Retirees Who Want to Opt Out of Medicare Can Sue Government

Several citizens led by former House Majority Leader Dick Armey have won the right to sue the federal government for threatening to deny their Social Security benefits because they do not want to enroll in Medicare.

Armey and four other retirees allege that the Social Security Administration and the Department of Health and Human Services told them they will lose the thousands of dollars they had paid into Social Security over the years if they choose to opt out of Medicare.

U.S. District Judge Rosemary Collyer of the District of Columbia denied a motion to dismiss filed by HHS Secretary Kathleen Sebelius and Michael Astrue, commissioner of the Social Security Administration.

In so doing, she cleared the way for the plaintiffs to prove that it is illegal for the government to require enrollment in Medicare as a condition of receiving Social Security retirement benefits.

According to the complaint, the plaintiffs want to forgo Medicare because they currently have "adequate" health care coverage and enough money to pay privately for their health care needs.

If just a small percentage of Medicare-eligible retirees voluntarily opted out of the program, the plaintiffs add, it would save billions of dollars each year and relieve some of the financial pressure on the "fiscally ailing program."

The plaintiffs argue that there is nothing in the federal Social Security law that says a retired person who chooses not to apply for Medicare coverage will be stripped of his or her Social Security benefits.

But in 1993 and 2002 the Social Security Administration issued rules in the Social Security program operations manual stating that retirees would lose their benefits if they opted out of Medicare Part A, the government's hospital insurance entitlement program.

The plaintiffs argue that the Clinton and Bush administrations put the new rules into effect without following the Administrative Procedure Act, which requires notice of proposed rule-makings and appropriate comment periods for the general public.

In letting the case move forward, Judge Collyer said there is nothing in either the Medicare Act or the Social Security Act requiring the plaintiffs to pay Social Security benefits back to the government to get out of Medicare.

She also rejected the government's contention that the plaintiffs have failed to exhaust their administrative remedies before turning to the courts.

The plaintiffs can be excused from this requirement, she said, because the government already has indicated that it does not intend to change the operations manual.

"When an agency has committed itself not to change its rules unless judicially compelled to do so, has made known that its general views are contrary to those of the complainant, and has never given an inkling that it would consider a matter afresh, and when the regulations in question have received careful attention within and outside the agency, a complainant need not make a pro forma request that the agency redo its system," Judge Collyer said.

The plaintiffs are asking the federal court to temporarily and permanently prohibit the government from enforcing the policies.

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