Facts
- Sindie Katskee had a strong family history of breast and ovarian cancer.
- In January 1990, she consulted a cancer genetics specialist, Dr. Henry Lynch, to evaluate her risk given her family history.
- Dr. Lynch diagnosed Katskee with breast-ovarian carcinoma syndrome, a genetic condition associated with a greater than 50% chance of developing breast and/or ovarian cancer.
- Dr. Lynch and Katskee’s gynecologist, Dr. Larry Roffman, recommended a total abdominal hysterectomy and bilateral salpingo-oophorectomy as the most medically appropriate treatment for her condition.
- Katskee sought preauthorization from Blue Cross/Blue Shield of Nebraska (BCBSN) under a policy covering “medically necessary” services for an “illness,” defined as a “bodily disorder or disease.”
- BCBSN initially suggested coverage was possible but, shortly before the operation, denied coverage through its chief medical officer.
- Katskee underwent the surgery in November 1990 and sued BCBSN for breach of contract to recover $6,022.57 in related costs.
Issues
- Whether breast-ovarian carcinoma syndrome, a genetic abnormality creating a very high probability of future cancer, qualifies as an “illness” (a “bodily disorder or disease”) under the insurance policy.
- Whether the insurer could deny coverage for recommended prophylactic surgery on the ground that the insured did not yet have cancer.
- Whether any ambiguity in the policy’s coverage terms required construction in favor of the insured, making summary judgment improper.
Decision
- The Nebraska Supreme Court reversed the district court’s grant of summary judgment for BCBSN and remanded for further proceedings.
- The court held that Katskee’s genetic syndrome constituted an “illness” within the policy’s definition of “bodily disorder or disease.”
- The court rejected the insurer’s position that the absence of an existing cancer diagnosis necessarily defeated coverage as a matter of law.
- The court applied insurance contract interpretation rules requiring ambiguous terms to be construed in favor of the insured.
Legal Principles
- Insurance policies are construed to give effect to the parties’ intent, using the plain and ordinary meaning of terms as a reasonable insured would understand them.
- Ambiguous insurance policy language is construed against the insurer and in favor of coverage.
- A present abnormal bodily condition may qualify as an “illness,” “bodily disorder,” or “disease” even if it has not yet produced the feared ultimate pathology (here, cancer).
- Coverage for “medically necessary” services can include risk-reducing treatment directed at an existing pathological condition, not solely treatment of fully manifested disease.
- An insurer’s asserted contractual discretion to determine “medical necessity” does not justify summary judgment when coverage turns on disputed or ambiguous policy application to the insured’s condition.
Conclusion
The Nebraska Supreme Court held that a serious genetic cancer syndrome is a covered “illness” under a policy defining illness as a bodily disorder or disease, and it reversed summary judgment that had allowed the insurer to deny coverage for medically recommended risk-reducing surgery solely because cancer had not yet developed.