Humana settles False Claims Act lawsuit for $12.5M

Posted February 8th, 2021.

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By Chris Larson

Humana Inc. has settled a federal lawsuit which alleged that a deal that it made violated the U.S. False Claims Act.

The Feb. 5 settlement is between Chicago resident Crystal Derrick and the defendants — Humana Inc. and its subsidiary Humana Pharmacy Inc. and Roche Diagnostics Corp. and Roche Diabetes Care Inc. This case had been before U.S. District Court for the Northern District of Illinois Mary M. Rowland.

The civil complaint, which was filed in June 2014, alleges that the deal in question gave Roche inappropriate access to Humana’s insurance plan participants and induced false claims.

The defendants will pay the federal government $12.5 million, about $3.6 million of which will go to Derrick, one court document states. Qui tam suits such as this allow people to file lawsuits on behalf of the federal government. The government declined to intervene in the case, meaning it was not a defendant. However, the U.S. Attorney’s Office of the Northern District of Illinois has signed off on the settlement.

In short, the suit alleged that the Roche entities used the forgiveness of rebate overpayments made to Humana to get back Roche diabetes products on Humana formularies. Older documents in the suit state that Roche overpaid Humana $45 million in rebates. The complaint alleges that Roche “recognized an opportunity to be placed back on Humana’s formularies.”

The settlement is the first False Claims Act settlement arising from a Medicare Advantage organization accepting alleged kickbacks from a pharmaceutical company, according to a news release from New York City-based Sanford Heisler Sharp LLP, the firm that represented Derrick.

Humana’s core business is administering Medicare Advantage plans, a private version of the federal government’s Medicare program. The federal government partners with and pays private companies to provide benefits to American elders and people suffering specific diseases.

“Our client had the courage to hold [the] defendants accountable, at great personal risk. We are honored to have represented her and hope that others will continue to demonstrate similar courage and initiative,” Kevin Sharp, managing partner of the firm’s Nashville office, said in a release.

Data from the Kaiser Family Foundation shows that Humana holds the second largest market share of Medicare Advantage enrollments, covering about 18% of Americans that received coverage through the program.

Representatives of Roche and Humana have not yet responded to requests for comment. This story may be updated.

Humana posted $77.2 billion in revenue in 2020, an increase of 19% from the year before. The company also garnered $3.4 billion in operating income, according to its latest financial filings with the Securities and Exchange Commission.

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