The Villages Health System LLC Agrees to $541.5M Settlement to Resolve False Claims Act Allegations
The Villages Health System LLC agreed to a $541.5 million settlement resolving allegations it submitted false diagnosis codes to Medicare Advantage plans from 2020 to 2024, inflating payments to itself and insurers.
The Villages Health System LLC (TVH) will pay $541.5 million to resolve claims it knowingly submitted invalid diagnosis codes to Medicare Advantage Organizations (MAOs) between 2020 and 2024. The false codes were used to increase payments from the Centers for Medicare & Medicaid Services (CMS) to the MAOs, which then passed inflated amounts to TVH under capitated payment agreements. The settlement follows TVH’s self-disclosure to the HHS Office of Inspector General (OIG) in December 2024, which outlined unsupported or improperly documented diagnoses submitted to three MAOs: Humana Inc., UnitedHealthcare, and GuideWell Mutual Holding Corporation.
Federal officials stated the settlement reflects accountability for entities that inflate payments through invalid diagnoses while crediting organizations that self-disclose and cooperate. The Justice Department emphasized the Medicare Advantage program’s reliance on accurate diagnoses to protect federal funds. Acting Deputy Inspector General Miranda L. Bennett noted the case highlights consequences for submitting unsupported information that inflates payments, while acknowledging TVH’s use of the OIG Self-Disclosure Protocol and cooperation as mitigating factors in resolving the matter.
Under the Medicare Advantage program, CMS pays MAOs fixed monthly amounts adjusted for beneficiary health risks, with higher payments for sicker patients. Diagnosis codes must be supported by medical records from face-to-face visits and must affect patient care. TVH’s invalid codes lacked adequate medical record support or were improperly amended without provider approval, leading to inflated CMS payments to MAOs and, in turn, to TVH. The MAOs are required to return overpayments by removing invalid codes or entering agreements with the Justice Department and CMS to refund the funds.
TVH filed for Chapter 11 bankruptcy in July 2025, and the bankruptcy court approved the settlement on August 25, 2025. The resolution involved coordination between the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, and HHS-OIG. The case underscores the government’s focus on combating healthcare fraud, with the False Claims Act serving as a key enforcement tool to recover funds and hold wrongdoers accountable.