury, although “it may be in some cases possible for the
court to decide the question of the reasonableness or necessity of particular expenses as a matter
of law in much the same way that under certain circumstances it may decide whether a plaintiff
has sustained a threshold injury under [MCL 500.3135] of the act.” Id. at 55.
In the context of this case, because the question of whether this surgical procedure was
reasonably necessary involves medical judgment, expert testimony was required to support
plaintiff’s claim. See Bryant v Oakpointe Villa Nursing Ctr Inc, 471 Mich 411, 423; 684 NW2d
864 (2004). And, whether the medical testimony is admissible is a preliminary question to be
determined by the trial court. As we held in SPECT Imaging, Inc v Allstate Ins Co, 246 Mich
App 568, 578; 633 NW2d 461 (2001):
The party proffering the evidence bears the burden of demonstrating its
acceptance in the medical community. Pursuant to MRE 702, the trial court is
required to determine the evidentiary reliability or trustworthiness of the facts and
data underlying an expert’s testimony before the testimony may be admitted. To
determine whether the requisite standard of reliability has been met, the court
must determine whether the proposed testimony is derived from recognized
medical knowledge. To be derived from recognized medical knowledge, the
proposed testimony must contain inferences or assertions, the source of which
rests in an application of medical methods. Additionally, the inferences or
assertions must be supported by appropriate objective and independent validation
based on what is known, e.g., scientific and medical literature. [Citations and
alternations omitted.]
Thus, a trial court must first make a preliminary determination whether the proposed
treatment has gained general acceptance in the medical community as to be admissible under
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MRE 702. Id. at 578-579, citing Stitt v Holland Abundant Life Fellowship (On Remand), 243
Mich App 461, 468; 624 NW2d 427 (2000). Then, only after the procedure has been
demonstrated to have gained general acceptance in the medical community will the question of
whether it is an “allowable expense” become a question of fact for the trier of fact. Id.
IV. Analysis
Defendant argues that it was entitled to a directed verdict because plaintiff’s surgery was
not reasonably necessary. We agree. First, plaintiff’s own treating physician expert, Dr.
Hinderer, did not testify that the procedure was either reasonable or necessary. Second, even
assuming that Dr. Carlos Lima1 was properly qualified as an expert witness, even he conceded
that the surgery has not gained general acceptance in the international medical community, let
alone in the United States.
A. Reasonably Necessary
In support of his claim for recovery of the costs associated with the surgical procedure,
plaintiff presented the testimony of Dr. Hinderer. Dr. Hinderer testified that he does not
prescribe the experimental surgery for his patients and did not do so for plaintiff. Not only does
he not prescribe the surgery, CSCIRP does not recommend it. In fact, to the best of his
knowledge, the surgery has never been prescribed for any patient from the United States. It is
not part of the standard clinical care for patients suffering from spinal cord injuries, particularly
in light of its experimental nature and he believed that “many physicians would not recommend
[it] or agree that it is necessary.” Further, if a patient opts to have this procedure done, it might
disqualify the patient from later spinal cord treatment advances. Finally, he testified that the
procedure is not regarded as necessary in his field but rather is an understandable personal
choice. With respect to whether the surgery benefited the plaintiff, he testified that he would not
be able to determine whether any improvement was due to the surgery, the aggressive physical
therapy he prescribed for plaintiff, or a combination of both, and acknowledged that the
aggressive rehabilitation itself can produce improvements.
After our review of Dr. Hinderer’s testimony in a light most favorable to the plaintiff, it is
clear that it does not reflect a reasoned medical opinion on the potential health benefits of the
subject medical procedure. His testimony did not elicit any facts that would demonstrate that the
surgery was either reasonable or necessary. At most, it is merely evidence of a physician
carrying out his role as a health care professional providing support to his patient in a decision
the patient independently made regarding his own treatment.2
1
Dr. Lima is a neurologist licensed in Portugal. While he did not participate in plaintiff’s
surgery, he is part of the team that supervises the human clinical trials in Portugal. He is not
licensed to practice medicine in the United States.
