"We thought a lot of people were losing eligibility because they allegedly had not sent in the correct documentation," said Richard Weishaupt, a senior attorney with Community Legal Services, the Philadelphia nonprofit that provides legal assistance to low-income residents. "We thought that was unusual, since most of these people had figured out how to get on and had submitted documentation."
In July, the Obama administration stepped in, sending a letter asking DPW whether the state had determined if anyone had been wrongfully struck from the rolls.
In the meantime, Weishaupt's group and attorneys from the Philadelphia law firm Morgan, Lewis & Bockius spent about five months negotiating with DPW. Initially, they had threatened a lawsuit over the re-determinations. But they announced Tuesday night that they had reached an agreement with DPW.
The agreement stipulates that a new letter - on distinctive blue paper - will be sent out to about 100,000 Pennsylvanians previously found ineligible for Medicaid, informing them of their right to appeal.
Some could have their medical bills resolved if they were billed or paid for coverage while they were off Medicaid, according to a release from the legal team.
Letters will be sent to residents who lost benefits between July 1, 2011, and Jan. 31, 2012, Weishaupt said. They have 30 days to fill out an appeal form.
A DPW spokeswoman said Medicaid recipients found ineligible for benefits have always had the opportunity to appeal their cases.
"We will send out letters to those specific individuals telling them they can appeal anytime through DPW," said Carey Miller. She said the agency was doing due diligence to ensure that those receiving Medicaid benefits really need them.
Weishaupt said DPW had told the legal team it would appoint a special unit to work solely on processing the re-applications.
"I think they want to do the right thing, and they know we're going to be monitoring it. They're going to give us numbers as to how all of this shakes out, as to what the response rate is," he said.
DPW also agreed to try to use online databases to check household incomes, which help determine Medicaid eligibility.
Weishaupt said DPW has not offered answers on why cases became so backlogged - or why so many people were struck from Medicaid rolls - but he said his team was focused on getting people back into the program when it worked out the agreement with DPW.
"Rather than focus on who was right and who was wrong," he said, "we decided to do this and find a way to reinstate people who everybody agrees shouldn't have been cut off."
Contact Aubrey Whelan
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Staff writer Amy Worden contributed to this article.