Judge Orders Stop to Medicare Refund Collection Effort

A federal judge has ordered the Centers for Medicare and Medicaid Services (CMS) to halt efforts to collect refunds mistakenly mailed to 230,000 Medicare beneficiaries and to inform the beneficiaries that they have the right to apply for a waiver excusing them from repaying the money if doing so would cause undue hardship.

Because of a computer error, approximately 230,000 people were mistakenly mailed refunds for their Medicare prescription drug benefit premiums. CMS had insisted that the money, which averaged $215 a beneficiary, be paid back by Saturday, September 30.

In response to CMS's recoupment efforts, the Center for Medicare Advocacy filed suit on behalf of the Gray Panthers and the Action Alliance of Senior Citizens, arguing that Medicare law states that the government cannot recover an overpayment if the beneficiary was not at fault and if such recovery would violate "equity and good conscience.'

Shortly thereafter, CMS stopped sending letters to beneficiaries instructing them to return the money, and removed all content about the recovery effort from its Web site. However, CMS claimed these actions were unrelated to the filing of the lawsuit, which they were fighting on the grounds that the waiver did not apply in this case. (See ElderLawAnswers news article, "Medicare Officials Suspend Effort to Collect Mistakenly Mailed Refunds".)

The judge, Henry H. Kennedy Jr. of Federal District Court in Washington, D.C., said CMS must immediately send a notice to all 230,000 beneficiaries stating that each has a right under federal law to request such waivers. The judge also said that any money already paid to the government 'must be immediately returned to the beneficiaries so that they may decide whether to request waiver.'

Some Medicare beneficiaries have almost certainly spent the money sent to them, said Gill Deford, an attorney for the Center for Medicare Advocacy.

The erroneous premium refunds were a result of a computer error involving the new Part D prescription drug program. CMS officials are considering an appeal.

For a New York Times article on the ruling, click here. (Free registration required and article is available free of charge for only one week.)