One of the country’s largest health insurance companies just cut ties with one of its law firms.
Humana Inc. fired Greenberg Traurig after learning that the firm is under investigation for leaking inside information concerning a significant change in government health care policy. The policy change, announced April 1, is related to a Medicare program for the elderly and disabled and will save billions of dollars for private insurance companies such as Humana.
U.S. Senator Charles Grassley, R-Iowa, is reviewing whether a Greenberg Traurig employee shared inside information about the policy change with the investor company Height Analytics, which sent out an alert to clients about the change before regulators announced it. The early alert led to a jump in shares of Humana and other health insurers.
According to the Wall Street Journal, Humana fired Greenberg Traurig after learning of its relationship with Height Securities. Humana also has launched an internal investigation to determine whether its “interests were harmed” by the tie between a Humana-employed outside lobbyist and Height Analytics. Humana says it did not violate any insider-trading laws because it did not receive advance word of the policy change.
UPDATE: Greenberg Traurig sent the following statement to InsideCounsel in response to this story:
We have concluded that providing government relations services to an entity in the 'political intelligence' area may lead to misunderstanding and unintended use of those services, even when compliant with legal and ethical standards. Height is no longer a client and we will not represent such firms in the future.
The firm and its shareholders had no financial connection with Height's activities and Height has acknowledged using a variety of sources before issuing its alert. We have found no information that any of our shareholders had access to any material confidential government information.
We will continue to cooperate with government inquiries related to Height's alert, subject to our ethical obligations.
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