The Villages Health System Settles Medicare Advantage Risk-Adjustment Allegations For $541.5 Million

On August 26, the Department of Justice (DOJ) announced that The Villages Health System, LLC (TVH), a healthcare provider group located within The Villages retirement community in central Florida, agreed to a $541.5 million settlement to resolve False Claims Act (FCA) allegations related to Medicare Advantage risk-adjustment diagnosis codes. The same announcement linked two related settlement agreements, separately executed in late July 2026, where UnitedHealthcare and Florida Blue resolved overpayment recoupment obligations resulting from the same underlying conduct.

What Did The Villages Health System Agree to in the $541.5 Million False Claims Act Settlement?

The settlement resolves allegations that between 2020 through 2024, TVH knowingly submitted invalid risk-adjusting diagnoses to Medicare Advantage Organizations (MAOs) that resulted in inflated capitation payments made by the Centers for Medicare & Medicaid Services (CMS) to MAOs. According to the settlement agreement, two internal practices, “Retrospective Amendments” and “Sprints,” were the vehicles by which diagnosis codes not supported by the underlying medical record were added to patient records after the original visit, sometimes more than a year later. 

According to the settlement agreement, TVH retained outside coding consultants in 2016 and 2019 who advised TVH that it was “undercoding” because it was not documenting and submitting certain diagnoses that could affect MA payments. The settlement describes two internal practices that followed: “Retrospective Amendments” and “Sprints.” Under the Retrospective Amendment process, TVH employees proposed additional diagnoses and sometimes added language documenting monitoring, evaluation, assessment or treatment. Under “Sprints,” employees targeted specific Hierarchical Condition Category (HCC) diagnoses for addition to records of providers who previously indicated a willingness to include the relevant HCC. In both cases, TVH submitted the proposed changes to providers for review, and amendments were made only after provider acceptance.

TVH Identified and Terminated the Retrospective Coding Practices

In August 2024, TVH conducted a probe audit and, thereafter, terminated both practices. TVH then initiated broader coding reviews. For 2023 dates of service, TVH’s internal coders reviewed certain high-risk HCCs and determined that approximately 54% of the member-HCCs reviewed were unsupported. An outside consultant separately reviewed TVH’s retrospective coding and determined that 23% of the member-HCCs it reviewed for 2023 were unsupported.

On December 27, 2024, TVH submitted the matter through HHS-OIG’s Health Care Fraud Self-Disclosure Protocol. It subsequently notified its MAO partners and provided unsupported diagnoses to the MAOs for deletion. DOJ states that it has credited TVH’s disclosure, cooperation and remediation under the Justice Manual. The resulting $541.5 million settlement is 1.5 times TVH’s estimated $361 million in provider-level payments attributable to the unsupported diagnoses.

What TVH’s Chapter 11 Bankruptcy Means for the $541.5 Million Recovery

The $541.5 million headline amount also requires some context. In July 2025, TVH filed for Chapter 11 Bankruptcy. Under the settlement, the government receives a claim against TVH’s bankruptcy estate for $541.5 million. The agreement also prevents duplicative recovery. Funds returned to CMS by MAOs in connection with the covered diagnoses before final distribution in the bankruptcy reduced TVH’s settlement obligation dollar-for-dollar. In other words, the amount the government ultimately recovers directly from TVH will depend on the operation of the bankruptcy process and the offsets contemplated by the settlement.

No Corporate Integrity Agreement

The TVH settlement does not include a Corporate Integrity Agreement, which is notable given the size and duration of the alleged conduct. However, the circumstances also include TVH’s voluntary disclosure, termination of the challenged practices, substantial retrospective review and remediation, Chapter 11 bankruptcy, and Humana’s acquisition of the TVH operating business.

Separate MAO Settlement Agreements: UnitedHealthcare and Florida Blue (GuideWell)

In a separate settlement agreement dated July 29, 2026, UnitedHealthcare Insurance Company and related affiliates agreed to pay $125,499,714.33 to resolve CMS’ overpayment recoupment claims tied to diagnosis codes TVH submitted for United’s Medicare Advantage members. The agreement releases United from any overpayment obligations or data correction obligations, as well as any civil or administrative monetary claims under common law theories of payment by mistake or breach of contact arising from diagnosis codes submitted by TVH for United’s Medicare Advantage members for service dates January 1, 2020 through December 31, 2024.

In a comparable settlement agreement dated July 28, 2026, GuideWell Mutual Holding Corporation, with its affiliates Blue Cross and Blue Shield of Florida, Inc. and Florida Blue Medicare, Inc., resolved its own overpayment recoupment obligations to CMS. Florida Blue received credit of $9,195,172.28 for diagnosis codes it had already deleted from CMS systems or included in prior auditable estimates and agreed to pay an additional $11,953,203.14 to the DOJ. In exchange, CMS released Florida Blue from further recoupment, audit, or common-law claims tied to the same diagnosis codes for dates of service from January 1, 2020, through December 31, 2024.

What Do These Settlements Mean for Risk-Bearing Providers and Medicare Advantage Plans?

Taken together, the TVH, United and Florida Blue agreements provide several data points for risk-bearing providers and MAOs.

First, provider approval alone may not resolve retrospective coding risk. TVH generally obtained physician approval before adding diagnoses, but the settlement focuses on the full process surrounding those additions: how diagnoses were identified; when amendments were made; who initiated, documented, and approved the changes; and whether the record independently supported the submitted HCC.

Second, the same underlying conduct created provider and MAO exposure. TVH resolved alleged FCA liability, while United and Florida Blue separately resolved CMS repayment obligations arising from the same diagnosis data. Notably, the MAO agreements address overpayment and data-correction obligations, not FCA liability.

Third, self-disclosure can affect the path to resolution, but it does not eliminate exposure. TVH disclosed through OIG’s Self-Disclosure Protocol, stopped the challenged practices, conducted reviews, notified MAO partners, and received express cooperation and remediation credit. Yet, TVH still faced substantial liability tied to the government’s view of the underlying overpayments generated by unsupported diagnoses – even if at an arguably reduced (1.5 times) multiplier.