Humana Settles $90M Whistleblower Suit Over Medicare Drug Charges
Humana agrees to pay $90 million to resolve allegations of overcharging in Medicare's prescription drug program. The settlement, announced today, stems from a whistleblower lawsuit filed by a former actuary.
Humana Inc. has reached a $90 million settlement in a whistleblower lawsuit, addressing allegations of overcharging the U.S. government for prescription drugs under the Medicare Part D program. The agreement, announced on August 16, 2024, marks a significant development in healthcare fraud litigation.
The case, initiated by Steven Scott, a former actuary at Humana, alleged that the company misrepresented its true costs to secure more favorable contracts with Medicare. This settlement is noteworthy as it represents the first of its kind involving an insurer accused of fraud in Medicare's prescription drug contracting process.
Medicare Part D, introduced in 2006, serves millions of Americans by providing prescription drug coverage. The program relies on private insurers like Humana to administer benefits, with contractors submitting bids for reimbursement based on the level of benefits they propose to offer.
Scott's lawsuit, filed under the False Claims Act in 2016, claimed that Humana overstated the benefits it would provide, effectively pocketing the difference between the stated and actual costs. The False Claims Act, dating back to 1863, allows whistleblowers to sue on behalf of the government and potentially receive a portion of any recovered funds.
While Humana has agreed to the settlement, the company maintains its innocence. A spokesperson stated:
"While we are confident in our position and expected to prevail at trial, we have made the decision to enter into a settlement agreement without admitting any wrongdoing to avoid the uncertainty, distraction, inconvenience, and expense of a lengthy jury trial."
This case highlights the ongoing challenges in managing healthcare costs and preventing fraud within the Medicare system. Medicare fraud costs taxpayers billions annually, making whistleblower actions crucial in identifying and addressing potential misconduct.
The settlement also underscores the significance of the False Claims Act as a tool for combating fraud. Since 1986, this legislation has helped the U.S. government recover over $70 billion, with whistleblowers potentially receiving between 15% to 30% of the recovered funds in successful cases.
As one of the largest health insurance companies in the United States, with revenues exceeding $90 billion in 2023, Humana's involvement in this case draws attention to the complexities of the Medicare Part D bidding process. This process, designed to promote competition and reduce costs, has been subject to numerous reforms since its inception to improve efficiency.
The resolution of this case may prompt increased scrutiny of Medicare Part D contracts and potentially lead to further reforms in the program's administration. As the healthcare landscape continues to evolve, the role of whistleblowers and the enforcement of the False Claims Act remain critical in safeguarding public funds and ensuring the integrity of government healthcare programs.
