A federal judge in the Northern District of Texas dismissed Humana Inc.’s lawsuit challenging the U.S. Department of Health and Human Services’ decision to lower the insurer’s star ratings for Medicare Advantage plans. The ruling leaves intact reductions that will slash Humana’s quality-based bonus payments, a revenue stream the company has said is worth billions of dollars and will weigh on 2026 earnings. The court setback triggered a sell-off across managed-care stocks. Humana fell about 2% in afternoon trading, while CVS Health slid 1.4% and UnitedHealth Group dropped 1%, putting UnitedHealth on course for its second-lowest close in more than five years. Humana had filed the suit in September 2023, arguing that the government’s methodology for calculating star ratings was arbitrary and capricious. By upholding the Department’s approach, the judge preserves a rating system that affects payments to all Medicare Advantage insurers and could influence how companies allocate resources to meet quality targets.