Humana has been ordered to pay over $32 million in legal fees following its $90 million settlement in a federal False Claims Act case. The settlement resolved allegations that Humana inflated bids submitted to the Centers for Medicare & Medicaid Services, leading to significant overcharges to the government.
The lawsuit, which started in 2016, accused Humana of deliberately overstating projected costs between 2011 and 2017 to secure better contract terms. While Humana did not admit any wrongdoing, it agreed to the settlement to avoid the costs and uncertainties of a lengthy legal battle.
A U.S. District Judge in Louisville, Kentucky, recently ruled that Humana must cover attorneys’ fees for whistleblower Steven Scott, a former company actuary whose claims led to the case. Scott, represented by law firms Kellogg Hansen and Phillips & Cohen, received nearly $26.1 million, about 29% of the settlement. The court approved additional fees beyond the $10.44 million Scott had already paid, but rejected a larger fee request, citing unreasonably high rates for the region.
This ruling comes at a critical moment as the False Claims Act’s whistleblower provisions face legal challenges. Last year, a Florida judge ruled that private citizens suing on the government’s behalf may be improperly exercising executive authority. The issue is now before the 11th U.S. Circuit Court of Appeals, with arguments expected soon.
The outcome could significantly affect not just health insurers but all businesses that work with federal programs. In 2023 alone, whistleblowers filed nearly a thousand lawsuits under this law, resulting in $2.4 billion in recoveries.
Humana’s case highlights the risks health insurers face in dealing with federal reimbursement programs amid increasing scrutiny. Similar challenges are hitting others in the industry, like Omnicare, a CVS Health unit, which was ordered to pay nearly $949 million for alleged billing fraud and has since filed for bankruptcy.
Whether whistleblower lawsuits continue as they are or face new limits, Humana’s recent legal costs show the high stakes involved. For now, the whistleblower’s attorneys have secured a major payout, while questions about the future of these cases remain open.