Litigation - Situ Vs. Leavitt

Issue: Whether CMS' failure to correctly implement the Part D prescription benefit for hundreds of thousands of dual eligibles violates the Medicare statute and the Due Process Clause.

Relief sought: A nationwide class of dual eligibles has been alleged. Plaintiffs seek declaratory and injunctive relief to ensure that dual eligibles receive the full benefits of Part D.

Status: The complaint was filed on April 26, 2006. After extensive discovery on the jurisdictional question raised by the Secretary's motion to dismiss, the district court granted that motion in part and denied it in part. See 2006 WL 3734373 (N.D.Cal. 2006). The court concluded that the Secretary had not demonstrated that most of the individual plaintiffs lacked standing to pursue the issue. It dismissed two of the organizational plaintiffs outright, but allowed two others to remain in the case while they attempted to demonstrate that they had standing to proceed on behalf of their membership.

A few weeks later, the court granted the plaintiffs' motion for class certification, holding that the "presentment" requirement was met by any individual who had complained to the Secretary, to a Part D plan, or to a state Medicaid agency. See 240 F.R.D. 551 (N.D.Cal. 2007). The court held that all the factors necessary for class certification had been met, rejecting the government's contention that the case was not proper for certification because plaintiffs challenged a systemic failure to comply with the law rather than challenging a stated policy. Significantly, the court agreed with plaintiffs that a nationwide class should be certified.

In June 2007, plaintiffs' co-counsel from the Center for Medicare Advocacy, Inc. and the National Senior Citizens Law Center were joined by attorneys in the Palo Alto office of a private firm, Wilson Sonsini Goodrich & Rosati, who are acting pro bono.

On June 19, 2008, a settlement agreement was filed in federal court in San Francisco. The settlement, if approved, would require CMS to take a number of steps to improve the efficiency of the Low Income Subsidy (LIS) process, including one-business day processing by CMS of eligibility files received from the states and liberalizing the standards for beneficiaries to demonstrate their LIS status. On July 9, the court preliminarily approved the settlement, setting October 6 for the fairness hearing at which class members may comment on the proposed settlement. The court could then give final approval to the settlement. The court's order of preliminary approval and the Notice of Proposed Settlement of Class Action and of Fairness Hearing are available for review.

The Court gave final approval to the settlement agreement at a fairness hearing on October 6, 2008. The Order granting final approval and the Judgment were entered on October 22, 2008. For now, the only active aspect of the case is monitoring of the settlement agreement, which includes periodic meetings between counsel for the parties and CMS employees.