Neurotron Inc v. Medical Serv Assoc

Opinions of the United

2001 Decisions States Court of Appeals

for the Third Circuit

6-19-2001

Neurotron Inc v. Medical Serv Assoc

Precedential or Non-Precedential:

Docket 00-1516

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Filed June 19, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

NO. 00-1516

NEUROTRON INC.,

Appellant

v.

MEDICAL SERVICE ASSOCIATION OF PENNSYL VANIA,

INC., t/a Pennsylvania Blue Shield; HIGHMARK, INC.

On Appeal From the United States District Court

For the Middle District of Pennsylvania

(D.C. Civil Action No. 98-cv-00157)

District Judge: Honorable Yvette Kane

Argued December 14, 2000

BEFORE: NYGAARD and STAPLETON, Circuit Judges,

and DEBEVOISE,* District Judge

(Opinion Filed: June 19, 2001)

_________________________________________________________________

* Honorable Dickinson R. Debevoise, United States District Judge for the

District of New Jersey, sitting by designation.

Andrew W. Barbin

Gleason & Barbin

123 State Street

Harrisburg, PA 17101

and

Charles I. Artz (Argued)

Charles Artz and Associates

207 State Street

Harrisburg, PA 17101

Attorneys for Appellant

Thomas E. Wood (Argued)

Keefer, Wood, Allen & Rahal

210 Walnut Street

P.O. Box 11963

Harrisburg, PA 17108

Attorney for Appellees

OPINION OF THE COURT

STAPLETON, Circuit Judge:

Neurotron, Inc. ("Neurotron") is a Maryland corporation

which manufactures an electrodiagnostic medical testing

device known as the Neurometer CPT ("Neur ometer").

Highmark, Inc. ("Highmark")1 is a Pennsylvania corporation

engaged in the operation of nonprofit health care plans.

Neurotron alleges that a passage in Highmark's newsletter,

Policy Review and News ("PRN"), commer cially disparaged

the Neurometer. Highmark successfully moved for summary

judgment. Neurotron appeals. We will affirm.

_________________________________________________________________

1. At the time of the disputed events, Medical Services Association of

Pennsylvania operated under the trade name "Pennsylvania Blue Shield."

"Highmark, Inc." is the Pennsylvania corporation formed in 1996 by the

consolidation of the former Pennsylvania Blue Shield and Blue Cross of

Western Pennsylvania. The parties have stipulated that Highmark is the

successor-in-interest to all of its pr edecessor corporations' rights and

obligations.

2

I.

The Neurometer tests a patient's ability to per ceive small

electrical currents through a procedure known as "current

perception threshold" testing ("CPT"). CPT involves

connecting electrodes to the surface of the patient's skin

and then delivering a series of low-voltage electrical shocks

and recording whether the shocks wer e perceived. Through

a series of shocks at decreasing voltages, the Neurometer

establishes the lowest level of current that the patient is

able to feel. It then compares these readings to a database

of "normal" readings and delivers a printout that states

whether the patient's sensory perception of electrical

current is either elevated ("hyperesthesia"), normal, or

depressed ("hypoesthesia"). Hyper esthesia and hypoesthesia

can be symptoms of numerous medical problems.

Neurotron contends that the Neurometer is a useful

diagnostic tool because it can detect these symptoms at a

very early stage.

Highmark provides nonprofit health insurance programs

which cover the medical expenses of Highmark members.

Among the services that Highmark excludes fr om payment

are services that are experimental or investigational. Its

agreement with its members and health car e providers

stipulates that Highmark "does not cover services which it

determines are Experimental or Investigative in nature

because those services are not accepted by the broad

medical community as effective treatments." App. III at

298a. That agreement defines "Experimental or

Investigative" as follows:

the use of any . . . procedure . . . which[Highmark],

relying on the advice of the general medical community

which includes but is not limited to medical

consultants, medical journals and/or gover nmental

regulations, does not accept as standar d medical

treatment of the condition being treated, or any such

items requiring federal or other governmental agency

approval for which approval has not been granted at

the time the services were rendered.

App. III at 300a.

