Erb v. McClellan

Issue: Whether CMS' implementation of so-called "passive enrollment" into a Medicare managed care plan for over 110,000 dual eligibles in Pennsylvania, without prior notice and publication, violates the Medicare statute, (especially the Medicare Modernization Act), the Administrative Procedure Act, and the Due Process Clause.

Relief sought: A statewide class of dual eligibles subject to passive enrollment is alleged.  Plaintiffs seek declaratory and injunctive relief, including a preliminary injunction, to restore to the affected class members their right to choose their Medicare coverage.

Status: Passive enrollment was effected in the fall of 2005.  Dual eligibles were notified by managed care plans that they had been disenrolled from either fee-for-service Medicare or the Part C plan of their choice and enrolled into one of six managed care plans, with enrollees subject to the new plans' rules effective January 1, 2006.  Although dual eligibles were nominally able to repudiate this switchover, there was and still is considerable confusion and misunderstanding, coupled with plans either intentionally or negligently making it difficult or impossible to correct the disenrollment.  Even a transition plan in effect through March 31, 2006, by which affected dual eligibles were supposed to be able to continue to see their old providers, has not operated correctly.

The complaint was filed on November 30, 2005.  Plaintiffs shortly thereafter moved for a preliminary injunction and class certification, and, in January 2006, the CMS Administrator and HHS Secretary moved to dismiss on several grounds, including failure to present a claim and to exhaust administrative remedies.  The attorneys in Pennsylvania who brought the case asked Center attorneys to participate, and the latter entered appearances as co-counsel in January 2006.

Before there was a ruling on the pending motions, the parties entered into extensive negotiations, which resulted on March 30, 2006 in a settlement agreement. Under that agreement, the defendants agreed to take several steps intended to correct problems for those who had been harmed by passive enrollment.  With the terms of the agreement largely carried out, the parties stipulated to dismissal on August 1, 2006.