Updated: December 15, 2004

Issue: Whether the Secretary of HHS could dispense with the statutory deadline for MCOs to submit information about their plans for the upcoming year and the Secretary could refuse to mail comparative written information about plans to beneficiaries, again as required by the statute (Click here for more information on the origination of this suit).

Relief Sought: Declaratory and injunctive relief to force the Secretary to comply with its statutory obligations.

Status: The court issued a preliminary injunction in August 2001 prohibiting the Secretary from not mailing out the comparative written information in October 2001 (Click here for more information). The Secretary complied with that order. On September 5, 2002, the court denied the Secretary's motion to dismiss (on the grounds that the case was now moot) and granted summary judgment to plaintiffs on all claims, enjoining the Secretary from not complying with his explicit statutory obligations. That decision is now reported at 273 F.Supp.2d 32 (D.D.C 2002).  (Click here for more information).  Plaintiffs' motion for attorneys fees was granted on February 23, 2004.  See 304 F.Supp.2d 36.  The Secretary filed a notice of appeal from the order awarding fees on April 20, 2004.  Plaintiffs filed a motion for summary affirmance of the fee award, but the Secretary decided to dismiss the appeal and to pay all the fees awarded.

MEDICARE AGENCY DROPS APPEAL OF COURT'S BAD FAITH FINDING

The Secretary of Health and Human Services, who is in overall charge of the Medicare program, recently asked the Court of Appeals for the District of Columbia Circuit to dismiss his appeal from a decision holding that he acted in bad faith. By dropping the appeal, the Secretary has accepted the February 2004 findings of a federal district judge in Washington, D.C. who characterized the Medicare agency’s actions as "wanton" and in "blatant contravention of statutory authority." Thompson v. Gray Panthers et al, 304 F.Supp.2d 36 (D.D.C. 2004).

The bad faith finding, which is extremely unusual, grew out of the agency’s 2001 decision to ignore clear-cut language in the Medicare statute and to favor managed care programs over Medicare beneficiaries. Judge Henry H. Kennedy, Jr. held that the Secretary’s "actions in direct contradiction to congressional directives coupled with his failure to consult with or notify beneficiaries were extraordinary circumstances." Gill Deford, one of plaintiffs’ attorneys from the Connecticut-based Center for Medicare Advocacy, was not surprised by the result but remains distressed by the agency’s behavior: " The Secretary knew what he was doing; the judge simply applied the rule that knowing disregard of a law by a government official is bad faith. The Secretary’s actions underlying this case were puzzling and troubling."

The Medicare statute requires the agency to mail comparative information to Medicare beneficiaries regarding the upcoming year’s managed care plans. In the spring of 2001, however, after the Secretary had informed beneficiaries and their representatives of the schedule for compliance, he secretly told the managed care industry that he would not comply with the mailing requirement, nor require the industry to submit their information on time. In finding that conduct to be in bad faith, Judge Kennedy questioned the Secretary’s pretense that "his actions were really for the benefit of the intended beneficiaries of the Medicare+Choice program rather than the parties who, because of their obvious access to him, were able to persuade him to do what they wanted him to do."

With the Secretary now responsible for implementing the massive Medicare Modernization Act that was passed in late 2003, Medicare beneficiaries and their advocates are especially apprehensive about the Secretary’s willingness to sacrifice the rights of beneficiaries to the demands of providers. Vicki Gottlich, an attorney in the Center for Medicare Advocacy’s Washington, D.C. office, is concerned by the implications: "What’s going to happen as the agency implements the discount drug card plan, and in 2006 when the new Medicare drug program goes into effect? We are hoping the bad faith finding in this case is of sufficient concern that the Secretary will think twice before ignoring the law again."

For more information: Contact Center attorney Gill Deford at (860)456-7790 or gdeford@medicareadvocacy.org

FEDERAL JUDGE FINDS SECRETARY THOMPSON IN BAD FAITH FOR INTENTIONALLY VIOLATING LAW THAT REQUIRES PROVIDING INFORMATION ON MEDICARE MANAGED CARE PLANS

On February 23, 2004, Judge Henry H. Kennedy, Jr. of the federal court in Washington, D.C., found that Tommy Thompson, the Secretary of Health and Human Services, had acted in bad faith in 2001 in refusing to implement the law requiring him to mail comparative information to beneficiaries about the upcoming year’s M+C plans. Gray Panthers Project Fund v. Thompson, – F.Supp.2d –, 2004 WL 326717 (D.D.C. 2004). Judge Kennedy had previously concluded that the Secretary had violated the laws, 42 U.S.C. §§ 1395w-24(a)(1) and 1395w-21(d); see 273 F.Supp.2d 32 (D.D.C. 2002), and his latest ruling comes in response to the motion of the five plaintiffs for an award of attorneys’ fees under the Equal Access to Justice Act.

