Opinion ID: 154172
Heading Depth: 3
Heading Rank: 2

Heading: Applying the Arbitrary and Capricious Standard

Text: 44 We hold that FHP did not act arbitrarily and capriciously in concluding that the PTE procedure was experimental. We agree with the magistrate judge that in deciding to deny Chambers his benefits, the Board members, who were stockholders of FHP, operated under a significant conflict of interest. Despite this, the evidence strongly supports FHP's decision. On May 1, 1990, the following evidence was before FHP: 45 (1) Despite twenty years of experience with PTE, the procedure still had a 13% to 15% mortality rate at UCSDMC and a 30% to 50% rate in France; 46 (2) Dr. Moser and his staff at UCSDMC were the only practice group successfully performing the procedure; 47 (3) Dr. Moser, who originated the procedure and would supervise the plaintiff's treatment, described the procedure as an experiment with nature. 48 (4) The medical community performed the PTE procedure in an almost exclusively investigational setting at only two teaching facilities, UCSDMC and Duke University; 49 (5) Medical practitioners at other major medical institutions, such as the Mayo Clinic, referred their patients to UCSDMC for the procedure; 50 (6) The Health Care Financing Administration, an organization responsible for determining national government-funded coverage, had not decided whether to cover the procedure or not; 51 (7) Blue Cross and Blue Shield of Kansas, the state's largest insurer, strongly considered the procedure experimental; 52 (8) Blue Cross and Blue Shield's written guidelines defined procedures as experimental if performed only in investigational settings; 53 (9) Employees at Dorth Coombs, a Wichita company that administers healthcare plans, stated that the company would cover PTE because the procedure was in the Physician's Current Procedural Terminology book; 54 (10) Medical directors of Equicor and Prime Health, two Kansas health maintenance organizations, had never heard of the procedure; 55 (11) The Oschsner Clinic, a health maintenance organization in New Orleans, covered the procedure on a case-by-case basis; 56 (12) The medical department responsible for handling California medicare considered the procedure to be investigational. 57 We conclude that although the Board suffered from a conflict of interest, FHP's determination that PTE was an experimental procedure was reasonable in light of the administrative record. Accordingly, we find that FHP's decision to deny Chambers benefits was not arbitrary and capricious.