Consumer Advocates File Lawsuit to Protect Medicare Refunds

Some of the 230,000 Medicare beneficiaries mistakenly sent refunds last month should not have to repay them, according to two consumer advocacy groups that are suing the government.

The beneficiaries got an average reimbursement of $215. The refunds equaled the amount of money they paid each month this year for the premiums on their Medicare drug benefit. However, the refunds were the result of computer error, and the government wants its money back.

The Center for Medicare Advocacy Inc. said Monday that federal law allows for waiver of recover when the beneficiary is not at fault in the overpayment. The organization said it tried to forestall the litigation by asking the government to redraft a letter sent to seniors that included notice of their rights to a waiver in certain circumstances.

In response to the lawsuit, the Centers for Medicare and Medicaid Services agreed Monday to stop mailing letters seeking the refund and to remove all material concerning the recovery of overpayments from its Web site.

A lawyer called the actions an important first step. "The next steps are for CMS to return monies already repaid and inform all beneficiaries who received the incorrect refunds of their right, under federal law and the U.S. Constitution, to seek waiver of recovery," said Gill Deford of the Center for Medicare Advocacy.

A CMS spokesman confirmed that the agency agreed not to send out any more letters about the refund and amended its Web sites. The spokesman, Jeff Nelligan, said in this case, a waiver of recovery does not apply, but he did not elaborate.

"Because this is a matter in litigation, and consistent with our policy, we are responding to these allegations through our court filings," Nelligan said.

The Center for Medicare Advocacy is representing two groups in the lawsuit, the Gray Panthers and the Action Alliance of Senior Citizens.