April 15, 2008
By Ned Milenkovich*
The U.S. District Court for the District of Massachusetts held on April 9 that Medicare Part D beneficiaries stated a valid claim when they alleged their constitutional due process rights were violated by the U.S. Department of Health and Human Services (HHS) and the Social Security Administration (SSA). (Machado v. Leavitt, No. 07-30111-MAP, (D. Mass. April 9, 2008)).
The court was outraged when SSA and HHS's Center for Medicare & Medicaid Services (CMS) failed to timely correct improper withholdings of Medicare Part D premiums. SSA and CMS improperly deducted Part D premiums from Social Security benefits when in fact beneficiaries had elected to directly pay such premiums for their Part D benefit or, in some cases, the agencies deducted incorrect amounts intended to be deducted.
The beneficiaries brought a statutory claim under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), and a constitutional due process claim. The court, however, rejected the statutory claim stating that the MMA provides no remedy to beneficiaries for incorrect or excessive premium withholdings made by government agencies.
Notwithstanding the Court's rejection of beneficiaries' statutory claim, the court upheld the due process claim. The court acknowledged that administrative bureaucracy has caused delays that are not redressable, but it was not clear to the court, based on the evidence presented, whether agency actions rose to the level of dilatory behavior without any rationale to permit a due process claim to stand. Unreasonable delays in entitlement processing could rise to the level of a constitutional due process violation. In demonstrating its outrage over the protracted agency delays, the court asked "how egregious does an agency's failure to make timely corrections of its own mistakes have to be, and how much suffering do these uncorrected errors have to inflict, before a violation of due process may be found?" Although it was unclear whether the beneficiaries would ultimately succeed on the merits of their case, the fact that the agencies were so dilatory in resolving the improper premium withholdings gave the court justification to deny defendants' motion to dismiss the due process claim and allow the case to proceed.
*We would like to thank Ned Milenkovich, Esquire (McDermott Will & Emery LLP, Chicago, IL) for writing this email alert.