3

Highmark's Medical Policy Department ("MPD") r eviews

developments in health care practice and pr ocedure and

makes determinations as to when a new pr oduct or

procedure has advanced beyond the experimental or

investigational stage and becomes an accepted part of

standard medical practice. Highmark's Benefits Utilization

Management Department ("BUMD") conducts post-payment

audits of health care providers to assur e that their billings

to Highmark have been in accordance with the applicable

policies and regulations, that services ar e reported and paid

accurately, and that unnecessary services ar e not being

prescribed.

In October of 1990, Ralph Cohen, Neurotr on's President,

wrote to Highmark requesting that the Neur ometer be

reviewed and evaluated for coverage. Highmark r eferred the

request to the MPD which, pursuant to Highmark's policy,

initiated a "consultant review." Thr ee independent

neurologists, Drs. Brennan, Jeffries, and Lossing, evaluated

the Neurometer and CPT. Based upon the consultant

review, Highmark concluded that CPT was investigational

in nature and was, therefore, an uncovered service.

In October of 1991, Dr. Jefferson Katims, Neurotron's

Director of Research, wrote to Highmark to request again

that the Neurometer be reviewed and evaluated for

coverage. Dr. Joseph Ricci, Highmark's V ice President for

Medical Affairs, responded in November of 1991 that

Highmark's opinion remained unchanged and that,

consequently, CPT would remain noncover ed.

In 1994, Dr. Katims again wrote to Dr . Ricci to request

reevaluation of CPT. Dr. Ricci r eferred the request to the

MPD for review by Douglas Worley. W orley solicited advice

from Drs. Lossing, Samuels, and Silverman. Based upon

the advice of these independent consultants, Highmark

concluded that CPT continued to be investigational.

Highmark added CPT to Medical Policy Bulletin Z-24 which

listed numerous products and procedur es which were not

covered because they had been determined to be

investigational.

In 1996, Emelie Sconing, Manager of the BUMD,

conducted a claims review of certain chir opractors who

4

appeared to be inappropriately billing noncovered CPT as

covered nerve conduction velocity tests. She sent the claims

files of the providers under investigation to consultants for

review. The consultants, Drs. Tar ola and Samuels,

concluded that the providers under investigation had

actually performed CPT and not nerve conduction velocity

tests. Dr. Tarola opined that"CPT is a nonspecific

electrodiagnostic procedure that lacks proof of validity and

reliability, and has limited clinical utility." App. III at 223a.

He concluded that "the CPT's perfor med on the above

referenced patients were medically unnecessary because of

apparent indiscriminate use of the procedure and its lack

of validity, reliability, and clinical utility." Id. at 224a. Dr.

Samuels opined that a "CPT test is experimental and of no

proven clinical value. It is not a nerve conduction test. All

of these claims should be denied." Id. at 225a.

Having concluded that health care providers were

submitting claims for covered nerve conduction velocity

tests when in fact they were perfor ming noncovered CPT,

Sconing asked the MPD to prepare a notice for publication

in Highmark's newsletter, PRN, that CPT tests were not

permissibly billed as nerve conduction velocity tests.

Highmark uses the PRN to communicate medical policies

and other information to its participating health care

providers.

Worley drafted the requested notice by adopting the

language of Dr. Samuels' comments assessing CPT testing.

The notice appeared in the February, 1997, edition of the

PRN and read, in its entirety, as follows:

Neuro-selective current per ception threshold test

The neuro-selective current perception threshold test is

performed to provide an objective measure of subjective

sensation. It requires the patient's conscious

perception of the stimulation applied. The neur o-

selective current perception threshold test has no

proven clinical utility and is not eligible for payment,

since it is considered to be investigational.

Use procedure code 95999 to report this service.

The District Court found that although the passage did

5

not refer specifically to Neurotr on or the Neurometer, there

was sufficient evidence for a reasonable factfinder to find

that the passage could be understood as referring to the

Neurometer. The District Court also found that there was a

genuine issue of material fact as to whether the PRN article

was false. Summary judgment was granted, however , for

three reasons, each of which precluded a recovery for

Neurotron: (1) the PRN's statement that CPT had "no

proven clinical utility" was not disparaging; (2) Highmark

was conditionally privileged to publish the PRN, and

Highmark had not abused its privilege; and (3) the r ecord

would not support a finding "that Defendants either knew

their statement was false or acted in reckless disregard of

its falsity . . . ."2

II.

