Nursing Home Patients Get Go-Ahead for Class Action Over Medicare Denials

Medicare patients denied nursing home coverage for failure to meet the hospital inpatient stay requirement because time in the emergency room or in observation status was excluded from the calculation may pursue a class action against the U.S. government, a federal judge in Connecticut has ruled.

Judge Janet C. Hall of the U.S. District Court for the District of Connecticut granted the plaintiffs' motion for nationwide class certification, finding common questions of law and fact and ruling that class members did not have to exhaust the Medicare administrative process before filing suit.

The plaintiffs' lawyer, Gill Deford of the Center for Medicare Advocacy Inc., hailed the decision as an important first step toward abolishing an unjust and arbitrary policy.

"Certification of the nationwide class will mean that, if they win, Medicare beneficiaries around the country will get skilled-nursing-facility coverage regardless of their status while in the hospital," Deford said in a Sept. 22 statement. "It's the only fair way to do it, especially since the average time spent in hospitals has been cut in half in the 40 years since Medicare began."

The three named plaintiffs — Marion Landers, Marion Dixon and Muriel Grigley — challenge the U.S. Department of Health & Human Services' interpretation of the nursing-home-coverage provisions of the Medicare law.

To qualify for Medicare's coverage of nursing home services, a beneficiary must first have spent three consecutive days in a hospital. The plaintiffs allege they were denied coverage for nursing home stays even though they spent at least three days in the hospital before they were admitted to nursing facilities.

They say the government health agency erred in failing to consider time spent in an emergency room or while on observation status in calculating the length of their hospital stays.

According to court documents, each plaintiff visited the emergency room complaining of various ailments and spent a significant amount of time there. Dixon also claimed that he spent time on observation status. Eventually, each was admitted to the hospital and then discharged to a nursing home.

Landers exhausted all administrative remedies before filing this lawsuit. Dixon and Grigley had not completed the administrative review process before suit was filed.

The plaintiffs filed a motion seeking to represent a class consisting of all Medicare beneficiaries who have or will be denied nursing facility coverage despite having spent at least three days in a hospital, including time spent in an emergency room or on observation status, prior to discharge to a nursing facility.

The government objected, arguing that the court lacks jurisdiction over individuals like Dixon and Grigley who have not fully exhausted the administrative review process.

Judge Hall rejected the department's jurisdiction argument, finding that while administrative remedies normally must be exhausted prior to judicial action, the requirement may be waived where the issue asserted is collateral to a claimant's substantive claim and where delay in the decision could irreparably harm the claimant.

According to the judge, the plaintiffs in this action were not asking the court to grant them benefits, but merely to clarify the three-day hospital-stay provision. Thus, the issue was collateral to whether the individual plaintiffs could collect benefits.

Furthermore, the denial of benefits could cause the deterioration of the plaintiffs' health or even death, and the administrative process was time-consuming and costly. Since further delay would subject the plaintiffs to sufficient harm, the administrative exhaustion requirement must be waived, the judge ruled.

In its objection to class certification, the government argued that the claims did not involve common issues of fact and law because the lawsuit includes three groups of class members: those who spent time in an ER, those who spent time on observation status and those who did both. Therefore, the government alleged, the plaintiffs' claims were atypical and the relevant questions were too disparate.

Judge Hall said there is no requirement that the facts of each claim be identical.

"The arguments that emergency-room stays and time spent on observation status ought to count toward the three-day qualifying hospital stay are not mutually exclusive and rest on the same facts and law," she said.