In May 2001, the Secretary informed the managed care industry -- but no one else -- that M+C plans need not comply with the July deadline for submitting information about their 2002 plans and also indicated that he would ignore the statutory requirement of mailing comparative written information to beneficiaries. Four organizations and an individual Medicare beneficiary, all represented by attorneys from the Center for Medicare Advocacy, sued and obtained a preliminary injunction in August 2001 requiring the Secretary to mail the comparative written information. A year later, the court made the injunction permanent.

The plaintiffs’ fee motion followed. In addition to the traditional contention that the Secretary’s actions were not substantially justified under 28 U.S.C. § 2412(d), plaintiffs argued that the Secretary’s blatant and knowing violation of the Medicare law amounted to common law bad faith, thereby entitling them to fees under the less-used 28 U.S.C. § 2412(b). Fees under that provision are not subject to the $125 per hour cap rate of subsection 2412(d).

In agreeing with plaintiffs, Judge Kennedy strongly rebuked the Secretary. The judge denounced his "blatant contravention of statutory authority," referred to his "audacity" and "wanton conduct," and belittled the Secretary’s pretense that "his actions were really for the benefit of the intended beneficiaries of the Medicare+Choice program rather than the parties who, because of their obvious access to him, were able to persuade him to do what they wanted him to do." He added: "[T]o state the obvious, the Secretary has no more right to violate the law because he thinks he knows best than any other public official who like him took an oath to uphold the law regardless of their thinking regarding its wisdom."

The court therefore awarded plaintiffs fees at market rates and for all the hours claimed. It is not known at this time whether the Secretary will appeal, but the determination that he acted in bad faith is a factual finding, reviewable under the strict "clearly erroneous" standard. Further information on the case is available from Vicki Gottlich in the Center’s Washington office (202) 293-5760, or from Gill Deford in the Connecticut office (860) 456-7790.

THE CENTER FOR MEDICARE ADVOCACY WINS VICTORY
GRAY PANTHERS PROJECT FUND V. THOMPSON:
COURT RULES THAT HHS MUST COMPLY WITH MEDICARE STATUTE

On September 6, 2002, the federal District Court for the District of Columbia granted plaintiffs’ summary judgment motion in Gray Panthers Project Fund, Inc. v. Thompson, Civ. Action No. 01-01374 (HHK) (D.C.D.C. filed June 22, 2001). The Center for Medicare Advocacy, Inc., represented the Gray Panthers Project Fund, Action Alliance of Philadelphia, the Medicare Rights Center, the Northern Virginia Medicare Ombudsman Program, and a Medicare beneficiary, Horace Baker, in their challenge to unilateral decisions by Secretary of Health and Human Services Tommy Thompson to delay the statutory date by which Medicare+Choice plans had to file their plan benefit information in 2001 and to ignore a statutory requirement to send written comparative plan information to beneficiaries. The court issued a preliminary injunction order in August 200. As a result, HHS mailed supplemental comparative area-specific M+C plan information to beneficiaries in October 2001.

In granting the summary judgment motion, the court rejected the Secretary’s argument that the Plaintiffs’ claims were moot. Instead, the court found that the Secretary’s compliance with the preliminary injunction order fell within the "voluntary cessation" exception to the general rule regarding mootness. The Secretary would not have complied with the statutory requirement if the court had not ordered him to do so. Further, compliance with the preliminary injunction did not preclude the court from ruling that the Secretary’s 2001 action violated the law or that he may not evade the law in the future. The court further found that the failure to provide comparative plan information was not an oversight, but that the Secretary recognized that the information was both required by the Medicare statute and necessary to help beneficiaries compare M+C options. The court was also troubled by the Secretary’s "failure to confess error regarding his past conduct" and his repeated assertions about the reasonableness of his action.

The court in a footnote stated that the passage of Pub.Law 107-288, Sect. 532(b)(1) (June 12, 2002), which extended the MCO filing deadline from July to September, also did not render the controversy moot. The issue is not whether the information is to be submitted in July rather than in September, but whether the Secretary "may disregard the clear mandate of Congress in its administration of the Medicare+Choice Program." The court stated that, although the new deadline might make it easier to comply with the filing requirement, the Secretary did not make it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.