We agree with the District Court that while the summary

judgment record may perhaps r eflect a material dispute of

fact as to whether the challenged statement was the result

of negligence on the part of Highmark, it will not support a

finding that this statement was believed by Highmark to be

false or made by it with reckless indif ference as to its truth

or falsity. We also agree with the District Court that

Neurotron, as a matter of law, cannot r ecover in the

absence of such a finding.

_________________________________________________________________

2. The District Court had diversity jurisdiction pursuant to 28 U.S.C.

S 1332(a)(1). We have jurisdiction pursuant to 28 U.S.C. S 1291.

We exercise plenary review over a district court's grant of summary

judgment and review the facts in the light most favorable to the party

against whom summary judgment was entered. See Coolspring Stone

Supply, Inc. v. American States Life Ins. Co., 10 F.3d 144, 146 (3d Cir.

1993). Summary judgment is proper if ther e is no genuine issue of

material fact and if, viewing the facts in the light most favorable to the

non-moving party, the moving party is entitled to judgment as a matter

of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317

(1986). At the summary judgment stage, the court's function is not to

weigh the evidence and determine the truth of the matter, but to

determine whether there is a genuine issue for trial. See Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

6

A. The Challenged Statement

We begin our analysis by focusing on the challenged

statement. Its purpose was to communicate to participating

health care providers that payments for CPT would not be

reimbursed by Highmark. Understandably, the statement

also communicated Highmark's explanation for its no

coverage position: in Highmark's opinion, CPT was

investigational in the sense that its clinical value had not

been proven. While this explanation does not directly state

to whom the clinical value of CPT has not been pr oven, the

only reasonable inference to be drawn is the medical

community. As Highmark stresses, its explanation cannot

reasonably be understood as an affirmative assertion that

CPT had been established to be without value in the

practice of medicine.

B. The Governing Law

We agree with the parties that Pennsylvania law governs

the liability issues in this diversity action. Accor dingly, we

are required to predict the law that would be applied by the

Supreme Court of Pennsylvania to the facts of this case.

See Gruber v. Owens-Illinois Inc., 899 F .2d 1366, 1369 (3d

Cir. 1990).

The Supreme Court of Pennsylvania has not decided a

"trade libel" or "injurious falsehood" case in over 25 years.

So far as we have been able to determine, it has never

expressed a view on the dispositive issue her e -- whether

the absence of a reasonable basis for a disparaging

statement will alone support a recovery in a case of this

kind.

When we find ourselves without guidance fr om the

highest court of the state whose law applies, we look to the

decisional law of the state's intermediate appellate courts,

to the decisions of other federal courts interpr eting that

state's law, and to decisions from other jurisdictions

discussing the relevant issue. Boyanowski v. Capital Area

Intermediate Unit, 215 F.3d 396, 406 (3d Cir. 2000). In

particular, "[a]n intermediate appellate state court's

decision `is a datum for ascertaining state law which is not

to be disregarded by a federal court unless it is convinced

7

by other persuasive data that the highest court of the state

would decide otherwise.' " Id. (quoting from West v.

American Tel. & Tel. Co., 311 U.S. 223, 237 (1940)).

The Superior Court, an intermediate appellate court of

Pennsylvania, recently discussed the Pennsylvania law

governing "trade libel" or "injurious falsehood" claims in Pro

Golf Manufacturing, Inc. v. Tribune Review Newspaper

Company, 761 A.2d 553 (2000). The specific issue involved

there was whether the claim alleged was a defamation claim

governed by a one-year statute of limitations or a libel

claim governed by a two-year statute. After noting that the

latter tort was variously referred to as"trade libel,"

"commercial disparagement," and "injurious falsehood," the

Court looked to S 623A of the Restatement (Second) of Torts

and described the tort as follows:

Regardless of the label, the publication of a disparaging

statement concerning the business of another is

actionable where: (1) the statement is false; (2) the

publisher either intends the publication to cause

pecuniary loss or reasonably should recognize that

publication will result in pecuniary loss; (3) pecuniary

loss does in fact result; and (4) the publisher either

knows that the statement is false or acts in r eckless

disregard of its truth or falsity. Restatement (Second) of

Torts S 623(A) (1977).

Pro Golf, 761 A.2d at 555-56.

