Here at The D&O Diary, our job is to watch for emerging trends in corporate and securities litigation. There is plenty to watch. Because we are always so attentive to what is new, it sometimes surprises us when a development appears that reflects an old or even seemingly played-out trend. That was our reaction to seeing the new COVID-related complaint filed this week against the health Insurer Humana, in which the plaintiff alleges that the company misled investors about the company’s rising costs associated with increased patient utilization rates due to post-pandemic pent-up demand. It is, in fact, a little surprising that even now, more than four years after the coronavirus first emerged in the U.S., COVID-related lawsuits are still being filed. A copy of the Humana complaint can be found here.


Humana is health insurance company that provides medical benefit plans. In July 2022, the company announced that it was experiencing better than expected medical cost trends. According to the complaint, the company rejected suggestions that pandemic-related pent-up demand could later negatively impact patient utilization rates and profitability.

On June 13, 2023, UnitedHealth Group, one of Humana’s competitors reported that it was seeing higher levels of patient activity and suggested that higher patient utilization rates were due to pent-up demand or delayed demand being satisfied. Given the similarities of the two companies businesses, and given the likelihood that Humana was also experiencing increased utilization due to pent-up demand, Humana’s stock declined on the UnitedHealth Group announcement.

Three days later, on June 16, 2023, Humana announced that it was also seeing higher than anticipated utilization trends. While the company acknowledged that it expected the increase utilization to continue for the remainder of the year, it also reconfirmed its benefits expense ratio guidance and profitability projections. In subsequent announcements during 2023, the company continued to acknowledge increased medical costs associated with higher utilization rates. In these later disclosures, the company increased its benefits expense ratio guidance, but still continued to affirm its earnings per share guidance.

On January 18, 2024, the company preliminarily announced its financial results for the fourth quarter and full year. Among other things, it disclosed that its benefits expense ratio had finished higher than its prior projections, and also disclosed that its EPS for 2023 would be more than $2 below the company’s November 2023 projection. The company’s share price declined about 8% on this news.

Finally, on January 25, 2024, the company announced that it had experienced a loss for the fourth quarter of 2023 and that it expected that the higher level of medical costs would persist for all of 2024. The company also substantially lowered its EPS projection for 2024. The company’s share price declined a further 12% on this news.

The Lawsuit

On June 3, 2024, a plaintiff shareholder filed a securities class action lawsuit in the District of Delaware against Humana and certain of its directors and officers. The complaint purports to be filed on behalf of investors who purchased the company’s securities between July 27, 2022, and January 24, 2024.

The complaint alleges that during the class period, the defendants misled investors as they “downplayed pressures on the company’s adjusted EPS resulting from increased medical costs associated with pend-up demand for healthcare procedures (especially as COVID concerns abated) which, contrary to the company’s assurances, resulted in increased utilization rates and costs.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks to recover damages on behalf of the class.


The COVID-related securities litigation filing trend has proven to be more durable than I anticipated. My expectation was that as the pandemic subsided and business activities returned to normal, the COVID-related securities suit filings would end as well. It has turned out somewhat differently than I expected; by my count, this new lawsuit against Humana is seventh COVID-related securities lawsuit to be filed this year.

Why have these COVID-related filings persisted (albeit at lower levels than was initially the case at the outset of the pandemic)? There are a least two factors that I underappreciated that explain why these suits are continuing to be filed. The first is that the pandemic’s disruptive effects were far more pervasive and far more extensive than I appreciated. Here, the pandemic significantly altered a fundamental component of this company’s business model – that is, the extent to which patients were utilizing medical services.

The other thing I failed to appreciate the extent to which the very return to normal would affect many companies’ business operations and financial results. Even as things returned to normal, the reverberations from the pandemic’s disruption continued to ripple through the economy, affecting consumer behavior and other economic activity. Sooner or later, all of these aftereffects will finally have played out. I assumed it would be sooner, but it has turned out to be later.

In any event, by my count, this lawsuit is the 78th COVID-related securities lawsuit to be filed since the initial coronavirus outbreak in the U.S. in March 2020. As noted above, this lawsuit is the seventh COVID-related suit to be filed so far this year (compared to nine for all of 2023).

New litigation trends are of course always interesting. But it also interesting to see how already well-developed trends extend, continue, and evolve.

And Speaking of Humana: Coincidentally, just after reviewing this new securities class action complaint against Humana, I happened to read Dan Aronowitz’s May 31, 2024 post on the The Fid Guru Blog, in which Dan explores in detail the court’s award of summary judgment to Humana in an ERISA 401(k) excessive fees lawsuit. Dan does an excellent job of explaining that while Humana was successful in obtaining summary judgment, the case should have been disposed of at the initial pleading stage. Humana was able to show that it had employed best practices in negotiating its fees yet it still had to endure years of litigation and incur millions of dollars in defense fees for a lawsuit that had no merit, as the court finally concluded at the end. Like so many of Dan’s articles, this post is through and compelling. I highly recommend it.