In recent weeks, the U.S. Department of Justice (DOJ) has announced three settlements of False Claims Act (FCA) matters—including a $541.5 million settlement just last week— against healthcare providers partnering with Medicare Advantage plans for allegedly causing the submission of false diagnosis codes.  In two of the settlements, the settling parties received credit for self-disclosure and cooperation with DOJ.  These settlements underscore DOJ’s focus on fraud by healthcare providers and risk-sharing payment arrangements in the Medicare Advantage program, as well as the potential benefits to enforcement targets of self-disclosure and cooperation.

Background

Medicare Advantage, also known as Medicare Part C, gives seniors the option to receive Medicare benefits by enrolling in private healthcare plans.  The Centers for Medicare & Medicaid Services (CMS), which oversees the Medicare program, pays Medicare Advantage plans a fixed amount each month for each enrolled senior.  CMS then adjusts that amount to account for the health status and demographic characteristics of a given plan’s enrolled population—a process known as “risk adjustment.”  For enrollees with more severe health conditions based on the diagnosis codes reported by their providers—who have higher “risk scores”—CMS pays the plans more to cover the higher expected costs of treatment.  The plans, in turn, pay healthcare providers for the items and services they provide to their members out of the revenue they receive from CMS.

 In both Medicare Advantage and traditional Medicare (also known as Medicare Parts A and B), CMS has encouraged the use of value-based care arrangements, which tie payments to patient outcomes or the cost of services delivered rather than to the volume of those services.  In the Medicare Advantage context, these arrangements can include risk-sharing that aligns incentives between Medicare Advantage plans and the providers who partner with those plans to offer better care and lower costs.  But, as discussed below, risk-sharing arrangements may also draw enforcement scrutiny if they result in knowingly reporting inaccurate diagnosis codes that trigger higher payments both from CMS to the plan and from the plan to the provider.

DOJ’s Justice Manual, § 4-4.112, provides that the Department may credit a defendant’s voluntary disclosure, cooperation, or remediation efforts by reducing the amount of monetary penalties or damages it seeks.  The Manual describes in detail the factors that DOJ may consider, including the timeliness of the target’s disclosure or cooperation; the truthfulness, completeness, and reliability of information provided; the extent of the assistance; and its usefulness to the government.

Settlements

1. The Villages Health System LLC

On August 26, 2026, DOJ announced that The Villages Health System LLC (TVH), a Florida healthcare provider group, agreed to pay $541.5 million to resolve self-disclosed allegations that it caused the submission of false diagnosis codes to multiple Medicare Advantage plans, resulting in increased payments from CMS.  As alleged by DOJ, the submitted diagnosis codes were invalid because they were not adequately supported in the medical records or were based on amended medical records that had not been initiated or approved by the rendering providers.  Three plans that had benefitted from the invalid codes also agreed to return related overpayments to CMS.  In its press release, DOJ noted the financial arrangement between TVH and the Medicare Advantage plans at issue.  The press release explained that at times Medicare Advantage plans “agree to pay provider groups like TVH a set percentage of what the [plan] receives from CMS” and emphasized that the increased payments caused by “TVH’s knowing submission of the unsupported and/or undocumented codes ... inflated the [plans’] payments to TVH.” 

DOJ’s press release also highlighted TVH’s extensive cooperation with the government.  TVH made a voluntary submission in 2024 of the invalid diagnosis codes under the Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Health Care Fraud Self-Disclosure Protocol.  TVH also “promptly took remedial actions,” provided the government with a “detailed and thorough written disclosure,” and “cooperated with the government throughout its investigation.”  An HHS-OIG representative remarked in the press release that TVH’s use of the self-disclosure protocol and cooperation “were important factors in resolving this matter.”  

2. Monogram Health

On August 24, 2026, DOJ announced that Monogram Health Professional Services PC and Monogram Health Inc. (together, Monogram Health) agreed to pay $2.4 million to resolve allegations that they caused the submission of false diagnosis codes leading to increased payments from CMS.  DOJ’s press release also noted that Monogram Health received cooperation credit but did not specify what Monogram Health had done to obtain credit.  Monogram Health provides in-home care and related services to Medicare beneficiaries who are enrolled in Medicare Advantage plans.  Monogram Health’s contracts with the Medicare Advantage plans at issue in the settlement included risk-sharing arrangements that enabled Monogram Health to receive increased payments for patients with higher risk scores based on diagnosis codes reported in the prior service year.  According to DOJ, these payments incentivized Monogram Health to submit additional diagnosis codes in order to increase its patients’ risk scores and the resulting payments from CMS.

