WASHINGTON, Sept. 28 — A federal judge on Thursday ordered the Bush administration to halt its effort to collect $50 million from 230,000 Medicare beneficiaries who had received erroneous refunds of premiums paid for prescription drug coverage. He said many of them might qualify for waivers because repayment would cause hardship.
Federal officials had previously told beneficiaries to return the money by Saturday, Sept. 30. Judge Kennedy said the administration could not enforce that demand unless it first gave beneficiaries an opportunity to seek an exemption.
If a beneficiary requests a waiver, the government cannot try to recoup the money until the secretary of health and human services rules on the request, Judge Kennedy said in issuing a preliminary injunction sought by the plaintiffs. The plaintiffs include the Action Alliance of Senior Citizens, based in Philadelphia, and Gray Panthers, a national organization for older Americans.
Judge Kennedy said that any money already paid to the government “must be immediately returned to the beneficiaries so that they may decide whether to request waiver.”
Mr. Deford said beneficiaries were entitled to notice of their rights because of the Fifth Amendment to the Constitution, which states that no person shall be “deprived of life, liberty, or property, without due process of law.” The administration’s refusal to provide such notice violates the Constitution, as well as the Medicare law and regulations, he said.
The Medicare law says the government shall not recover an overpayment if the beneficiary was without fault and if it would be “against equity and good conscience” for the government to recover the money.
Dr. McClellan has, in effect, acknowledged that the beneficiaries are without fault, saying the mistake occurred because of “an error in Medicare computer systems.” At the court hearing, lawyers for Dr. McClellan and Michael O. Leavitt, the secretary of health and human services, argued that Medicare beneficiaries had no right to a waiver and therefore no right to be informed that they could fight the demand for repayment.