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AARP Asks Court For Fairness in Ability to Challenge Medicare Benefits Decisions

A number of Medicare beneficiaries who disputed the amount they had to reimburse Medicare following compensation for injuries from lawsuits or settlements have challenged the policy of the government to require “up front” payment before the resolution of administrative appeals.


Each of the plaintiffs in the class action lawsuit of Haro v. Sebelius was injured in an accident, received compensation for his/her injuries, and was served notice that Medicare was seeking (as most insurers do) to be reimbursed the costs expended for medical care. The plaintiffs disputed the amount due to the government. The Department of Human Services (DHS), which oversees the Medicare program, notified the victims of their right to appeal this demand for compensation or ask for a waiver. However, DHS demanded the payment up front even before the deadline for appeal or waiver had passed.

Most of the victims in Haro paid the upfront reimbursement and then joined the lawsuit. Only Patricia Haro, the named plaintiff, raised the issue of the unfairness of reimbursement timing in her letter to the agency. Haro was represented by counsel, and the rest were not.

DHS argued that those who did not raise the specific legal issue cannot now object in the litigation. A trial court agreed with the beneficiaries and enjoined the Secretary from seeking up front reimbursement of Medicare secondary payments before their appeals were resolved. On appeal, the Court of Appeals ruled in favor of the Secretary and the plaintiffs sought reconsideration. While making minor changes to the wording of its order, the Court of Appeals stood by its decision.

Attorneys with AARP Foundation Litigation filed AARP’s friend-of-the-court brief in support of reconsideration citing U.S. Supreme Court decisions that make it clear that the purpose of requiring objections be raised to federal agencies prior to filing lawsuits is to allow the Department to change its policies, not to shut the door to legitimate grievances. The brief also noted that given the complex nature of Medicare laws and regulations and the age and disability of Medicare beneficiaries — who are mainly unrepresented, the panel’s holding that plaintiffs did not adequately present this challenge at the administrative review level effectively forecloses beneficiary access to the courts for judicial review of policies that may be contrary to law and violate their rights.

What’s at Stake

Many — if not most — Medicare beneficiaries represent themselves in negotiations with the agency, whether due to limited resources, isolation, or lack of awareness of the complexity of the possible issues. The court’s decision would require Medicare beneficiaries — regardless of their situation — to raise specific legal objections to policies or regulations. Moreover, it would require them to do so at every step of the appeals process, even after their objections have been ignored, or risk waiving those objections.  The court of appeals imposed a requirement that is too stringent, it is not what the law demands, and would deny Medicare beneficiaries access to the courts.

Case Status

Haro v. Sebelius was decided by the U.S. Court of Appeals for the Ninth Circuit.