A Federal Appeals Court has ruled that the Medicare Part D beneficiaries who were erroneously mailed a premium refund do not have the right to apply for a waiver excusing them from repaying it. This new decision overturns a prior ruling by a federal district court ordering the Centers for Medicare and Medicaid Services (CMS) to halt efforts to collect the mistaken refunds.

In August 2006, about 230,000 people were mailed refunds for their Medicare prescription drug benefit premiums and told to pay their carrier directly. Although this was not correct, no one ever admitted how the mistake was made. Almost immediately, the government insisted that the money (about $215 per beneficiary) be paid back by the end of September. The Center for Medicare Advocacy filed suit on behalf of two senior’s rights groups, arguing that Medicare law states that the government cannot recover an overpayment if the beneficiary was not at fault and if such recovery would violate “equity and good conscience.”

Last September, the Federal District Court in Washington, D.C., agreed and issued an injunction ordering CMS to send a notice to the beneficiaries stating that each has a right under federal law to request a waiver of the obligation to repay the funds. CMS appealed to the U.S. Court of Appeals, which recently overruled the District Court. While calling the government’s mistake “a monumental gaffe,” the Appeals Court ruled that the right to ask CMS to waive the repayment of an incorrect payment applies only to a “provider of services” for “items or services furnished an individual,” and, “it has nothing to do with erroneous refunds of Medicare premiums.” If you received such a refund, and have yet to pay it back, it appears you will now have to do so.