About 40,000 people across the state whose Medicaid benefits were cut because of a computer glitch will be contacted and reimbursed under a $17.2 million settlement approved Thursday.

U.S. District Judge Wiley Daniel ruled on a deal that will settle a class-action suit against state agencies including the Colo rado Department of Human Services.

The settlement protects those "who have the fewest resources to fight and who didn't even know that their Medicaid was cut, potentially illegally," said Tracy Ashmore, an attorney who helped represent the plaintiffs.

Johanna Gerke, a Jefferson County mother of two who was not a plaintiff but had her benefits cut, said she was pleased with the outcome.

"They cut me off everything just two months after I started going to school and got my job," said Gerke, who attended Thursday's hearing. "But if they would have just helped us out for at least six months with Medicaid or even cash benefits, we could have gotten our feet on the ground."

Five attorneys handled the class-action lawsuit, filed in December 1999, at no cost. They and state officials spent 10 months forging a settlement.

"We will do everything in our power to notify people affected by this," said Vivianne Chaumont, an attorney represent ing the state.

The agreement requires the Colorado Health Care Policy and Financing Department, one of the defendants, to launch a massive campaign to find each person who lost their benefits and re-evaluate their eligibility.

Health care providers who paid for treatment that should have been covered by Medicaid or who still have outstanding bills will also be reimbursed.

From July 1997 to August 2000, thousands of people across the state lost their Medicaid benefits when they moved from welfare to work or stopped receiving public assistance for other reasons, despite federal provisions that guaranteed those benefits would remain intact.

The state said the mistake was caused by computer software that was not updated when 1996 federal laws changed the way welfare was handled. The software was reprogrammed last August.

Of the 40,000 who lost health care, 16,558 gradually got Medicaid back on their own. The state will reinstate the remaining 23,442.

The state will spend up to five months tracking down people affected by the computer error, reevaluating their Medicaid eligibility and reinstating their health care. The state will also reimburse people who can prove they spent their own money for care that should have paid through Medicaid.

Officials estimate it will cost $279,230 to reimburse clients for proven out-of-pocket medical ex penses and at least $1.2 million to pay back health care providers for outstanding bills.

The bulk of the $17.2 million, half of which will be covered by the federal government, will pay for setting up office space and the salaries for temporary staff who will locate and reimburse Medic aid recipients.

Jean Henry, who also attended the hearing, said she stopped receiving her Medicaid and food stamps when an illness kept her from attending one appointment with her caseworker. She had to go to a free clinic to get school shots for her 12-year-old and is awaiting bills for strep medication for her 9-year-old boy.

"It's not right the way they treat people," said Henry, who was pleased by the settlement. "They think they can treat us any kind of way because we need it."

Denver Post

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