Humana settles allegations of Medicare fraud for $90M
Humana has agreed to pay $90 million to the federal government to settle a lawsuit accusing the insurer of fraud related to how it obtained Medicare Part D contracts. Attorneys from Phillips & Cohen, who represented a whistleblower bringing the suit, announced the settlement on Friday.
The lawsuit against Humana was brought under the False Claims Act, which imposes penalties on companies that defraud federal government programs. The plaintiff in the case alleged the insurer submitted fraudulent bids to secure Medicare Part D contracts between 2011 and 2017, leading to the Centers for Medicare & Medicaid Services (CMS) being overcharged for patient care.
According to the legal complaint, Humana allegedly agreed to provide certain, mandated levels of care coverage in its bids, distinct from the subsidies provided by CMS. However, the company ultimately paid less than agreed, leaving patients and the Medicare program to cover more of the bill than planned.
“We alleged that Humana kept two sets of books—one set that its actuaries prepared for bids Humana submitted to the government and a separate internal set that Humana's actuaries prepared with Humana's actual anticipated costs, which Humana used for all its business dealings including its internal budgeting," Edward Arens, a Phillips & Cohen partner, said in the announcement.
The whistleblower was named as Steven Scott, a former employee of Humana, who alleged the company would openly budget for its planned level of coverage, despite telling CMS something different to earn Medicare Part D contracts.
The company ceased the practice once it received a demand for discovery as a civil investigation, the lawsuit claimed. The U.S. Department of Justice (DOJ) ultimately decided not to intervene in the case, allowing civil litigation to move forward.
The $90 million settlement was reached out of court before any trial.
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