Humana to pay $90M to settle fraudulent Medicare bid lawsuit

Humana settlement overview: 

• Who: Health insurance company Humana agreed to pay $90 million to the federal government.
• Why: The settlement ends claims Humana submitted fraudulent bids for Medicare contracts.
• Where: The Humana settlement was lodged in a Kentucky federal court.

Health insurance company Humana agreed to pay a $90 million settlement to the federal government to end claims it submitted fraudulent bids for Medicare contracts.

A press release by attorneys for the plaintiffs, Phillips & Cohen LLP, announced the settlement Aug. 16.

“This is the first case of its kind to resolve allegations of fraud in the Part D contracting process,” the firm says in the release.

Humana contracts with Medicare to provide Medicare Part D Prescription Drug Plans.

According to the plaintiffs, Humana submitted fraudulent bids to the Centers for Medicare & Medicaid Services for lucrative Part D prescription drug contracts from 2011-2017, significantly overcharging the government.  

Medicare Part D is the government’s voluntary prescription drug program under which CMS contracts with private insurance companies to cover prescription drug benefits for people enrolled in Medicare.  

By law, the insurance companies must offer plans that cover a minimum required portion of drug costs, with the government and Medicare beneficiaries covering the rest, the lawsuit claimed. 

CMS requires insurance companies to submit annual bids in which they report the benefits they propose to cover and confirm those benefits meet Part D’s minimum coverage level. The complaint alleged Humana committed to providing the required level of coverage yet planned to provide less, with the government and beneficiaries unknowingly picking up more than their share.

“The Part D program depends on insurance companies paying their minimum share of drug costs,” Claire Sylvia, a whistleblower attorney and Phillips & Cohen partner who filed the case, says in the press release. “We argued that Humana shirked its responsibility by telling the government that its plan would cover drug costs that Humana did not actually plan to cover.”  

She says the complaint detailed how the government and beneficiaries were left paying tens of millions of dollars more than Congress intended for years while Humana pocketed the money as savings.

Human kept two sets of books during scheme, lawsuit claims

The complaint alleged Humana kept two sets of books – one set its actuaries prepared for bids Humana submitted to the government and a separate internal set Humana’s actuaries prepared with Humana’s actual anticipated costs, which the company used for all its business dealings, including its internal budgeting. 

Steven Scott, the whistleblower who filed the lawsuit in 2016, is a former actuary for Humana.  

The complaint alleged he discovered Humana had accurately predicted internally each year the costs for its Part D Walmart Plan while basing its bids to the government on different and unsupported assumptions used for no other purpose.  

In 2023, a consumer hit Humana with a class action lawsuit alleging it unlawfully deploys artificial intelligence to wrongfully deny elderly patients care owed to them under Medicare Advantage plans.

What do you think of this Humana settlement? Let us know in the comments! 

Scott is represented by Andrew C. Shen, James M. Webster III, Bethan R. Jones, Katherine C. Cooper, Caroline Schechinger and Thomas G. Schultz of Kellogg Hansen Todd Figel & Frederick PLLC and Claire M. Sylvia, Edward Arens and George Collins of Phillips & Cohen LLP. 

The Humana Medicare settlement is United States of America et al. v. Humana Inc., Case No. 3:18-cv-00061, in the U.S. District Court for the Western District of Kentucky.

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