AUBURN — The father of a child with a rare disease is suing his employer — a local hospital — for refusing to cover his daughter's expensive medical procedure.

The state sought to join the suit recently, claiming MaineCare paid a portion of the family's medical expenses that should have been borne by the defendant.

Twelve-year-old Jasmine Binette needed a bone-marrow transplant to reverse her worsening condition due to a rare and severe hereditary illness. With ancillary treatments, the total bill came to more than $500,000.

Binette was insured through her father, Dennis, who worked at a local hospital.

Apparently, working for a medical provider didn't guarantee coverage.

Jasmine Binette was diagnosed with Shwachman-Diamond syndrome, an illness that leads to bone-marrow failure and often results in death in the case of someone with Binette's medical profile, according to a complaint filed in Androscoggin County Superior Court.

She did well in the early stages of treatment as she underwent platelet transfusions and pancreatic enzyme replacement, but her condition later worsened. Her doctors concluded that a bone-marrow transplant was her only "reasonable" option, the complaint said. Otherwise, she was likely to develop bone-marrow failure and/or leukemia, according to court documents.

Her father, Dennis, worked at St. Mary's Regional Medical Center, part of St. Mary's Health System. His employer offered Binette health insurance benefits that were handled by third-party administrator Health Plans Inc. of Westborough, Mass. St. Mary's had final approval of claim decisions under that plan, the complaint said.

Binette sought pre-approval from his health care provider for his daughter's bone-marrow stem cell transplant. It was denied, so Binette appealed that decision. The provider reversed its initial denial and pre-approved Jasmine for the transplant and related-medical care, the complaint said.

The final approval letter read: "We have had this ... reviewed by a physician who agreed this is the only known possible treatment and should therefore be considered medically necessary," the complaint said.

On Dec. 29, 2009, Binette underwent the transplant at Children's Hospital in Boston. After that treatment, Dennis Binette received bills for his daughter's medical care totaling $546,686.33. He has received overdue notices from collection agencies.

The health care provider instructed the plan administrator to rescind approval of coverage of the procedure and related costs because Binette was eligible for MaineCare, Maine's Medicaid program.

After the transplant, the Binettes got a letter from the administrator saying that, because of their eligibility for state and federal coverage, "St. Mary's does not wish to pay such expenses as a benefit exception under the terms of your plan."

The Binettes sued for breach of contract and to stop St. Mary's from rescinding its agreement to cover Binette's medical expenses related to the transplant.

They also sued for intentional infliction of emotional distress.

The Binettes and the state cited Maine law, which says MaineCare is the payer of last resort for eligible patients.

In its answers to the lawsuit, St. Mary's denied the claims made by the Binette family and by the state.

A spokesman for the Department of Health and Human Services, which oversees MaineCare, said he could not disclose the amount the state has paid for the transplant. That figure was not included in court papers filed by an assistant attorney general on behalf of DHHS.