Humana to pay $45M to settle contract violation lawsuit

Humana expects to pay about $45 million to settle a five-year-old lawsuit in which five health systems claimed the insurer's military healthcare business breached agreements.

About 300 hospitals, including ones owned by the Sacred Heart Health System in Northwest Florida and South Alabama and Dallas-based Tenet Healthcare, accused Humana Military Healthcare Services of violating reimbursement agreements for non-surgical outpatient services, Reuters reported.

The lawsuit alleged that Humana broke its network agreements by providing reimbursement rates to doctors that were below contracted amounts, Goldman Sachs analyst Matthew Borsch said in a research note Monday, CBS News reported.

In a regulatory filing Monday with the Securities and Exchange Commission (SEC), Humana said it expects to spend the $45 million in this year's second quarter. Consequently, the insurer lowered its 2012 earnings outlook to $7.38 to $7.58 per share, down from its previous forecast of $7.55 to $7.75 per share, according to Fox Business.

However, because the $45 million settlement isn't an operating expense and won't reoccur, Borsch is keeping his forecast for 2012 operating earnings at $7.85 per share, CBS News noted.

To learn more:
- read Humana's SEC filing
- see the Fox Business article
- check out the CBS News article
- read the Reuters article

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