Humana Will Pay $90 Million in Medicare Drug Fraud Settlement

Humana Inc. agreed to pay $90 million to the federal government to settle a whistleblower’s False Claims Act suit alleging that the company submitted fraudulent bids for Medicare Part D prescription drug contracts.

Whistleblower Steven Scott alleged that, since 2011, Humana began offering its Medicare Part D prescription drug plan, known as the basic Walmart Plan, and “knowingly provided benefits under that plan that have been significantly less valuable than Humana promised in its bids,” according to Scott’s suit filed in 2016 in the US District Court for the Central District of California.

Counsel for Scott, Phillips & Cohen LLP, announced the settlement in a Friday news release. The firm was touting it as the first settlement of its kind.

This suit was among several in 2016, including suits against Humana, United Health, Cigna Corp., and Optum RX Inc., accusing health insurers of secretly overcharging for prescription drugs. The suits cited an investigation into health insurance clawbacks that New Orleans television station Fox 8 began airing in May 2016.

Medicare Part D is the government’s voluntary prescription program under which the Centers for Medicare & Medicaid Services contracts with private insurance companies to cover prescription drug benefits for people enrolled in Medicare, the announcement said.

Scott, a former actuary for Humana , alleged that Humana committed to providing the required level of drug cost coverage, but in fact planned to provide less, with the government and beneficiaries unknowingly paying more than their proper share, the announcement said.

The suit covered alleged conduct from 2011 to 2017, the announcement said.

“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 Phillips & Cohen attorney Claire Sylvia.

“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,’” Sylvia said.

Counsel for Humana didn’t immediately respond to a request for comment.

O’Melveny and Myers LLP represents Humana. Kellogg, Hansen, Todd, Figel & Frederick PLLC also represents Scott.

The case is United States ex rel. Scott v. Humana Inc., C.D. Cal., No. 16-cv-401, 8/16/24.