Humana Faces Investor Probe Over Alleged Medicare Kickback Scheme: What Investors Need to Know

The Pomerantz Law Firm has launched an investigation into potential securities fraud and unlawful practices by Humana Inc. (NYSE: HUM), following a U.S. Department of Justice (DOJ) lawsuit that accused the company of orchestrating a kickback scheme to sway Medicare Advantage enrollments. This development marks a significant risk for investors, who now face scrutiny over whether Humana misled the market about its compliance with federal regulations.

The Allegations: A Scheme Spanning Decades

The DOJ’s May 1, 2025, complaint under the False Claims Act accuses Humana and its affiliated brokers of offering illegal kickbacks to brokers totaling hundreds of millions of dollars between 2016 and 2021. The scheme, according to the lawsuit, involved structuring payments to incentivize brokers to steer Medicare beneficiaries into Humana’s plans. Such practices are alleged to violate federal law by improperly influencing patient enrollment decisions, which could lead to false or fraudulent claims submitted to the U.S. government.

The False Claims Act penalties are severe: companies found liable can be required to pay up to three times the government’s losses plus civil fines of up to $25,000 per false claim. For a company like Humana, which derives roughly 80% of its revenue from Medicare Advantage plans, the financial and reputational stakes are enormous.

Stock Price Impact and Investor Concerns

The DOJ’s announcement sent Humana’s stock plummeting by 2.36%, closing at $256.04 on May 1—a stark reversal for a stock that had risen 24% year-to-date prior to the news.

The Pomerantz investigation centers on whether Humana’s public disclosures during the kickback period adequately reflected the legal and financial risks of these activities. If the firm proves that Humana misled investors—through either false statements or material omissions—shareholders who purchased the stock during the alleged misconduct could qualify for compensation.

Legal and Regulatory Context

The False Claims Act has become a powerful tool for the DOJ to combat healthcare fraud. In 2023 alone, the department recovered over $2.8 billion through these cases, with roughly 80% of those recoveries tied to healthcare-related fraud. For Humana, the allegations could open the door to not just civil penalties but also criminal investigations if evidence of intentional wrongdoing surfaces.

Class Action Implications for Investors

Pomerantz, a veteran securities litigation firm with over 85 years of history, is urging investors who purchased HUM shares between 2016 and 2021 to contact them to discuss joining the class action. The firm’s record includes recovering hundreds of millions for investors in past cases, though outcomes are never guaranteed.

Investors should note that class actions often take years to resolve. A successful case could hinge on proving that Humana’s executives knew about the kickbacks and failed to disclose the risks. Meanwhile, Humana has stated it “vigorously disputes the allegations,” asserting its compliance with all laws.

Conclusion: Risks and Uncertainties Ahead

Humana’s legal and financial exposure is significant. If the DOJ’s claims hold, the company could face penalties exceeding $1 billion—potentially eroding its market capitalization, which stood at roughly $50 billion as of May 2025. For investors, the key questions are: How much prior knowledge did Humana’s leadership have of the kickbacks? And did the company’s public statements mask these risks?

The stock’s recent volatility underscores the market’s skepticism. Even if Humana ultimately prevails in court, the reputational damage and ongoing legal costs could weigh on its ability to grow its Medicare Advantage business—a core pillar of its strategy. Investors holding HUM should monitor developments closely, as this case could reshape the company’s trajectory and shareholder value for years to come.

In the end, the Humana saga serves as a cautionary tale about the risks of aggressive sales tactics in the healthcare sector—and the lengths regulators will go to enforce compliance with federal laws. For now, investors are left in limbo, awaiting clarity on whether the company’s past actions will trigger a reckoning.