Delaware Medicare Advantage case closed

A case involving the state’s plan to move Delaware retirees to a new Medicare supplement has been closed, with plaintiffs’ attorneys’ denied attorneys fees.

Delaware Superior Court Judge Calvin Scott Jr. closed the case with a Feb. 8 ruling that denied attorneys fees to plaintiffs RISE Delaware, Karen Peterson and Thomas Penoza. 

In his opinion, Scott said he could not grant attorneys fees because, first, no trial was held in the case, and second, because his court has no discretion to award such fees. 

The case stems from a decision made by the Delaware State Employee Benefits Committee, co-chaired by Department of Human Resources Secretary Claire DeMatteis and Office of Management and Budget Director Cerron Cade, that would have required state retirees holding Medicare supplement plans to switch to Medicare Advantage, which would have been administered by Highmark Blue Cross Blue Shield. 

Under state law, the state must provide about 30,000 state retirees with a Medicare supplemental plan, which the state previously provided through a Highmark BCBS plan known as the Medicfill Medicare Supplement Plan. Under the Medicfill plan, retirees were not limited to a specific network of doctors, and they were not required to obtain prior authorization from the insurance company before receiving treatments ordered by their doctors.

The committee voted in February 2022 to have the switch take effect Jan. 1, 2023. However, at the time of the adoption, no contract had been negotiated with Highmark, so terms of the plan were not known. Letters extolling the benefits of the switch were sent out to Medicare-eligible retirees in June, but a formal contract with Highmark was not executed until Sept. 28, according to court documents. 

On Sept. 25, a lawsuit was filed by RISE Delaware Inc., as well as Peterson, a former state senator, and Penoza, a retiree who had worked with the Delaware Department of Justice. RISE Delaware is a nonprofit established “to act as a sentinel on issues involving state healthcare benefits provided for Medicare-eligible Delaware retirees,” per court documents. 

The lawsuit stated that new rules require doctors and hospitals to abstain from administering tests and treatments unless the insurance company authorizes them. The plaintiffs sought to have Scott rule that the committee violated state law by adopting the new Medicare plan, and to stop the state from implementing it.

Attorneys representing DeMatteis and Cade, the two named defendants in the suit, argued the court did not have the authority to grant a stay, but Scott disagreed, saying the committee has no statutory directive to force all retirees from their state-subsidized benefits to a Medicare Advantage plan or lose benefits.

Scott also agreed with RISE Delaware’s argument that state retirees would be irreparably harmed without the stay, as they would be forced to change their health insurance coverage.

A trial was scheduled to be held in November in Delaware Superior Court in Wilmington, but three weeks before the trial was to start, the state extended its current Medicare supplement plan for another year. 

With that, the parties represented to Scott that a trial was not necessary. But after that, the parties continued to file motions asking for a determination of fact in the case, which Scott said in his opinion, should have been dealt with at trial. 

Plaintiffs attorneys argued they should receive attorneys fees because the state violated open meetings laws when it made the decision to change the supplement plan. However, Scott said he did not have jurisdiction to award those fees, which are normally handled by the Court of Chancery. He said both parties are responsible for their own attorneys fees and that he considers the case closed.