Print - Litigation - Situ Settlement Notice

July 17, 2008

COURT PRELIMINARILY APPROVES SETTLEMENT OF NATIONWIDE MEDICARE PRESCRIPTION DRUG CASE, ORDERS NOTICE TO CLASS MEMBERS

On July 9, 2008, the federal court in San Francisco issued an "Order Preliminarily Approving Class Settlement, Approving Class Notice, and Setting Final Fairness Hearing" for the settlement agreement in Situ v. Leavitt, filed on June 19 between a nationwide class of Medicare beneficiaries who are also eligible for Medicaid ("dual eligibles") and the Secretary of Health and Human Services. The Settlement Agreement in and the Order Preliminarily Approving are available on the Center for Medicare Advocacy's website. The settlement agreement can be found at http://www.medicareadvocacy.org/SettlementAgreement.pdf, while the Order Preliminarily Approving can be found at www.medicareadvocacy.org\litigation_SituOrderofPreliminaryApproval.070908.pdf. Both items may also be accessed directly from the Center's home page, www.medicareadvocacy.org, in the "Hot Topics" section.

Under the settlement and the preliminary approval order:

The Secretary, by July 25, 2008, must notify the class members by sending a notice to ten national organizations representing dual eligibles, which will then publicize the settlement and the right of class members to comment on the settlement.
Class members have until September 8, 2008 to file written objections with class counsel, which should be directed to: Attention: Situ Class Counsel, National Senior Citizens Law Center, 1330 Broadway, Suite 525, Oakland, CA 94612.
Whether or not a class member files a written objection, he or she has the right to appear at the "fairness hearing" on October 6, 2008 at 10 a.m. to express an opinion on the settlement. The hearing will be held in Courtroom No. 12 of the United States District Court for the Northern District of California, at 450 Golden Gate Avenue, San Francisco, California.

"Fairness hearings" are required, under federal rules, whenever a case with a certified class is settled, in order to ensure that the class members' rights are protected. The federal court's July 9 Order recognized on a preliminary basis that the settlement is "fair, reasonable, and adequate," but that recognition can only be finalized after the class members have had their right to comment, in writing and/or in court. Class members have no obligation to comment in order to protect their rights as class members, but they do have that option.

History

The case grew out of the massive problems that greeted implementation of the Part D prescription drug program by the Centers for Medicare & Medicaid Services ("CMS"). It specifically targets the systemic problems encountered by the 6.2 million dual eligibles whose poverty qualifies them for Part D's Low Income Subsidy ("LIS") and the corresponding nominal payments for their medications.

Since dual eligibles rely on an average of ten more prescription drugs per month than do other Medicare beneficiaries, the difficulties that they have encountered in obtaining their medications have put them at severe, even life-threatening, risk. Dual eligibles and their advocates have been struggling since Part D began, on January 1, 2006, to ensure that their medications were available. The process has remained a daunting and difficult one. This settlement is expected to alleviate some of the more pronounced problems for hundreds of thousands of dual eligibles annually.

The case was filed in April 2006 when it had become clear that CMS' implementation of the LIS program was having disastrous repercussions for dual eligibles. The Court certified the case as a nationwide class action in January 2007, and the parties then engaged in negotiations that led to the settlement agreement.

The Settlement

Under the settlement, the automatic enrollment process for new dual eligibles in Part D drug plans will be speeded up, as states will submit relevant information to CMS on a more expedited basis and CMS will process that information within one business day. The 5-6 week delay in enrollment should be significantly reduced. Second, the new protocol will require prescription drug plans and CMS Regional Offices to provide additional assistance to beneficiaries who do not show up as LIS-eligible on the pharmacy or plan computer systems. While the existing system had required beneficiaries to produce the paperwork to prove their LIS-eligibility, the burden will now be on CMS to contact the state to confirm eligibility for any beneficiary who claims to be LIS-eligible.

Third, CMS is obligated to educate pharmacy organizations about new policies that increase protections for dual eligibles who are not automatically enrolled in a Part D drug plan and are therefore unable to obtain medications. Fourth, CMS must hold quarterly meetings with attorneys for the plaintiff class to monitor implementation of the settlement and to discuss issues facing dual eligibles.

Conclusion

Although the settlement will not resolve all the hardships that Part D has created for low income Medicare beneficiaries, it is expected to solve the more egregious problems that have arisen. The settlement suggests that CMS is committed to resolution of the problems, and the Court will retain jurisdiction over the case for three years to enforce the settlement's terms.

The plaintiff class is represented by attorneys from the Center for Medicare Advocacy and the National Senior Citizens Law Center, and from the Palo Alto law firm of Wilson Sonsini Goodrich and Rosati, who devoted considerable time and hard work to the case, especially the settlement negotiations. Plaintiffs' attorneys received invaluable and consistent assistance from advocates around the country who have had to spend tens of thousands of hours dealing with the problems caused by Part D.