United Airlines, Inc. agreed to pay a record $7,9 million settlement with the Federal Aviation Administration (FAA) for “unlawful, fraudulent and willful conduct related to the falsification of product and service information” in a settlement announced Tuesday.
United’s alleged misconduct included misleading or intentionally misleading customers about its Medicare Advantage plans, falsifying prescription drug data to cover costs, and making false claims about Medicare Advantage reimbursement rates, according to the FAA.
United will also pay $2.6 million to the Federal Trade Commission (FTC) and $1.5 million to a state attorney general for civil rights violations, as well as $250,000 in penalties and interest.
In a statement, the airline said it “apologizes unreservedly” for any harm caused to customers and employees, and that it “has taken full responsibility for the actions that it took.”
The FAA’s announcement on Tuesday was the result of a complaint from the Consumer Product Safety Commission (CPSC), which was investigating the company’s Medicare Advantage program.
In the settlement, the agency alleged that United, via its Medicare-related pharmacy service provider, used an “inflated” Medicare Advantage prescription drug price and other inaccuracies to push Medicare Advantage pharmacies to sell its cheaper drugs.
The company’s CEO, Oscar Munoz, said in a statement that the airline has “fully cooperated with the investigation.”
He said that the company is “reviewing our position on Medicare Advantage and our business in general.”
Munoz added that the FAA’s investigation was “deeply disturbing and requires a thorough investigation into the conduct of United’s employees, suppliers, and the marketplace, and we have taken significant actions to address these issues.”
United was previously fined $25 million in 2016 and 2017 for similar Medicare-type price-fixing claims.
The agency found that Munoz’s company, United Parcel Service, engaged in “unethical” practices that caused Medicare Advantage to artificially inflate its drug costs, but the airline is appealing the findings.
In 2018, the Federal Communications Commission (FCA) found that United’s Medicare-like drug pricing violated the Federal Food, Drug, and Cosmetic Act.
United is currently subject to a lawsuit brought by the FTC, which accused the company of “knowingly and willfully” violating the Federal Acquisition Regulation (FAR).
The FAA settlement comes as Congress prepares to consider a major rewrite of the FAA, which has become a target of political attacks from conservatives and a target for regulators who are wary of allowing the agency to be outsourced.
The FAA will likely be reauthorized in December, but some Democrats and some Republicans have said they will oppose the legislation, arguing that the agency has too many restrictions on its power to regulate.