Florida health system settles Medicare Advantage fraud claims for $542M

The Villages Health System, a senior-focused health system in Florida, has agreed to pay nearly $542 million to settle a lawsuit with the U.S. Department of Justice (DOJ), where authorities accused it of upcoding Medicare Advantage claims to juice payouts.

According to an announcement, the claims of submitting inaccurate diagnosis codes to Medicare Advantage plans were “self-disclosed,” stemming from a report the group submitted to the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) in December 2024, wherein it admitted to earning reimbursement that did not align with its clinical documentation.

Those claims were submitted through multiple insurers, including Humana, UnitedHealthcare and Blue Cross and Blue Shield of Florida, all of which manage Medicare Part C plans.

As part of the privatized Medicare program, these insurers are paid risk-adjusted payments by the Centers for Medicare & Medicaid Services (CMS), for taking on members with preexisting and chronic conditions that can be costly to cover with insurance.

These payments are sometimes shared with providers as part of a managed care plan for seniors, known as a Medicare Advantage Organization. For Villages Health System, this means it received extra reimbursement funds from CMS that it was not owed, as its patients were not as sick as paperwork led the government, and the insurance companies, to believe.

As part of the settlement, however, the senior care group does not admit to wrongdoing. All the same, the DOJ framed the upcoding as entirely deliberate.

“The accuracy of diagnosis information submitted to Medicare Advantage is vital to protecting taxpayer dollars,” Acting Deputy Inspector General for Investigations Miranda L. Bennett of the HHS-OIG said in a statement. “This case underscores that entities will be held accountable when they submit unsupported information that inflates payments.”

Authorities did, however, acknowledge that the health system reported the fraud on its own. Notably, Villages Health System filed for bankruptcy shortly after its disclosure in 2025 and has since joined CenterWell, an integrated primary care group for seniors.

The settlement with the DOJ was handled through the bankruptcy court as part of the proceedings, with final approval granted on Aug. 25.

“The provider’s use of the OIG self-disclosure and its cooperation were important factors in resolving this matter, and the protocol remains available for managed care entities and other providers that bill managed care entities that seek to disclose potential liability,” Bennett added.