Humana lawsuit over denied payments, the first of its kind, moves forward

Gavel court room lawsuit judge
A federal judge has ruled that Prime Healthcare's lawsuit against Humana can move forward. (Pixabay)

A federal lawsuit against Humana alleging breach of contract is moving forward in what could set a new precedent for providers.

A federal judge denied Humana's motion to dismiss a lawsuit by California-based Prime Healthcare that claims the insurer denied or underpaid for services rendered to Medicare Advantage patients.

Humana argued that in-network providers cannot directly sue them for breach of contract as they are preempted from doing so by the Medicare Act.

Product Spotlight

Top-Rated Mobile App for Health Insurance Members

Zipari’s Mobile App is the smarter, easier, and better way for payers to engage members on the go and directly in the palm of their hands. Members can find the right doctors, receive notifications, send messages, view claims, track spending, talk to a nurse, download ID card, and more. It’s ready to install and launch in a few months.

However, Judge Virginia Phillips found this interpretation of the law to be overly broad.

The decision is the first time a federal court has recognized that providers can challenge private contracts with MA insurers, Damaris Medina, an attorney with Buchalter who represented Prime in the lawsuit, told FierceHealthcare.

RELATED: Federal judge dismisses UnitedHealth fraud suit over in-home visits, Walmart gift cards

"This decision confirms that contracted providers do not have appeal rights through the Medicare Appeals process and therefore do not have to exhaust such a process before suing; and that they are not preempted by the Medicare Act from suing a Medicare Advantage Plan for breach of contract," the firm said in an emailed statement to FierceHealthcare.

Medina added that that the ruling will open the door for other providers to directly sue MA insurers for breach of contract, which many have tried and failed.

Humana did not immediately respond to FierceHealthcare's request for comment.

Suggested Articles

The proposed change was tucked into a proposed payment rule released by the Centers for Medicare & Medicaid Services on Monday.

DOJ filed suit against Cigna on Tuesday, alleging that the insurer used a primary care program launched in MA to boost its risk scores.

Missouri became the latest state to OK a Medicaid expansion through a ballot measure, winning the approval of 53.2% of voters.