Like the Superior Court in Pro Golf, federal district courts

sitting in Pennsylvania have predicted that the Supreme

Court of Pennsylvania would look to the Restatement

(Second) of Torts to determine the parameters of the tort of

injurious falsehood. See Swift Bros. v. Swift & Sons, Inc.,

921 F. Supp. 267, 276 (E.D. Pa. 1995); Eagle's Eye, Inc. v.

Amber Fashion Shop, Inc., 627 F. Supp. 856, 863 (E.D. Pa.

1985) Zerpol Corp. v. DMD Corp., 561 F . Supp. 404 (E.D.

Pa. 1983).

We have been referred to nothing which suggests to us

that the Pennsylvania Supreme Court would take any other

approach to defining the tort of injurious falsehood than

that followed by Pro Golf. Mor eover, even if we did not have

the benefit of Pro Golf, we would r each the same conclusion

8

based on the respect the Pennsylvania Supr eme Court has

consistently accorded the Restatement (Second) of Torts

even in situations in which Pennsylvania common law

precedents varied from the Restatement rule. See Gilbert v.

Korvette, Inc., 327 A.2d 94, 100 n.25 (Pa. 1974) ("In recent

years, this Court has not hesitated to adopt sections of the

Restatement (Second) of Torts (1965) when our common-law

precedents varied from the Restatement or when the

Pennsylvania common law provided no answer ."); Walker v.

Grand Central Sanitation, Inc., 634 A.2d 237, 244 (Pa.

Super. Ct. 1993) ("We are convinced, and therefore hold,

that Section 621 of the Restatement (Second) of Torts

accurately states the law of Pennsylvania with r egard to

damages in cases of slander per se. . . . This is consistent

with our Supreme Court's tendency to adopt the Second

Restatement of Torts in defamation matters."); Agriss v.

Roadway Express, Inc., 483 A.2d 456, 473 (Pa. Super. Ct.

1984) (noting "Pennsylvania's general tendency to follow the

Restatement rule in defamation law."); Medico v. Time, Inc.,

643 F.2d 134, 138 (3d Cir. 1981) ("Pennsylvania follows the

Restatement (Second) of Torts on most matters . . . . We

believe it appropriate to accept as the law of Pennsylvania

the version of the fair report privilege embodied in the

current Restatement.").

Based on the foregoing, we predict that the Supreme

Court of Pennsylvania would apply Sections 623A and 626

of the Restatement (Second) of Torts, to this case. Those

sections provide:

S 623A. Liability for Publication of Injurious

Falsehood -- General Principle

One who publishes a false statement harmful to the

interests of another is subject to liability for

pecuniary loss resulting to the other if

(a) he intends for publication of the statemen t to

result in harm to interests of the other having a

pecuniary value, or either recognizes or should

recognize that it is likely to do so, and

(b) he knows that the statement is false or ac ts in

reckless disregard of its truth or falsity.

9

S 626. Disparagement of Quality -- T rade Libel

The rules on liability for the publication of an

injurious falsehood stated in S 623A apply to the

publication of matter disparaging the quality of

another's land, chattels or intangible things, that

the publisher should recognize as likely to r esult in

pecuniary loss to the other through the conduct of

a third person in respect to the other's interests in

the property.

Before turning to the task of applying these principles to

the record in this case, we note that the"General Principle"

set forth in S 623A of the Restatement (Second) of Torts is

subject to the following two "caveats:"

Caveats:

The Institute takes no position on the questions of:

(1) Whether, instead of showing the pub lisher's

knowledge or reckless disregard of the falsity of the

statement, as indicated in Clause (b), the other may

recover by showing that the publisher had either

(a) a motive of ill will toward him, or

(b) an intent to interfere in an un privileged manner

with his interests; or

(2) Whether either of these alternate ba ses, if not

alone sufficient, would be made sufficient by being

combined with a showing of negligence regar ding the

truth or falsity of the statement.

The commentary to S 623A explains that these caveats

are necessary because of recent jurisprudence of the United

States Supreme Court tailoring the common law of

defamation to the demands of the First Amendment and

because of uncertainty concerning the extent to which this

jurisprudence may also apply to "injurious falsehood." In

this context, Comment (d) to S 623A describes the state of

the preexisting common law as follows:

In addition to the knowledge-or-reckless-disregard

basis for liability set out in Clause (b), the common law

recognized two others as alternatives. At common law,

10

the publisher of an injurious falsehood was also held

subject to liability, (1) if he was motivated by ill will

toward the other (malice, in the factual sense), or (2) if

he intended to interfere with the inter ests of the other

in an unprivileged manner (intent to harm). Knowledge

or reckless disregard as to falsity has not been a

requirement for these other two bases of liability at

common law.

