Law firm Phillips & Cohen said that healthcare insurance company Humana has agreed to pay $90m to settle False Claims Act Case alleging Medicare Part D Prescription Drug Program fraud.
The whistleblower lawsuit was filed by Phillips & Cohen.
The lawsuit claims that from 2011 to 2017, Humana submitted fraudulent bids to the Centers for Medicare & Medicaid Services (CMS) for Medicare Part D contracts, leading to substantial overcharges to the government.
The case is the first of its kind to address fraud allegations in the Part D contracting process.
Medicare Part D is the government’s optional prescription drug programme, through which CMS contracts with private insurance companies to provide prescription drug benefits to Medicare enrollees.
These insurance companies are legally required to offer plans that cover at least a minimum portion of drug costs, with the remaining costs covered by the government and Medicare beneficiaries.
Each year, CMS requires these companies to submit bids outlining the benefits they plan to offer and to verify that these benefits meet the minimum coverage requirements of Part D.
The complaint in this case alleged that Humana promised to provide the required level of coverage but intended to deliver less. This resulted in the government and beneficiaries unknowingly bearing more of the costs.
Phillips & Cohen partner and whistleblower attorney Claire Sylvia said: “The Part D programme 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.
“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.’”
Steven Scott, who brought the lawsuit in 2016, previously served as an actuary at Humana.
Scott claimed that Humana accurately predicted the costs of its Part D Walmart Plan internally each year but used different, unsupported assumptions for its government bids.
According to the complaint, the insurance firm’s internal predictions were correct, but the assumptions used in bids were often significantly off, thus benefiting the company.
