Humana has consented to resolve a lawsuit filed by a whistleblower concerning the submission of fraudulent bids by the health insurer to the Centers for Medicare and Medicaid Services (CMS) for Medicare Part D contracts between 2011 and 2017. The Medicare Part D program, which covers the prescription drugs of more than 54 million recipients of Medicare, helps minimize medication expenses and protects against soaring costs. The U.S. government welcomes bids from private insurance companies to handle Part D benefits, but they need to pay a minimum part of medication fees. Insurance companies send yearly bids to the CMS, explaining their suggested benefits and validating conformity to the government’s minimum requirements.
In 2016, whistleblower Steven Scott, an ex-actuary at Humana, submitted a lawsuit claiming the company committed a violation of the False Claims Act. Scott stated that Humana blew up costs to get higher-paying contracts and did not give the required amount of coverage. In 7 years, Humana purportedly overcharged the government. The company saved hundreds of millions of dollars, whereas Medicare beneficiaries lost by paying more for their prescription drugs, which is not the desired outcome by Congress. Scott additionally claimed that Humana kept two sets of financial books, a practice that stopped in 2017 because the government opened up an investigation. Nonetheless, the Department of Justice later stopped the investigation and opted not to get involved in Scott’s lawsuit.
Just before the start of the jury trial, Humana and Scott decided to resolve the lawsuit. Humana did not admit any wrongdoing and mentioned that its doctor-prescribed drugs program complies with all regulations and conditions (with HIPAA certification) and that the program’s actuarial presumptions were reasonable. Humana opted to resolve and steer clear of the uncertainty and cost of a prolonged jury trial.
Phillips & Cohen is Scott’s legal representative, a law firm working in whistleblower lawsuits, which mentioned that this was the first case to deal with accusations of fraud in the Part D contracting procedure. Edward Arens of Phillips & Cohen said that Humana allegedly kept two sets of books – one set is organized by its actuaries for the bids sent to the government and one internal set showing Humana’s actual expected expenditures, which was used for all business dealings, which include internal budgeting. This practice would have stayed undetectable if not for our brave client, Steven Scott, moving forward to expose it.