These caveats are not applicable here. Nothing in the

record suggests that Highmark was motivated by ill will

towards Neurotron or that its purpose was to harm

Neurotron's business in an unprivileged manner. There is

no evidence that would support an inference that

Highmark's purpose was anything other than to

communicate its position on CPT to its participating health

care providers, a purpose that is clearly a privileged one.

The discussion of these caveats in the Restatement

commentary is helpful here, however, because it goes on to

document that in the absence of actual ill will towards the

plaintiff or an intent to injure for an unprivileged purpose,

negligence regarding the falsity of the disparaging

statement was not a sufficient basis for imposing liability at

common law. See Restatement (Second) of T orts S 623A cmt.

d ("In an action for injurious falsehood, negligence

[regarding falsity] has not been a sufficient basis at

common law to impose liability.").

In concluding that the Supreme Court of Pennsylvania

would look to the Restatement (Second) of T orts for the law

governing this case, we have not been unmindful of that

Court's decision in Menefee v. Columbia Br oadcasting

System, Inc., 329 A.2d 216 (Pa. 1974). Menefee, the

plaintiff, alleged that he had been a successful radio

personality. His employer terminated his employment and

allegedly told the press that he was "incompetent in the

performance of his assigned broadcast duties." Menefee

died after filing suit. Under Pennsylvania law, libel and

slander causes of action abate at death but other tort

claims survive. The Pennsylvania Supreme Court held that

Menefee had a cause of action for "untruthful

disparagement" of his interest in his br oadcast career

which was governed by the two-year statute. It relied upon

11

SS 624 and 633 of the Restatement (First) of Torts, the then

current Restatement, in the course of establishing that the

alleged injury to Menefee's broadcast car eer gave rise to a

tort distinct from the defamation claim arising from the

injury to his personal reputation. The case pr esented no

issue with respect to whether liability could be predicated

on a negligent misrepresentation r egarding Menefee's

professional competence.

Neurotron finds Menefee important because S 624 of the

Restatement (First) of Torts describes the general rule

governing liability for "trade libel" without requiring that the

defendant must either have known his statement to be false

or have made it with reckless indiffer ence as to its truth or

falsity. While Neurotron correctly characterizes the position

taken by the Restatement at the time Menefee was decided,

that decision does not persuade us that the pr ediction

found in Pro Golf is in error . We believe the Pennsylvania

Supreme Court, if presented with this case, would accept

the Restatement (Second) as the most r eliable collation of

the common law of injurious falsehood. As we have noted,

that Court has not hesitated to follow the curr ent

Restatement of Torts even when it is in tension with

Pennsylvania's own prior jurisprudence. Menefee did not

involve the determinative issue here, and we have found no

other Pennsylvania precedent inconsistent withS 623A's

requirement of actual knowledge of falsity or reckless

indifference. The inclusion of that r equirement was the

product of a careful reevaluation of the common law

precedents by the American Law Institute.3 If called upon to

_________________________________________________________________

3. The first Restatement, based in part on an influential law review

article published in 1913, adopted the view that where no privilege

existed, the case law called for strict liability for false disparagement

without regard to innocence, good intentions or honest belief. Based

primarily on a review of the case law by Dean Prosser in Injurious

Falsehood: The Basis of Liability, 59 Colum. L. Rev. 425 (1959), which

found the common law more analogous to fraud and interference with

contract rather than defamation, the Restatement (Second) reflects the

view that there is liability when (1) "the defendant knowingly or

recklessly speaks a falsehood," (2) "acts from a spite motive," or (3)

"out

of a desire to do harm for its own sake." See Prosser and Keeton On the

Law of Torts S 128 (5th ed. 1984).

12

decide this dispositive legal issue for the first time, we are

confident that the Pennsylvania Supreme Court would

accept the consensus reached as a result of this

reevaluation. Finally, we find it significant that the Pro Golf,

Zerpol, and Swift Brothers opinions bear evidence that each

of these courts had focused on Menefee in the course of

concluding that the Pennsylvania Supreme Court would

follow the Restatement (Second) of Torts .4

It necessarily follows that summary judgment was

properly entered in favor of Highmark unless the record

would support a finding that Highmark acted with actual

knowledge of the falsity of its PRN statement or with

reckless disregard of whether it was true or false.

