Lawsuit filed to End Practice of Hospital “Observation Status”. On November 3, 2011, the Center for Medicare Advocacy and the National Senior Citizens Law Center filed a class action lawsuit against Kathleen Sebelius, the Secretary of Health and Human Services, on behalf of seven individual plaintiffs – all Medicare beneficiaries who received hospital inpatient services – harmed by the increasingly common practice of classifying these patients as on “observation status,” rather than inpatients. This practice deprives Medicare beneficiaries of Part A coverage for their hospital stay, and because of the 3-day prior hospitalization stay requirement – deprives them of Part A coverage for post-hospitallization skilled nursing care.