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 No. 11-cv-17 (D.Vt.), filed January 18, 2011
 
Issue: Whether the "Improvement Standard", which operates as a rule of thumb to terminate or deny Medicare coverage to beneficiaries who are not improving, violates substantive and procedural requirements of the Medicare statute, the Administrative Procedure Act, and the Freedom of Information Act, and the Due Process Clause of the Fifth Amendment.
 
Relief sought: Declaratory and injunctive relief prohibiting the continued application of the Improvement Standard and review of the cases of class members and beneficiary plaintiffs to determine whether a prior denial of coverage based on the Improvement Standard should be revised.
 
Updated:July 9, 2014
 
Status: The complaint, with five beneficiary plaintiffs and five national organization plaintiffs, was filed along with a motion for certification of a nationwide class on January 18, 2011.  On March 3, plaintiffs filed an amended complaint that added two more organization plaintiffs and one beneficiary plaintiff. The parties completed briefing of the class motion in early May 2011, but the court has neither ruled nor scheduled oral argument.
 
Instead of answering the amended complaint, the government filed a motion to dismiss.  It contended both that the court lacked jurisdiction over the plaintiffs’ claims (for a variety of reasons) and that the plaintiffs had failed to state a claim for which relief could be granted.  Oral argument on the motion to dismiss was held on July 14, 2011.  On October 25, 2011, the court largely denied the motion to dismiss.  2011 WL 5104355.  The judge did dismiss one beneficiary plaintiff for failing to satisfy the "presentment" requirement of 42 U.S.C. §405(g) and one organizational plaintiff for lack of standing, but she rejected most of the Secretary's arguments regarding exhaustion of administrative remedies and standing. She determined that the court had jurisdiction over the other organizational plaintiffs under the mandamus statute.  The judge also held that plaintiffs had stated a claim, thus denying the motion to dismiss for failure to state a claim. The court has not yet ruled on the class motion.

The Secretary filed the Answer to the Amended Complaint on November 8, 2011.  Plaintiffs submitted written discovery, but the defendant Secretary asked for settlement discussions, which have been ongoing during 2012 while the proceedings have been stayed. The parties met the deadline of July 20 to inform the court that they had an agreement in principle, which was the basis for the stay of proceedings continuing in effect.

On October 16, 2012, the parties filed a proposed settlement agreement with the district court.  Although the Secretary maintains the pretense that the government does not use an Improvement Standard and that the settlement agreement clarifies rather than changes the existing policy, the settlement, if approved, will make major changes in the way that coverage decisions are made for beneficiaries needing skilled care in the areas of home health, nursing home, and outpatient therapy.  Among the key provisions of the proposed settlement agreement are the following:

  1. A nationwide class will be certified consisting of all beneficiaries who received an adverse administrative decision based on the Improvement Standard that became final and non-appealable on or after January 18, 2011.  Many of those class members will be entitled to re-review of their claims.
  2. The Centers for Medicare & Medicaid Services (CMS), with input from plaintiffs' counsel, will revise relevant portions of the Medicare Benefit Policy Manual to eliminate any suggestion that a beneficiary must show a potential for improvement, with the need for skilled care being the determinative factor.  CMS also has the option of issuing a Ruling on the corrected policy.
  3. CMS will engage in a nationwide Educational Campaign, using written materials, interactive forums, and national calls, to communicate the corrected maintenance coverage standards to providers, contractors, and adjudicators.
  4. CMS will do random samplings of QIC decisions to determine if the corrected policy is being applied, review up to 100 claims brought to them by plaintiffs' counsel, and meet with plaintiffs' counsel five times on a bi-annual basis.
  5. The Court will maintain jurisdiction for up to two or three years after the end of the Educational Campaign (the time frame depending on whether CMS issues a Ruling), during which time plaintiffs may seek enforcement of any settlement provisions that they believe the Secretary is not complying with.

After the district judge signed an order on November 20, 2012 preliminarily approving the settlement, notice to the class members was posted on various websites, but only one written objection to the settlement was submitted.  At the Fairness Hearing on January 24, 2013, no class members appeared to object to the settlement, and the district judge, satisfied that the settlement was fair, signed the order approving the settlement and certifying the nationwide class.  Consistent with the settlement agreement, CMS submitted proposed revisions to plaintiffs’ counsel, who commented on them.  CMS then submitted a second draft of proposed revisions, and plaintiffs commented on those on July 15, 2013.  The finalized revisions have not yet been published.  On September 30, 2013, CMS submitted the proposed educational materials to plaintiffs’ counsel, who submitted comments on October 21.

On December 9, 2013, the Secretary published the manual revisions.  She also began the Educational Campaign, which involved memoranda, articles, National Calls, and other efforts to educate adjudicators, contractors, and others who carry out Medicare policy, about the "clarifications" to the manuals spelling out that there is no Improvement Standard.  Plaintiffs' counsel continued to monitor and comment on the Secretary's actions to ensure that the settlement is carried out correctly, and had their first post-settlement meeting with opposing counsel on January 6, 2014.  Class members’ opportunity to seek re-review of claims previously denied under the Improvement Standard began on January 24, 2014.  Class members have until either July 23, 2014 or January 23, 2015 to seek re-review of their denied claim for coverage, with the deadline geared to when they received their adverse decision.  (The re-review form and information on filling it out and the applicable timelines are on our website, noted in the next paragraph.)

Counsel for the parties continue to discuss implementation and problems with implementation by telephone and e-mail.  The second formal meeting of counsel pursuant to the settlement agreement is scheduled for early September.

Detailed information on this case, the settlement, and how beneficiaries can take advantage of it is provided on our Medicare Improvement Standard page.

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