In 2022, a former Monogram Health physician, Dr. Ajay Gupta, filed a lawsuit under the FCA’s qui tam provisions in California federal court, alleging that Monogram Health’s provision of in-home care violated the FCA.¹ On August 17, 2026, DOJ partially intervened in the litigation to effectuate a settlement between the parties.  As alleged by DOJ, between 2021 and 2023, Monogram Health reported diagnosis codes for four conditions—protein-calorie malnutrition, substance use disorder, coagulation defects and other specified hematological disorders, and angina pectoris—that were not clinically accurate or supported by documentation in the patient’s medical records, and/or did not affect patient care, treatment, or management.  The inaccurate diagnosis codes triggered higher payments from CMS to the Medicare Advantage plans with which Monogram Health contracted.

3. Complete Health

On August 3, 2026, DOJ announced that Complete Health Partners Holdings (“Complete Health”) paid $14.2 million to resolve allegations that it caused the submission of false diagnosis codes to increase payments from CMS.  Complete Health is a management services organization that operates provider groups in Florida, Alabama, and Colorado and contracts with Medicare Advantage plans to provide services to Medicare patients.  Like Monogram Health’s contracts with Medicare Advantage plans, Complete Health’s contracts at issue in the settlement also included a risk-sharing component—Complete Health received a percentage of the payments that the plans received from CMS—which, according to DOJ, incentivized Complete Health to submit additional diagnosis codes to increase patient risk scores.

In 2022, Karen Bowers, the former associate director of risk adjustment at VIVA Health, a health insurer that operates Medicare Advantage plans and contracted with Complete Health, filed a qui tam action under the FCA in Florida federal court, alleging that Complete Health and other defendants submitted inaccurate risk-adjustment data.² On July 21, 2026, DOJ partially intervened to settle the claims.  As alleged by DOJ, between 2020 and 2023, Complete Health disseminated incorrect guidance to coders and physicians related to reporting drug and alcohol dependence and major depressive, bipolar, and paranoid disorders. DOJ alleged that Complete Health coders also retrospectively reviewed beneficiary medical records and identified additional diagnosis codes for these and other chronic conditions.  The allegedly inaccurate codes were then reported to CMS, increasing the payments from CMS to Medicare Advantage plans that then shared a portion of those payments with Complete Health.

Key Takeaways

DOJ’s settlements with TVH, Monogram Health, and Complete Health underscore several key points for providers and others that participate in Medicare Advantage and other federal healthcare programs:

• First, consistent with its recent emphasis on self-disclosure and declination of a healthcare company in criminal proceedings, DOJ continues to take seriously self-disclosure and cooperation in FCA enforcement. DOJ specifically noted that TVH and Monogram Health received credit under the agency’s guidelines.  And the TVH press release describes TVH’s cooperation in detail, providing a window into what DOJ and HHS-OIG view as extensive cooperation warranting substantial credit.  To receive comparable credit, healthcare organizations should consider whether situations they uncover warrant similar steps to get ahead of a potential whistleblower complaint or DOJ investigation, including self-disclosing potential misconduct, taking prompt remedial action to address the misconduct, and cooperating throughout any resulting DOJ investigation.
• Second, DOJ scrutiny of risk-sharing arrangements is not limited to Medicare Advantage plans. Providers that partner with plans, as each of the provider groups above did, are also potential DOJ targets of FCA enforcement activity.
• Third, although CMS continues to encourage value-based care, providers and Medicare Advantage plans participating in risk-sharing arrangements that align incentives to provide such care must implement systems to avoid reporting inaccurate diagnosis codes that their plan partners will then submit to CMS for risk adjustment. As these settlements demonstrate, providers that do not maintain adequate controls are potential targets for DOJ enforcement activity.
• Fourth, healthcare fraud enforcement remains a priority for DOJ. This year, DOJ launched a new National Fraud Enforcement Division and a Task Force to Eliminate Fraud.  And in public remarks, Brenna Jenny, the Deputy Assistance Attorney General for the Commercial Litigation Branch of the Civil Division, has stated that DOJ will continue to pursue health care fraud, prioritizing managed care programs like Medicare Advantage.

As the government continues to pursue FCA enforcement related to Medicare Advantage, our team of experienced FCA litigators is available to counsel clients regarding risks under the False Claims Act and legal developments in this area.