Humana 2014 Annual Report Download - page 125

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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related to one of these matters captioned United States of America ex rel. Olivia Graves v. Plaza Medical Centers, et
al., and the Court ordered the complaint unsealed. Subsequently, the individual plaintiff amended the complaint and
served the Company, opting to continue to pursue the action. After the Court dismissed her complaint, the individual
plaintiff filed a second amended complaint on October 23, 2014, which all defendants answered and moved to dismiss,
which motions are pending with the Court. We continue to cooperate with and respond to information requests from
the U.S. Attorney’s office. These matters could result in additional qui tam litigation.
Recently, the Civil Division of the United States Department of Justice provided us with an information request,
separate from but related to the Plaza Medical matter, concerning our Medicare Part C risk adjustment practices. The
request relates to our oversight and submission of risk adjustment data generated by providers in our Medicare Advantage
network, including the providers identified in the Plaza Medical matter, as well as to our business and compliance
practices related to risk adjustment data generated by our providers and by us, including medical record reviews
conducted as part of our data and payment accuracy compliance efforts, the use of health and well-being assessments,
and our fraud detection efforts. We continue to cooperate with and voluntarily respond to the information requests from
the Department of Justice and the U.S. Attorney’s Office.
Other Lawsuits and Regulatory Matters
Our current and past business practices are subject to review or other investigations by various state insurance and
health care regulatory authorities and other state and federal regulatory authorities. These authorities regularly scrutinize
the business practices of health insurance, health care delivery and benefits companies. These reviews focus on numerous
facets of our business, including claims payment practices, provider contracting, risk adjustment, competitive practices,
commission payments, privacy issues, utilization management practices, pharmacy benefits, access to care, and sales
practices, among others. Some of these reviews have historically resulted in fines imposed on us and some have required
changes to some of our practices. We continue to be subject to these reviews, which could result in additional fines or
other sanctions being imposed on us or additional changes in some of our practices.
We also are involved in various other lawsuits that arise, for the most part, in the ordinary course of our business
operations, certain of which may be styled as class-action lawsuits. Among other matters, this litigation may include
employment matters, claims of medical malpractice, bad faith, nonacceptance or termination of providers,
anticompetitive practices, improper rate setting, provider contract rate disputes, failure to disclose network discounts
and various other provider arrangements, general contractual matters, intellectual property matters, and challenges to
subrogation practices. For example, a number of hospitals and other providers have asserted that, under their network
provider contracts, we are not entitled to reduce Medicare Advantage payments to these providers in connection with
changes in Medicare payment systems and in accordance with the Balanced Budget and Emergency Deficit Control
Act of 1985, as amended (commonly referred to as “sequestration”). Those challenges have led and could lead to
arbitration demands or other litigation. Also, under state guaranty assessment laws, we may be assessed (up to prescribed
limits) for certain obligations to the policyholders and claimants of insolvent insurance companies that write the same
line or lines of business as we do.
As a government contractor, we may also be subject to qui tam litigation brought by individuals who seek to sue
on behalf of the government, alleging that the government contractor submitted false claims to the government including,
among other allegations, those resulting from coding and review practices under the Medicare risk adjustment model.
Qui tam litigation is filed under seal to allow the government an opportunity to investigate and to decide if it wishes
to intervene and assume control of the litigation. If the government does not intervene, the lawsuit is unsealed, and the
individual may continue to prosecute the action on his or her own, on behalf of the government. We also are subject to
other allegations of non-performance of contractual obligations to providers, members, and others, including failure
to properly pay claims, improper policy terminations, challenges to our implementation of the Medicare Part D
prescription drug program and other litigation.
A limited number of the claims asserted against us are subject to insurance coverage. Personal injury claims, claims
for extracontractual damages, care delivery malpractice, and claims arising from medical benefit denials are covered
by insurance from our wholly owned captive insurance subsidiary and excess carriers, except to the extent that claimants
seek punitive damages, which may not be covered by insurance in certain states in which insurance coverage for punitive