State makes $18 million mistake Settlement drafted because 40,000 people were wrongly denied Medicaid coverage

By Karen Abbott Denver Rocky Mountain News Staff Writer

Colorado will spend $18 million restoring Medicaid coverage in settlement of a lawsuit filed on behalf of more than 40,000 low-income residents the state wrongly cut off since 1997.

"It was obviously a profound error that this happened, and we regret that," said Diana Maiden, a manager with the state Department of Health Care Policy and Financing.

She blamed old programming in a state computer that was not updated when federal laws changed in 1996, as part of nationwide welfare reform.

"But we do not think that people went without medical coverage when they truly needed it," Maiden said.

A class-action lawsuit over the state's Medicaid mistake says otherwise.

The lawsuit said that after Aloha Tatum's coverage was ended in August 1999, her premature newborn, Tearney Rose, was discharged from a hospital on oxygen, even though she was losing weight.

The 4 pound, 2 ounce baby lost 4 ounces the night before she was sent home, according to the suit.

"The mother was advised that it was very important to monitor the baby's temperature since the baby would otherwise expend calories trying to adjust and then lose more weight," the lawsuit said. "Aloha Tatum and her mother took turns watching Tearney Rose around the clock."

The lawsuit said Aloha Tatum has yet to get her Medicaid coverage straightened out and couldn't schedule her daughter's four-month check-up.

Deanna Gabler-Alonzo has two children, a 3-year-old boy with cerebral palsy and an 17-month-old daughter who can't keep down food. Her son has had 10 surgeries, her daughter one.

Because the state wrongly denied them Medicaid benefits, the family has had trouble maintaining relationships with medical offices, the lawsuit said.

"Some medical providers are reluctant to provide treatment without proof of insurance. Ms. Gabler-Alonzo and her children have had to cancel appointments and wait for long periods while the providers attempt to verify their Medicaid status with calls to Social Services," the lawsuit said.

Five lawyers, working at no charge, filed the class-action lawsuit Tuesday in Denver U.S. District Court. With it came a thick settlement agreement they had spent about 10 months negotiating with state officials.

A federal judge still must approve the settlement agreement.

Lawyers who filed the case said they got involved because word had begun circulating in the legal community that many low-income people were having problems with Medicaid coverage.

"We got a few tips that there was some stuff really going drastically wrong," said Tracy Ashmore, one of the lawyers who worked on the case.

The other lawyers are Lawrence Theis of Perkins Coie, Lawrence Treece of Sherman & Howard, Greg Parham of Parham & Associates and Lawrence Volmert of Holland & Hart.

The lawyers said Colorado officials immediately acknowledged the Medicaid mistakes and cooperated in reaching the settlement.

Colorado officials said mistaken denials of Medicaid benefits have occurred nationwide since Congress reformed welfare, and that other states have reached similar settlements.

Maiden said the state knew when Congress changed welfare laws in 1996 that there might be trouble. Before that, people automatically lost Medicaid coverage if they lost welfare benefits. In Colorado, a state computer automatically made those cutoffs.

But under welfare reform, many people who became ineligible for welfare benefits still could be covered by Medicaid. The state computer couldn't handle that, Maiden said.

She said state officials decided not to try to reprogram the aged computer, but to work around the problem by training county social services workers to keep people from wrongly losing Medicaid coverage.

That plan failed. State officials found that out 10 months ago when the five lawyers showed up with a draft of their class-action lawsuit.

"When we saw the lawsuit, we knew we had a problem," Maiden said.

She said officials then spent about seven months reprogramming the computer.

Under the settlement agreement, the state would launch a complicated process to notify the more than 40,000 people who wrongly lost Medicaid benefits. The state then will pay their outstanding medical bills or reimburse them for spending their own money on medical care.

The cost is estimated at $18 million. The federal government will pay half.

"The undertaking that the state is doing is pretty complicated, expensive and really quite massive," Ashmore said. "It also is something that's really worth it."

http://www.insidedenver.com/news/1207poor2.shtml

-- Doris (nocents@bellsouth.net), December 07, 2000