The Villages Health System Agrees To $541.5 Million Over False Medicare Advantage Claims

THE VILLAGES, Fla. – The Villages Health System LLC (TVH), a primary care provider group based in The Villages, Florida, has agreed to pay $541.5 million to resolve claims that it violated the False Claims Act by submitting improper diagnosis codes to inflate Medicare Advantage payouts.

The settlement resolves allegations that between 2020 and 2024, TVH knowingly sent unsupported medical codes to private insurers operating Medicare Advantage plans. Under the Medicare Advantage system, the Centers for Medicare & Medicaid Services (CMS) pays insurers a monthly risk-adjusted rate per patient, offering larger sums for individuals with more severe health conditions. Insurers often share a portion of these increased payouts with provider networks like TVH.

Federal officials found that TVH submitted codes that lacked backing in patient records or were based on unapproved, untimely medical chart amendments that treating physicians did not originate. This practice led CMS to issue inflated payments to insurers, which then passed higher revenues back to TVH.

The invalid codes were sent to three major plan operators: Humana Inc., UnitedHealthcare, and GuideWell Mutual Holding Corporation (Florida Blue). These insurers are returning the resulting overpayments through code deletions or formal repayment agreements with the federal government.

“The Villages Health System LLC knowingly submitted false diagnosis codes to increase their payments from the Medicare Advantage program and increase their profits,” said U.S. Attorney Gregory W. Kehoe for the Middle District of Florida. “Our Office will continue protecting the integrity of the Medicare program and hold those who seek to defraud federal health care programs accountable.”

TVH initiated the resolution process on Dec. 27, 2024, by submitting a report through the Health and Human Services Office of Inspector General (HHS-OIG) Self-Disclosure Protocol. The Justice Department credited the organization for flagging the issue, providing written findings, and working with federal investigators.

“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. “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.”

Miranda L. Bennett, Acting Deputy Inspector General for Investigations at HHS-OIG, noted the role of the agency’s reporting system. “This case underscores that entities will be held accountable when they submit unsupported information that inflates payments,” Bennett said. “The provider’s use of the OIG Self Disclosure Protocol 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.”

TVH filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Middle District of Florida on July 3, 2025. The bankruptcy court formally approved the settlement agreement on Aug. 25.