On August 16, 2024, the plaintiff’s law firm Phillips & Cohen announced that health insurance giant Humana agreed to pay $90 Million to settle a qui tam whistleblower lawsuit filed under the federal False Claims Act (FCA).
According to the law firm’s press release, the whistleblower complaint alleged that Humana submitted fraudulent bids to the Centers for Medicare and Medicaid Services (CMS) for “lucrative Medicare Pard D prescription drug contracts . . . significantly overcharging the government.” The press release goes on to say that this is “the first case of its kind to resolve allegations of fraud in the Part D contracting process.”
Under Medicare Part D, CMS contracts with private insurance companies like Humana to cover prescription drug benefits for Medicare enrollees. Federal law requires those insurance companies to offer plans that cover a minimum required portion of drug costs, with Medicare and the beneficiary covering the rest. Part D contractors are required to submit annual bids in which they report the benefits they propose to cover and confirm that those benefits meet Part D’s minimum coverage level. The whistleblower complaint filed against Humana alleged that “Humana committed to providing the required level of coverage, but in fact planned to provide less, with the government and beneficiaries unknowingly picking up more than their share.”
According to one of the Plaintiff’s lawyers, 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.”
The whistleblower complaint was filed by Steven Scott, a former actuary for Humana. After an investigation, the DOJ declined to “intervene” in the case, thereby allowing Mr. Scott to pursue the case on his own. According to the press release, the case settled “just before the start of trial.” Although the press release does not say how much Mr. Scott will receive as part of the settlement, the typical minimum Relator share for non-intevened cases is 25%.
The False Claims Act is a powerful tool, imposing treble damages and massive per-claim penalties. In order to incentivize potential whistleblowers–known as “Relators”–the FCA provides that a Relator is entitled to between 15% and 30% of the eventual recovery.
If you need assistance in connection with a False Claims Act matter, please contact us today.