Judge Approves Settlement Agreement in Medicare Part D Case

On October 21, 2008, District Court Judge Thelton Henderson approved the settlement agreement that was filed on June 19, 2008 in the Medicare Part D class action lawsuit Situ v. Leavitt.

Under the agreement, the Centers for Medicare and Medicaid Services (CMS) has agreed to make significant changes to its administration of the prescription drug benefit for low-income beneficiaries. 

The case was filed against Michael Leavitt, Secretary of the Department of Health and Human Services, by the National Senior Citizens Law Center and the Center for Medicare Advocacy in April 2006 and was certified as a nationwide class action in January 2007. Pro bono counsel from the law firm of Wilson Sonsini Goodrich & Rosati later joined the plaintiff team.

The case was brought on behalf of 6.2 million low-income dual eligibles – individuals who receive both Medicare and Medicaid.  The Medicare Modernization Act (the statute that created Part D) requires CMS to automatically enroll dual eligibles into Part D plans and to deem them eligible for the Low Income Subsidy, a program which subsidizes the premiums, deductibles and co-payments of dual eligibles and other low income beneficiaries.  Unfortunately, the information management system that notifies plans and pharmacies of the enrollment and low-income status of dual eligibles has been dogged by extensive delays.  As a result, many dual eligibles have struggled to obtain the medications they need at a price they can afford.

In exchange for the Plaintiffs’ dismissal of their claims against the Secretary, CMS has agreed to make a number of changes that will streamline the Medicare Part D enrollment process. The agency will:

·        Speed up the enrollment process for new dual eligibles.  Instead of waiting several weeks to process files received from states identifying new dual eligibles, CMS will process these files within one business day of receipt. CMS will also allow states to submit these files more frequently than once per month;

·        Require plans to update their systems to reflect subsidy eligibility when presented with evidence of subsidy eligibility by the beneficiary, even if CMS systems do not yet reflect subsidy eligibility;

·        Require plans and CMS Regional Offices to provide additional assistance to beneficiaries who claim to have, but cannot provide evidence of, subsidy eligibility by contacting the state Medicaid agency to confirm eligibility.  This new protocol shifts the burden of proof away from beneficiaries and to plans and CMS when eligibility is in question. 

·        Educate pharmacy organizations about new policies intended to increase protections for dual eligibles who are not automatically enrolled in a plan and, therefore, are unable to obtain medications.

·        For two years, hold quarterly monitoring meetings with Plaintiffs’ counsel and provide documents and data in advance of those meetings.

These improvements will assist the hundreds of thousands of beneficiaries who become dually eligible and/or change plans each year.  The court will retain jurisdiction over the agreement for a period of three years.

The settlement agreement does not prevent individual class beneficiaries from filing separate claims for individual benefits. Under the terms of the agreement, the court will retain jurisdiction over the agreement for three years. 

A hearing to determine the fairness of the agreement was held on October 6, 2008.  Judge Henderson indicated at the hearing that he would approve the agreement and signed the final order approving the agreement and dismissing the case on October 21, 2008. 

Wilson Sonsini Goodrich & Rosati joined the plaintiff team in June 2007. Pro bono counsel from the firm played an integral role in developing the final settlement agreement.

Questions about the settlement should be directed to Kevin Prindiville (kprindiville@nsclc.org) or Anna Rich (arich@nsclc.org) in NSCLC’s Oakland office.  Information about the Center for Medicare Advocacy is available at www.medicareadvocacy.org. Information about the pro bono activities of Wilson Sonsini Goodrich & Rosati can be found at www.wsgr.com/probono.

Click here for a copy of the order approving the settlement.

Click here for a copy of the settlement agreement.

Click here for a copy of the Judge's July 9th order.

Click here for a copy of the official class notice.

Click here for press coverage of the settlement.