C. The Record

We start by asking whether the summary judgment

record would support a finding that those at Highmark

responsible for the PRN article knew or believed that the

clinical value of CPT had been proven to the medical

community. It will not. The internal Highmark

documentation indicates that it believed the clinical value

had not been generally accepted in the medical community,

and we find no evidence to the contrary.5 Moreover, notably

_________________________________________________________________

4. We conclude that Neurotron's reliance on our decision in U.S.

Healthcare, Inc. v. Blue Cross of Greater Philadelphia, 898 F.2d 914 (3d

Cir. 1990) is also misplaced. In U.S. Healthcare, the parties had engaged

in a heated advertising war, ultimately suing each other for various

reasons including alleged commercial disparagement. The District Court

granted the defendants' renewed motion for judgment as a matter of law

pursuant to Fed. R. Civ. P. 50(b) on the gr ounds that the defendants'

advertisements were protected by the actual malice standard of the First

Amendment as articulated by New York T imes Co. v. Sullivan, 376 U.S.

254 (1964), and that the plaintiff had not met the applicable clear and

convincing standard of proof requirement. U.S. Healthcare, 898 F.2d at

920. This Court reversed, holding that the New York Times actual malice

requirement did not apply to purely commercial speech. The portion of

the Restatement (Second) of Torts that we find dispositive here is based

upon common law uninfluenced by New York Times and its progeny.

5. The record does contain a March 27, 1995, letter from Dr. Sotoudish

to Diana Perota of Highmark's Medical Policy Department in response to

13

absent from the record is any evidence of a reason why

Highmark would represent that the clinical value had not

been established in the medical community when it knew

or believed to the contrary. While Neurotr on speculates in

its brief about possible economic motives for Highmark's

wanting to suppress use of CPT even though it is less

expensive than the generally accepted nerve conduction

studies,6 no hint of such motivation is found in Highmark's

internal documentation, and there is no expert analysis

supporting any of those suggested motives.

This leaves the question of whether Highmark's PRN

statement was made with reckless indiffer ence as to

whether the clinical value of CPT had been pr oven to the

medical community. Here also we conclude that the

summary judgment record would not support a finding in

Neurotron's favor.

The record reflects that Highmark had a department

whose function it was to ascertain whether a tr eatment at

any given time was investigative as that ter m is defined in

its contracts. Moreover, that department had established

guidelines for making such determination. The record

suggests nothing unreasonable about these institutional

arrangements.

In 1990 and again in 1994, Highmark, utilizing this

previously established apparatus, undertook to determine

the current status of CPT in the medical community. In

each instance it engaged the services of thr ee qualified

medical experts as consultants. Nothing in the r ecord

suggests any deficiency in the process by which these

consultants were selected. The recor d does reflect that

Neurotron, in 1994, asked that certain physicians not be

_________________________________________________________________

an inquiry about nerve conduction studies, a dif ferent form of testing,

and their use in the context of diabetic neur opathy. On page three of

that four page letter, there is a single mention of CPT as an alternative

to nerve conduction studies in diabetic neur opathy. This isolated

reference in a letter on another subject will not support an inference

that

those responsible for the PRN believed that their statement was false.

6. Dr. Katims in his correspondence with Highmark emphasizes the cost

effectiveness of using CPT.

14

chosen because they were viewed by Neur otron as having a

conflict of interest and that none of the physicians named

was chosen. On both occasions, Highmark provided its

chosen experts with the relevant information it had

accumulated on the subject of inquiry including the

materials that it had been supplied by Neurotr on. In 1990

that information consisted of Neurotr on literature

describing the Neurometer, and a jour nal article with

references to other materials on CPT and the Neurometer.

In 1994, that information consisted of Neur otron literature

describing the Neurometer, a bibliography of literature on

CPT, and a list of medical institutions then currently using

the Neurometer. In both 1990 and 1994, each of the three

experts responded that CPT was not accepted in the

medical community as having value in the diagnosis and

treatment of patients.

