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 
and visit the Litigation Section of the Center for Medicare Advocacy’s website.


© Copyright, Center for Medicare Advocacy, Inc. 09/17/2013