DOJ Continues Medicare Advantage Enforcement Focus with $541.5 Million Settlement

On August 26, 2026, the Department of Justice announced a $541.5 million settlement with a Florida-based provider group serving beneficiaries in the retirement community to resolve allegations that the group violated the False Claims Act by submitting invalid diagnosis codes as part of the Medicare Advantage (“MA”) program. The settlement is the next in DOJ’s intensified enforcement focus on the MA program, which we have previously covered here and here.

Under the MA program, the Centers for Medicare & Medicaid Services (“CMS”) pays Medicare Advantage Organizations (“MAOs”) capitated monthly amounts that are risk-adjusted upward for sicker beneficiaries. Those adjustments depend on diagnosis codes submitted by providers. The provider group here had arrangements with MAOs in which it was paid a percentage of what the MAOs received from CMS and thus had a direct financial benefit from higher risk scores, creating a structural incentive to capture as many diagnoses as possible.

The settlement resolves allegations that, from 2020 to 2024, the group submitted false diagnosis codes to MAOs and caused MAOs to submit false diagnosis codes to CMS, resulting in inflated payments from CMS to MAOs and the group. As alleged, the specific conduct at issue involved the group systematically adding diagnosis codes to patient medical records retroactively. Employees inserted additional diagnosis codes and sometimes additional clinical language purporting to document monitoring, evaluation, or treatment of those conditions months or even more than a year after the underlying patient visits. The group also had “sprints” in which employees edited records to add specific diagnosis codes, either without any amendment to the underlying patient file or by adding the code plus additional clinical language. None of these edits were initiated by the rendering provider. The government’s position was that the diagnosis codes were untimely and not provider-initiated, which made them invalid for MA risk adjustment purposes.

The government acknowledged that the group took steps that entitled it to cooperation credit. In late 2024, the group disclosed that it had submitted invalid diagnosis codes to multiple MAOs pursuant to the HHS-OIG’s Health Care Fraud Self-Disclosure Protocol. The group also cooperated with the government throughout its investigation.

The settlement comes in the context of a Chapter 11 bankruptcy petition filed by the group in the U.S. Bankruptcy Court for the Middle District of Florida in July 2025. In re Villages Health System, LLC, Case No. 6:25-bk-04156-LVV (Bankr. M.D. Fla.). The bankruptcy court approved the DOJ settlement.

Notably, DOJ also announced that the three MAOs to which the group submitted invalid diagnosis codes were returning overpayments to CMS that they had received as a result of the group’s conduct by deleting invalid codes and/or entering into agreements with the DOJ and CMS to return the funds.

A copy of the settlement agreement with the provider group can be found here. The settlement agreement with UnitedHealthcare is here, and the settlement agreement with Florida Blue is here.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.