While no full evaluation of CPT was conducted in 1996,

an investigation of suspected misbillings for nerve

conduction velocity studies in that year produced letters

from two expert consultants tending to confir m the results

of the six independent evaluations conducted earlier . Most

importantly, in addition to this uniform pr ofessional

opinion, as of February, 1997, when the PRN was

published, not a single participating physician had asked

Highmark to make CPT a covered service or had

complained about a failure to reimburse a payment for

CPT.

Based on the foregoing, we conclude that the r ecord

establishes a rational basis for Highmark's PRN statement.

This is not to say that Neurotron has been unable to come

forward with a number of legitimate criticisms of that

statement and of the process by which it came to be made.

However, those criticisms, individually or in combination,

do not permit a reasonable inference that Highmark made

its PRN statement with reckless indiffer ence as to its truth.

Neurotron has tendered expert testimony tending to show

that there were doctors using CPT prior to 1997 who

believed it to be useful in their practice. It has also

produced literature that reports on such use by medical

professionals. This evidence does not, however , demonstrate

that Highmark proceeded with reckless indifference. As we

15

have noted, because the PRN statement did not state to

whom the utility of CPT had not been proven, the only

reasonable inference is the medical community. That

concept necessarily posits situations in which ther e will

have been some use, but use short of community

acceptance. Highmark's independent consultants wer e

clearly aware that CPT was being used by health care

professionals and appeared in the medical literature.

Nevertheless, they unanimously opined that the CPT's

clinical utility had not been accepted in the medical

community.

Neurotron believes that Highmark's consultants did

superficial studies of the peer reviewed literature and would

have reached a different result had they conducted

reasonably careful studies. It faults Highmark for not doing

"due diligence" reviews to assure the quality of the

consultants' performance and points to an instance in

which a consultant informed Highmark that he had not

read all of the articles in Neurotr on's bibliography. Those at

Highmark familiar with its use of consultants testified that

Highmark selected its consultants with care, called upon

them to do whatever they believed necessary to have an

informed opinion, and trusted in their pr ofessional

judgment. One can perhaps debate the merits of

Highmark's approach in this area, but one cannot, we

believe, accurately classify it as reckless indifference to the

truth.7

Neurotron also insists that Highmark intentionally

prejudiced its consultants' studies by indicating the

outcome it desired in its letters of engagement and by

suggesting standards other than clinical utility for its

_________________________________________________________________

7. Contrary to Neurotron's suggestion, we find no probative value in what

it characterizes as an "admission" of counsel that Highmark "had not

conducted proper reviews." Appellant's Br. p. 17. After Highmark had

been sued by Neurotron, counsel was quoted as speculating in a letter

that "they are probably in the tr ouble (sic) they are in because they

said

the machine had no clinical utility and did not have their experts review

the material that Katims offered to pr ovide them." App. II at 86a. We

view this as hindsight speculation about why Highmark is in litigation

and not a confession concerning liability for reckless indifference or

even

negligence.

16

consultants to apply. However, the evidence indicates no

more than that (1) Highmark described its existing no

coverage position in the course of explaining the r eason for

the inquiry and (2) Highmark asked whether CPT had

clinical utility beyond the presently used testing in addition

to its inquiry about whether CPT's clinical utility had been

established. We conclude that a reasonable factfinder could

not draw the inference from this evidence that Neurotron

suggests.

Finally, Neurotron urges that one of Highmark's

consultants during the 1994 evaluation advised it that CPT

was "safe and effective." App. III at 172a. The inference it

suggests is that Highmark knew its PRN statement

regarding a lack of proven utility was false or at least was

recklessly indifferent to whether CPT was efficacious. In

context, its is clear that Dr. Silver man was acknowledging

that CPT was safe and measured what it purported to

measure. The letter is not inconsistent with Dr . Silverman's

overall view that CPT's utility had not been demonstrated to

the medical community.8

III.

Finding no material dispute of fact as to an essential

element of Neurotron's case, we will affirm the summary

judgment entered by the District Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

_________________________________________________________________

8. Prior to the "safe and effective" statement, Dr. Silverman's letter

states

that "this test is not used by neurologists or plastic surgeons secondary

to its poor reliability and subjective natur e." The letter concludes,

"Overall, this procedure is not in the mainstream and is not used by

mainstream physicians in our area." App. III at 172a.

17