Humana Accused of Illegally Stopping Payments for Eligible Retirees: AI-Driven Denials Spark Class-Action Firestorm
Retirees recovering from strokes and falls are fighting back against Humana, alleging the Medicare Advantage giant uses flawed AI to illegally slash payments for essential rehab care. In a class-action lawsuit gaining steam, plaintiffs claim this “fraudulent scheme” leaves seniors stranded without support, pocketing billions in unspent premiums while patients suffer setbacks.
The Lawsuit Unfolds: AI Overrides Doctors, Denials Pile Up
A federal class-action suit, Barrows et al. v. Humana Inc., filed in December 2023 in the U.S. District Court for the Western District of Kentucky, accuses Humana of deploying its nH Predict AI tool to prematurely deny post-acute care claims for Medicare Advantage (MA) beneficiaries. On August 19, 2025, Judge Rebecca Grady Jennings ruled the case can proceed, rejecting Humana’s bid to dismiss for failure to exhaust administrative appeals.
Plaintiffs, including Sharon Merkley and Marijane Mangan—both elderly women hit with multiple denials after hospitalizations—argue the algorithm flags patients as “stable” after mere days in skilled nursing facilities, overriding clinicians’ assessments. Medicare rules allow up to 100 days of rehab post-three-day hospital stay, but Humana allegedly cuts off at 14 days or less, forcing premature discharges.
The suit contends Humana banks on low appeal rates—only 0.2% of denials are challenged—despite overturning 90% upon review. Merkley endured seven denials in 30 days for the same care, cycling through futile appeals. Plaintiffs seek damages, an injunction against the AI, and declare the practice violates the Medicare Act.
Background: Humana’s MA Dominance and AI’s Double Edge
Humana, with $106 billion in 2024 revenue, insures 6 million MA enrollees—privatized Medicare plans covering 32 million seniors nationwide. nH Predict, from Humana’s 2021 $2.1 billion naviHealth acquisition, predicts discharge needs but allegedly errs toward denials, disciplining staff who deviate.
This echoes industry scandals: UnitedHealth’s 2024 Labor Department suit for systematic ER denials, and Cigna’s PXDX algorithm batch-rejecting claims. A May 2025 DOJ complaint hit Humana alongside Aetna and Elevance for $100 million+ in kickbacks, steering away “less profitable” disabled seniors. MA denials hit 13%—double traditional Medicare’s—prompting a November 2024 congressional push for CMS oversight.
Expert Takes and Public Outrage: A ‘Windfall’ for Profits?
Attorneys hail the ruling as a breakthrough. “This exposes AI’s dangers in life-or-death decisions,” says a plaintiff lawyer, noting Humana’s appeal success rate masks systemic bias. KFF’s Juliette Cubanski warns algorithms prioritize profits, urging audits against Medicare guidelines.
Outrage floods social media. AARP surveys show 40% of MA users face improper denials, with X users venting: “Humana’s AI killed my mom’s recovery—greed over grandma!” Humana insists nH Predict complies with CMS and appeals work 80% of the time, but critics call it a “tiny fraction” ploy.
Stakes for U.S. Retirees: Billions in Denied Care, Family Burdens
This hits 65 million Medicare users hard, where MA covers over half—up from 13 million in 2009. Illicit denials cost seniors $10,000 monthly in out-of-pocket rehab, forcing 25% to skip treatment and worsening outcomes.
Economically, overpayments topped $12 billion in 2024, per MedPAC, inflating taxpayer bills. Lifestyle tolls include caregiver burnout for 53 million Americans and delayed recoveries straining families. Politically, it intensifies 2026 fights over privatization, with Biden-era CMS crackdowns looming. Technologically, it demands AI ethics regs like the 2025 Algorithmic Accountability Act.
Reckoning Ahead: A Turning Point for MA Accountability
Humana’s alleged illegal payment stops via AI for eligible retirees betray MA’s promise, denying vital care to profit from unappealed rejections. As Barrows v. Humana advances—potentially yielding billions in settlements—stricter CMS audits and congressional probes could reshape the program. For seniors and families, this lawsuit offers hope: Tech must heal, not harm, in America’s aging safety net.
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