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For Immediate Release                                             Contacts: Judith Stein and Gill Deford
November 3, 2011                                                                          (860)456-7790

Center for Medicare Advocacy Seeks End to Harmful Practice of Hospital "Observation Status"

Hartford, CT− Today, the Center for Medicare Advocacy and co-counsel, the National Senior Citizen Law Center, filed a class action lawsuit against Kathleen Sebelius, the Secretary of Health and Human Services, on behalf of seven individual plaintiffs who represent a nationwide class of individuals harmed by an increasingly common practice. The plaintiffs are Medicare beneficiaries who received inpatient hospital services, but were improperly classified as outpatients, often referred to as “observation status,” and therefore deprived of Medicare Part A coverage for their hospital stay and after care. Bagnall vs. Sebelius, 3:11-cv-01703 (D. Conn. 11/3/2011).

The misapplication of "observation status" deprives Medicare beneficiaries of their coverage rights and may cause them to absorb significant hospital costs that otherwise would be paid for under Medicare Part A. Additionally, they may be forced to forego critical post-hospitalization skilled nursing facility (SNF) care or pay exorbitant out-of-pocket costs for it because Medicare requires a minimum of three consecutive days as a hospital inpatient to qualify for SNF care. 

"We’ve turned to the courts for fairness because 'observation status' harms thousands of Americans receiving Medicare each year, nationwide,” said Judith Stein, Founder and Executive Director of the Center for Medicare Advocacy, one of the nation’s leading legal advocates for the more than 48 million older and disabled Americans enrolled in Medicare. "It causes severe financial problems for beneficiaries and their families, and deprives them of nursing home coverage altogether."

"Worse yet, without advocates, Medicare recipients have virtually no way of challenging their denial of benefits,” said attorney Gill Deford, the Center for Medicare Advocacy’s Director of Litigation. "Without a class action lawsuit, it may be impossible to stop the government from misusing ‘observation status’ in the first place.”

"Throughout my sister’s hospital records the word 'admitted' or 'admit' was used. So we were shocked when we were advised that she was 'observation only,'" stated Mrs. Shirley Burton, a plaintiff seeking justice for her late sister, Nettie Jean Sapp, of Temple Texas. 

Plaintiff Lee Barrows of Connecticut described her husband's five-day stay in a Connecticut hospital as an observation patient and denial of Medicare payment for his subsequent nursing care. "After five days of treatment in the hospital, my husband's neurologist, physician and social worker ushered me into the hallway to tell me that my husband was never admitted. I was stunned with disbelief and tearfully blurted out that I would fight this," said Mrs. Barrows. "His doctors then indicated that this happens once or twice a week." 

For more information about the class-action lawsuit, or to learn more about Observation Status or how to get involved in advocacy activities visit For press inquiries and interviews, please contact Judith Stein ( at (860)456-7790 or Gill Deford ( also at (860)456-7790.  


The Center for Medicare Advocacy, Inc., established in 1986, is a national nonprofit, nonpartisan organization that provides education, advocacy and legal assistance to help older people and people with disabilities obtain fair access to Medicare and necessary health care. The Center is based in Washington, DC and Connecticut with offices throughout the country.

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