The court noted later in the opinion that the change in the date by which MCOs must file their plan benefit information makes the compiling and disseminating of written comparative plan information more difficult so that, without judicial intervention, the Secretary may violate the statutory requirement again.

In another footnote, the court dismissed the Secretary’s argument that the controversy was not ripe. The Secretary had argued that any harm from future actions was speculative since the court could not know the Medicare agency’s plans for future years. The court said the Secretary could not have it both ways, arguing that it is too late and too early for judicial intervention. The issue was fit for review because the Secretary’s behavior caused Plaintiffs cognizable injury.

Summary judgment in favor of Plaintiffs was warranted because the facts were both dispositive and not in dispute. The Secretary chose not to comply with the unambiguous dictate of Congress, and his actions violated both the Medicare statute and the Administrative Procedure Act. He did not meet the burden of demonstrating that, in the future, he would not again unilaterally choose to violate the M+C statute. As the court concluded, "Agencies may not choose to follow some laws while ignoring others... Put simply, agencies, like the rest of us, must obey the law -- even if compliance is cumbersome, burdensome, or costly."

CENTER WINS COURT ORDER: HHS Secretary ordered to comply with the Medicare Statute by the U.S. District Court for D.C.

Judge Confirms Beneficiaries' Rights To Written Comparative Medicare Plan Information

Gray Panthers Project Fund v. Thompson, Civ. Action No. CA-01-1374 (HHK), US Dist. Court for the District of Columbia. (Aug. 9, 2001)

Gray Panthers Project Fund and other plaintiffs, represented by the Center for Medicare Advocacy, Inc., were successful in obtaining a preliminary injunction ordering the Secretary of HHS to follow the Medicare law. The Judge ordered Secretary Thompson to comply with the statutory requirement to mail everyone with Medicare the Medicare plan comparative information required by statute by October 16, 2001. People with Medicare need this information to make an informed choice about their Medicare options in 2002.

The Secretary attempted to defend his failure to comply with the statute by claiming that compliance was both costly and not possible at this late stage. With regard to the Secretary's claim of budgetary problems, the court said it was "astounded that the Secretary has the audacity to argue that compliance with the statutory mailing requirement is too expensive while simultaneously electing to spend $35 million on advertisements."

With regard to the Secretary's claim that it was too late to comply with the statute, the Judge stated that "The Secretary's logic is similar to that of a child who kills his parents and then seeks pity as an orphan." The Secretary's difficulty in complying with the law stems from his own decision to allow Medicare plans to file their cost and benefit information with the Centers for Medicare and Medicaid Services (CMS) more than two months after the statutorily required date of July 1, 2001.

At a status hearing on September 17, 2001, HHS informed the court that it would comply with the court's order. The Medicare Agency will mail to every Medicare beneficiary in a zip code where one or more Medicare+Choice options is available a written comparison of those options. All comparative booklets will be mailed by October 16. In addition, the information that will be provided is more extensive than the information included in previous years in the Medicare & You handbook. (Click here for more information about Medicare Mailings.)

The court set another status hearing for November 2, 2001, to determine how to proceed on plaintiffs' requests for a permanent injunction and declaration that HHS must abide by the statutory time frame for filing information and must mail comparative written information to people with Medicare.

Plaintiffs have asked the court to rule on their motion for summary judgment, which was filed with the motion for preliminary injunction, while the government has moved to dismiss or for a stay.  A status conference is set for April 2002, but plaintiffs have asked the court to rule without oral argument.

A summary of the lawsuit is available below.  To view a copy of the court's original decision click here.  For further information contact Vicki Gottlich, at (202) 293-5760, ext. 103

CENTER BRINGS LAWSUIT ON BEHALF OF BENEFICIARIES

CMS Delays HMO Deadline to Submit 2002 Medicare Benefit and Premium Information 

-- Older and Disabled Americans Fear They Won't Get Accurate Health Coverage Information in Time to Make Informed Choice --

[WASHINGTON, D.C.] B Medicare advocates and beneficiaries filed a federal lawsuit on June 22nd in Federal District Court against Secretary Tommy G. Thompson, of the U.S. Department of Health and Human Services. They allege that the Secretary illegally extended a statutory deadline that requires HMOs to inform the Centers for Medicare and Medicaid Services (CMS, formerly the Health Care Financing Administration (HCFA)) of their proposed benefits and premiums for their 2002 Medicare plans and whether or not they plan to participate in the Medicare program.

