FCA settlement highlights DOJ’s focus on Medicare Advantage coding practices

On August 26, 2026, the United States Department of Justice (DOJ) announced a USD541.5 million False Claims Act (FCA) settlement with The Villages Health System LLC (TVH), a Florida healthcare provider group, resolving allegations that it submitted invalid diagnosis codes that increased Medicare Advantage (MA) payments.

The settlement is one of the largest MA risk-adjustment resolutions to date. It underscores DOJ’s continued focus on MA coding enforcement and carries key considerations for healthcare providers and MA plans.

What happened

The government alleged that from 2020 through 2024, TVH knowingly submitted unsupported diagnosis codes to three Medicare Advantage Organizations (MAOs), resulting in higher reimbursements than otherwise would have been received. The challenged diagnosis codes were revised to a higher severity level after the initial patient encounter. The upward revisions were implemented as part of organized campaigns within a revenue cycle management (RCM) plan aimed at increasing revenue.

The challenged conduct dates back to 2016 and 2019, when TVH retained outside coding consultants who advised that TVH was “undercoding” and leaving valid reimbursement on the table. TVH tied components of staff compensation to that advice.

Beginning in April 2020, TVH launched two organized campaigns as part of its RCM process. One, called “Retrospective Amendments,” involved back-office employees inserting additional diagnosis codes and supporting language into patient records months to more than a year after the visit, without the rendering provider’s initiation.

A second, called “Sprints,” involved non-clinical employees adding specific codes that had not previously appeared, again without the rendering provider’s initiation. The amendments were sent to the treating physician for approval. However, when that provider had left TVH, non-rendering providers – including TVH’s Chief Medical Officer and clinic medical directors – reviewed and approved the changes.

Retrospective chart review as part of an RCM process to ensure accurate coding is not inherently problematic. What distinguished this case was the scale, structure, and implementation of the RCM programs, largely by non-clinical personnel, with the goal of increasing revenue, and the fact that the revisions were made after the clinical encounter and, in some cases, approved by providers who never treated the patient.

After senior management became aware of the issue, TVH conducted several internal audits with the assistance of outside advisors. Based on the results of those audits, TVH self-reported through the Office of Inspector General (OIG) within the US Department of Health and Human Services (HHS) Health Care Fraud Self-Disclosure Protocol in December 2024 and received credit for prompt remediation and full cooperation.

TVH filed for Chapter 11 bankruptcy in July 2025; the bankruptcy court approved the settlement on August 25, 2026.

Why it matters

At USD541.5 million, this is among the largest FCA settlements against a single provider group for MA risk-adjustment allegations. FCA recoveries reached USD6.8 billion in fiscal year 2025 – the highest annual total in the statute’s history – with healthcare accounting for more than USD5.7 billion. In early September, Complete Health Partners settled similar invalid diagnosis-code allegations for USD14.1 million.

This scheme involved more than isolated coding errors or a single employee’s conduct – they reflected organized, institution-level programs that operated for more than four years. This fact pattern will likely inform how DOJ evaluates retrospective coding programs. DOJ pursued TVH even though the actual claims were submitted to the government by the MAOs. The three MAOs also settled with DOJ and are returning overpayments received due to TVH’s scheme.

DOJ linked the resolution to two new enforcement bodies: the Task Force to Eliminate Fraud, established by Executive Order 14395 in March 2026, and the National Fraud Enforcement Division (authority conferred by final rule on August 24, 2026 – two days before the settlement). The National Fraud Enforcement Division is the first new DOJ component since the National Security Division in 2006 and has absorbed more than 150 DOJ Criminal Division prosecutors.

The self-disclosure calculus is sobering. TVH received cooperation credit for self-disclosing, promptly remediating, and fully cooperating. TVH is responsible for paying a USD541.5 million settlement, underscoring that voluntary disclosure mitigates but does not immunize exposure.

Key takeaways

1. Self-disclosure is not a safe harbor, but it remains a key tool to mitigate potential liability. TVH’s outcome shows that cooperation credit has limits; the alternative – an uninvited investigation – likely guarantees worse terms. Providers with known risk-adjustment exposure may wish to evaluate the OIG Health Care Fraud Self-Disclosure Protocol and brief leadership on its benefits, limitations, and the threshold for disclosure.
   
   
2. RCM programs require clinical guardrails. Reviewing charts to ensure accurate coding is appropriate. Risk may arise when RCM teams or outside vendors drive the process without meaningful clinical oversight. Organizations running retrospective-amendment or chart-review programs may wish to confirm that clinical teams initiate and substantively approve coding changes, that amendments are timely and tied to the original clinical encounter, and that the program’s design and incentives can withstand government scrutiny. Compliance programs should address MA risk-adjustment coding specifically, not just fee-for-service billing.
   
   
3. MA contract terms warrant renewed attention on both sides of the table. TVH’s exposure flowed from its revenue-sharing structure with MAOs, and the three MAOs are separately returning overpayments to the Centers for Medicare & Medicaid Services (CMS). Providers may consider reviewing their indemnification exposure, the scope of their data-accuracy representations, and audit-cooperation obligations that may be triggered by a government investigation. MAOs may wish to assess whether existing contractual protections – including audit rights, coding-compliance requirements, and clawback provisions – can identify and address provider-level coding problems before they result in enforcement actions. Both sides may wish to evaluate how their agreements allocate responsibility for retrospective coding and the accuracy of codes submitted to CMS.

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