The Villages Health System has agreed to a $541.5 million settlement to resolve allegations that it submitted false diagnosis codes to secure higher payouts in Medicare Advantage.
The Department of Justice announced the settlement on Wednesday. The case surfaced when TVH made a report in December 2024 through the Department of Health and Human Services Office of Inspector General’s self-disclosure protocol, saying it had submitted invalid diagnosis codes to multiple Medicare Advantage organizations.
In the program, these MAOs are paid a fixed amount per month for each of their beneficiaries, which are adjusted for those who are sicker and thus more likely to generate healthcare costs through risk adjustment. Some plans may agree to share with a provider part of what they receive from the Centers for Medicare & Medicaid Services.
Providers in an arrangement like this will receive higher reimbursement for sicker patients, DOJ said in the announcement.
“The Medicare Advantage program relies on accurate diagnoses to protect the federal fisc,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division in the press release. “Today’s settlement reflects that we will hold accountable entities that inflate payments through invalid diagnoses.”
“At the same time, we will continue to credit organizations that disclose wrongdoing, take appropriate remedial actions, and fully cooperate with the government’s investigation,” Shumate said.
The settlement resolves allegations on the false claims submissions from between 2020 and 2024, DOJ said. The diagnoses were submitted to three MAOs—Humana, UnitedHealthcare and GuideWell—and those plans have entered into agreements with CMS to return funds associated with the false diagnoses, per the announcement.
The feds acknowledged that TVH self-reported the False Claims violations and proactively took steps to remedy the behavior.
The Villages Health, which provides medical care to individuals in the Villages complex in Florida as well as the surrounding area, was acquired by Humana’s CenterWell unit as part of a “stalking horse” deal in 2025 as it navigated bankruptcy proceedings.
The bankruptcy courts approved the False Claims Act settlement on Aug. 25, DOJ said.