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Precedential or Non-Precedential: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

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2001

Recommended Citation
"Neurotron Inc v. Medical Serv Assoc" (2001). 2001 Decisions. Paper 132.
http://digitalcommons.law.villanova.edu/thirdcircuit_2001/132

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2001 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
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