The lawyer for the Connecticut-based Center for Medicare Advocacy, which represented 14 Medicare beneficiaries denied skilled nursing care after a hospital stay, said the center is analyzing a federal court decision that dismissed their suit.

One option, lawyer Alice Bers said, could be an appeal.

In Bagnall v. Sebelius, which was filed in 2011, the plaintiffs each were hospitalized for at least three days and required follow-up care at a nursing home. But because they were on observation status – even though they were staying on a regular hospital floor for several days and getting the same care as inpatients – they were not considered inpatients and thus Medicare would not cover their post-hospital nursing home care.

They had to pay thousands of dollars for that care privately, said Bers, of the Center for Medicare Advocacy, who represented the plaintiffs. “Many people cannot afford that expense and simply go without that skilled nursing and rehabilitation care,” Bers said. “The problem is that under Medicare rules, only patients who are admitted to a hospital for at least three consecutive days as inpatients are eligible for coverage of follow-up nursing home care.”

Bers said that her office is seeing more and more elderly people complaining of being put on observation status.

Bers said that thousands of people throughout the country are affected. The Medicare Advocacy office in Washington, D.C., gets at least one call a day about elderly residents concerned about this issue, Bers said. “We continue to hear from people at our office every day,” Bers said.

“We get a lot of callers from Connecticut, having an office in Connecticut,” Bers said, adding that several of the plaintiffs are from Connecticut.

“This is a problem that is continuing to affect Medicare patients every day,” Bers said. “It’s a problem that needs to be addressed.”

The lawsuit was decided Sept. 23 by U.S. District Court Judge Michael P. Shea.

“The typical scenario we see is someone will experience a fall at home and they will go in through the emergency room,” Bers said.

Rick Sarner, a Stamford lawyer involved in Estate Planning and Elder Law issues, said that although “Judge Shea’s decision may have been right on the law as it is written, his dismissal of the complaint presents a disappointing reality of our current medical system – namely that doctors and hospitals with a financial interest in a particular result are often given the discretion to determine that result.”

“Even if the result isn’t arbitrary, it is certainly a conflict of interest. Hopefully, this will put renewed pressure on Congress to enact legislation which would make all time spent in the hospital count toward the 3-day requirement for Medicare Part A coverage,” Sarner said.

A Connecticut lawmaker is among those trying to make that happen.

Rep. Joe Courtney, a Democrat from Connecticut, is pushing for a bill that would help solve the problem, Bers said.

“We hope that Rep. Courtney’s bill will pass as it would solve the most harmful aspect of observation status by making all time spent in the hospital count toward the three-day requirement for coverage of follow-up nursing home care,” Bers said. “We think the whole concept of observation status is wrong and it should be eliminated.”

In the lawsuit, the plaintiffs claimed that observation status violates the Medicare statute by depriving them of coverage they are entitled to by law. Another part of the case dealt with inadequate notice and appeal rights, Bers said. “Most people are not told they are on observation status until they are being discharged to a nursing home, and even when they are told, there is no clear way to appeal it within the Medicare system,” Bers said.

Bers said that her office is weighing options in light of the dismissal. One of those options is whether to appeal, she said.