Bloomberg News

Humana Can Sue Over Benefits as High Court Rebuffs Glaxo

April 15, 2013

The U.S. Supreme Court left intact a ruling that lets insurers including UnitedHealth Group Inc. (UNH:US) and Humana Inc. (HUM:US) sue to recoup benefits they pay under a government health-care program covering 13 million people.

The justices today rejected an appeal by a GlaxoSmithKline Plc (GSK:US) unit, which argued unsuccessfully that the Medicare Advantage program doesn’t give insurers the power to file lawsuits.

The dispute stems from Glaxo’s Avandia diabetes drug, a medicine that has been linked to heart attacks and strokes. Glaxo has paid as much as $2.3 billion in settlements with 40,000 people who took Avandia.

A Humana unit is suing Glaxo, saying that at least several dozen of those people were its Medicare Advantage customers.

Medicare Advantage is an alternative to standard Medicare, the federal health program that covers the elderly and disabled. Humana receives 66 percent of its revenue and 58 percent of its profit from Medicare Advantage, leading the industry, according to estimates by Cowen & Co. analysts.

With the standard Medicare program, the federal government has the ability to sue third parties who are responsible for a beneficiary’s illness or injury. Federal law lets the government collect double damages. Humana also would be eligible to collect double damages should it win its lawsuit.

In the Humana-Glaxo case, a Philadelphia-based federal appeals court ruled that Medicare Advantage insurers can file similar lawsuits.

The case is GlaxoSmithKline v. Humana Medical Plans, 12-690.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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Companies Mentioned

  • UNH
    (UnitedHealth Group Inc)
    • $97.9 USD
    • 1.00
    • 1.02%
  • HUM
    (Humana Inc)
    • $137.69 USD
    • -2.15
    • -1.56%
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