Represented by the Center for Medicare Advocacy, Inc., the Gray Panthers Project Fund, Medicare Rights Center, Northern Virginia Medicare Managed Care Ombudsman, and Action Alliance of Senior Citizens of Greater Philadelphia, along with Medicare beneficiary, Horace Baker.  They contend that delaying the deadline from July 1 to September 17 will prevent older and disabled Americans from receiving Medicare and You, the annual government mailing with comparative health plan information, in time to make an informed choice about their health care options.

"The Secretary's actions show a complete disregard for the lengthy, difficult and often confusing process one undertakes to choose the right health care option," remarked Judith Stein of the Center for Medicare Advocacy, Inc. "It puts older and disabled Americans at risk of making poor health coverage decisions thus jeopardizing their health and finances."

Since Medicare + Choice was enacted in 1997, HMOs have been required by law to submit their Medicare plan information to HCFA. HCFA, now CMS, is responsible for reviewing and analyzing the data, putting it in a comparative format and sending it to the nearly 40 million people with Medicare 15 days before November 1, in time for Medicare=s open enrollment period. This year, however, Secretary Thompson authorized CMS to mail out Medicare and You 2002 without the comparative information on premiums, benefits and cost sharing for every Medicare HMO in the community.

"Thompson's unauthorized decision violates a law designed to protect people with Medicare from making uninformed coverage decisions by giving them the facts and time it takes to choose a health care plan that meets their needs and they can afford," said Vicki Gottlich, Center for Medicare Advocacy, Inc.

The Secretary=s decision also allows HMOs to mail out marketing materials with unapproved information as long as it includes a disclaimer explaining that the information is subject to final approval. And, he is extending the time frame for the HMOs to mail out their own marketing materials, including information on benefit and premium changes.

"Studies have found that most people with Medicare are already very confused about how to select a health care plan," explained Tim Fuller of the Gray Panthers. "Incomplete, inaccurate and delayed information will only make matters much worse."

Consumer advocates are also concerned because beginning January 2002, those enrolled in Medicare HMO will be Alocked-in@ to their health care choice. They will only be permitted to actually make one change during the first six months of the year.

'We know from experience that when Medicare HMOs announce they are dropping members or sending out marketing materials, our Medicare counseling hotline gets totally jammed," said Diane Archer of the Medicare Rights Center. "Now with a shorter time frame, it just won't be possible for organizations like ours to assist everyone who wants help making the right Medicare choice," she continued.

People who lose their HMO coverage can enroll in Original Medicare and may purchase a supplemental (Medigap) policy if they do so during a special time period that begins October 2, 2001 and ends March 4, 2002. About 27 percent of people with Medicare have one of the 10 different Medigap plans whose prices vary depending on the amount of coverage one buys. Those interested in choosing another HMO option, if one exists in their community, are advised to research the cost of premiums, benefits and co-pays, doctors and hospitals participating in the plan, and prescription drug formularies. Currently about six million people with Medicare are enrolled in Medicare HMOs. Over the last three years about 1.7 million older and disabled Americans had to find new health care coverage when their HMO dropped out of the Medicare program.

Contacts: Vicki Gottlich, (202-293-5760 or Gill Deford, 860-456-7790.

MEDICARE ALLOWS HMOs TO DELAY SUBMITTING PLAN INFORMATION

In a letter to the managed care industry, the US Department of Health and Human Services (HHS), extended the deadline by which managed care organizations must submit information about the plans they will offer to Medicare beneficiaries in 2002. The deadline was extended from July 1st to September 17th, 2001. This means that unless something changes, neither beneficiaries nor those who assist them will know until mid-September which plans will stay in the Medicare program in 2002. Beneficiaries will also have to wait until at least mid-September, possibly even until the end of October, to know what the premiums, benefits, and providers will be in those plans that do offer Medicare managed care options.

HHS has also stated that it will establish a "special election period" in December 2001 in order to extend the period during which a beneficiary can choose to enroll or disenroll from a Medicare managed care plan. Thus beneficiaries will not be limited to making elections in November 2001 but will be able to make Medicare + Choice selections from November through December, 2001.

Connecticut residents: for more information about this delay and about Medicare managed care plans in your area contact the CHOICES program at (800)994-9422.