2
Further, we also note that the trial court’s ruling appears to conclude that the surgery was an
allowable expense because plaintiff benefited from the surgery. We stress, however, that such
evidence does not provide a basis for the trial court’s conclusion. The use of the words
(continued…)
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Given the considerable lack of medical testimony or evidence, there was no question of
fact on the reasonableness and necessity of the surgery. Rather, taken as a whole, Dr. Hinderer’s
testimony established that the surgery was not “a reasonably necessary product, service and/or
accommodation[]” for plaintiff’s “care, recovery or rehabilitation,” see MCL 500.3107(1)(a), and
the fact that plaintiff may have benefited from the procedure was an irrelevant inquiry in
determining whether the surgery was an allowable expense. Thus, the trial court erred in not
granting defendant’s motion for directed verdict. When a plaintiff fails to show that the surgery
is a reasonably necessary product or service, “there can be no finding of a breach of the insurer’s
duty to pay that expense, and thus no finding of liability with regard to that expense.” Nasser,
supra at 50.
B. Scientific Unreliability
We further emphasize, that on this record, even if Dr. Hinderer had recommended or
prescribed the surgery, it still could not be considered an allowable expense. An insurer is only
liable for scientifically proven medical tests or procedures. SPECT, supra at 579; see also Miller
v State Farm, 168 Mich App 238, 246; 424 NW2d 31 (1988). Plaintiff did not establish that the
surgery had any current acceptance as a reliable treatment method, even in Portugal. Rather the
evidence merely established that the clinical study in Portugal was conducted under the theory
that the procedure could potentially produce a viable treatment option. Further, the experimental
surgery fails to meet any nationally recognized standard and has not been approved by the FDA.
There have been no controlled studies; no peer review; no published research materials; or any
follow up studies. Even Dr. Lima testified that at the time of plaintiff’s surgery, no studies had
been published as it was so new. The first “paper” published after plaintiff’s surgery only
referenced seven patients. Even plaintiff’s surgical results could not be included in subsequent
published studies as he would need to be followed for a minimum of two years. Dr. Hinderer
also testified that because the surgery is such a new procedure, by any scientific standards, the
outcomes are unknown and potential results were speculative. Accordingly, the trial court erred
in admitting Dr. Lima’s testimony regarding the surgery. See MRE 702.
V. Conclusion
Defendant’s motion for a directed verdict should have been granted because the evidence
established that the surgery was not prescribed by any licensed medical professional; no
medical professional testified that it was reasonably necessary; and it has not been shown to be
(…continued)
“reasonably necessary” within the statute mandates a review by an objective standard rather than
a subjective, insured based perspective. South Macomb Disposal Authority v American Ins Co,
225 Mich App 635, 657-659; 572 NW2d 686 (1997). In other words, a subjective positive
outcome of a medical procedure is not the ultimate fact essential to determining what is an
allowable expense within the context of the no-fault act. Solely relying on such evidence in this
manner would violate the plain language of the statute, as it would premise cost recovery simply
based upon actual success, even if viewed objectively, of a medically accepted treatment. This
would mean that any unsuccessful treatment would not be covered even though the medical
treatment was universally accepted as “reasonably necessary.” This is a result we cannot
sanction because it is contrary to the plain language and purpose of the statute.
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scientifically reliable such that it has gained general acceptance within the medical
community.3 We reject the argument that defendant is required to pay for the costs of
experimental surgery that is part of an experimental human clinical trial still in its infancy in
another country. Accepting such an argument would require insurance companies to accept
their insured’s unilateral health care treatment decisions, reached without medically accepted
support or judgment, thereby obliterating the cost-containment and policing functions of the
no-fault act. Clearly, the Legislature did not intend no-fault insurers to pay any claim
submitted without either reviewing the claim for lack of coverage or having legitimate,
properly supported contested claims submitted to a properly instructed fact-finder. McGill,
supra at 408, citing Lewis v Aetna Cas & Surety Co, 109 Mich App 136, 139; 311 NW2d 317
(1981).
Reversed and remanded for judgment in favor of defendant.
jurisdiction.
We do not retain
/s/ Mark J. Cavanagh
/s/ Kirsten Frank Kelly
3
Because of our resolution of this issue, we do not reach defendant’s additional argument that
the treatment was not lawfully rendered.
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