Humana has agreed to pay $90 million to settle a False Claims Act case related to its Medicare Part D contracts, according to the attorneys representing the whistleblower in the case.
The lawsuit, filed by Phillips & Cohen, alleges the insurer submitted bids to the federal government that were fraudulent to secure Part D contracts between 2011 and 2017. This led to significant overcharges to the Centers for Medicare & Medicaid Services, the lawsuit claims.
Phillips & Cohen said in a press release that this is the "first case of its kind to resolve allegations of fraud in the Part D contracting process."
Insurers are required by law to cover a minimum amount for prescription drugs under Part D, with the rest covered by the government and the beneficiaries' out-of-pocket costs. In the bidding process, payers outline what they plan to cover and ensure those benefits meet that standard.
The lawsuit alleges that Humana said it would offer the mandated level of coverage in its bids, but, behind the scenes, planned to pay less, which led to both the feds and enrollees "unknowingly picking up more than their share."
The whistleblower, a former Humana actuary named Steven Scott, alleged that the company made accurate predictions internally for what costs would be in its Part D program that's co-branded with Walmart. However, it based bids on other figures that were only used in this process, Scott claimed.
The company allegedly dropped the practice when it received a civil investigation demand from the government.
"The Part D program depends on insurance companies paying their minimum share of drug costs. 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," said Claire Sylvia, a whistleblower attorney and Phillips & Cohen partner who filed the case. "Our complaint detailed how the government and beneficiaries were left with paying tens of millions of dollars more than Congress intended for years, while Humana pocketed the money as 'savings.'"
A federal district court declined to offer additional time to investigate, and the Justice Department then elected not to intervene. The case was set to proceed to trial, though a settlement was reached before the trial began.