April 19 (Bloomberg) -- Humana Inc., the second-biggest private provider of Medicare coverage, is no longer employing a law firm whose actions are being reviewed by a U.S. senator in connection with his probe into whether government information was leaked this month that sent insurers’ stock soaring.
Humana cut its connections with Greenberg Traurig LLP after learning of the review, according to Tom Noland, a spokesman for the Louisville, Kentucky-based company. The insurance carrier also has begun an internal investigation, Noland said yesterday in a telephone interview.
U.S. Senator Charles Grassley, an Iowa Republican, is reviewing whether an investor company, Height Analytics LLC, received inside information from a Greenberg Traurig employee before telling clients the afternoon of April 1 that officials would change plans and reduce a proposed rate cut for Medicare Advantage plans sold by private insurers. Height today terminated its relationship with the Greenberg firm, a person familiar with the decision said.
Grassley has also requested information from New York-based Greenberg Traurig about an e-mail one of its lobbyists, Mark Hayes, sent to a Height analyst on April 1 saying Medicare would change its decision.
Jill Perry, a spokeswoman for Greenberg Traurig, declined to comment today on the firm’s relationships with Height and Humana. On April 17, Perry said the law firm didn’t receive or share any “material non-public” information. Hayes also didn’t immediately return telephone messages or e-mails today seeking comment.
Shares of Humana and other insurers jumped in the last 20 minutes of the trading day after Height sent an e-mail to clients predicting the rate cut would be reduced. Medicare officially announced the decision about 45 minutes later.
Humana rose 1.2 percent to $73.05 at the close of New York trading today. The shares have declined 19 percent in the past 12 months.
Noland said Humana had no advance notice of Medicare’s decision. The internal probe is meant to determine if Greenberg Traurig “in any way hurt Humana’s interests,” he said. It was unclear how long the investigation may take or if its results would be shared with Grassley, he said.
WellCare Health Plans Inc., another Medicare insurer, also employs the law firm. The Tampa, Florida-based carrier is “following Senator Grassley’s review of Greenberg Traurig closely, and we are evaluating potential next steps regarding our future relationship with the firm,” Jack Maurer, a spokesman, said in an e-mail.
The Centers for Medicare and Medicaid Services, which oversees the insurance program, has also said it’s reviewing the situation.
Height did nothing wrong, its managing partner, Andrew Parmentier, said in a statement on April 17 to the firm’s clients. Its report was based on “careful and close analysis” and not inside information, he said.
Height sent Greenberg a letter today ending their business relationship, a person familiar with Height’s decision said. The person isn’t authorized to discuss the relationship between the firms and asked not to be identified. Parmentier declined to comment on the move in an e-mail.
Height hired Greenberg in November to advise the firm’s analysts on “policy and regulatory implications of developments at the federal level affecting categories of providers and plans,” according to a letter outlining the relationship obtained by Bloomberg. Hayes handled the deal for Greenberg and said he would bill Height $595 per hour for his services.
Hayes didn’t bill Height for his advice on the Medicare Advantage decision and wasn’t paid for it, the person said.
Humana’s actions were reported earlier by the Wall Street Journal.
UnitedHealth Group Inc., based in Minnetonka, Minnesota, is the largest private provider of Medicare coverage.
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