Federal officials announced this week that one of the nation’s largest health insurers has agreed to pay $117.7 million to resolve fraud allegations.
The False Claims Act (FCA) case involved Aetna, Inc., which the U.S. Department of Justice (DOJ) said failed to withdraw inaccurate and untruthful diagnosis codes in order to increase the payments it received from Medicare, and falsely certified in writing to the Centers for Medicare & Medicaid Services (CMS) that their data was sound.
“The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage (MA),” U.S. Assistant Attorney General Brett A. Shumate of the DOJ’s Civil Division said in a statement. “We will continue to hold accountable insurers that knowingly submit inaccurate or unsupported diagnoses to improperly inflate reimbursement.”
“The government pays Medicare Advantage Organizations (MAOs) to facilitate vital healthcare to our seniors and other vulnerable citizens. When corporations or individuals threaten the Medicare Advantage program by diverting those limited government resources through fraud, waste, or abuse, we will continue to pursue all available remedies against them,” U.S. Attorney David Metcalf of the Eastern District of Pennsylvania added.
Specifically, the DOJ explained in a press release, for the 2015 payment year, Aetna operated a “chart review” program in which it paid coders to review medical records and identify all medical conditions that the charts supported. Aetna relied on the results of those chart reviews to submit additional diagnosis codes to CMS to obtain additional payments, officials said.
“However, Aetna’s chart reviews did not substantiate some diagnosis codes previously reported by Aetna to CMS. Aetna did not delete or withdraw those diagnosis codes, which would have required Aetna to reimburse CMS,” the press release read. “The United States alleges that Aetna used the results of its chart reviews to identify instances where Aetna could seek additional payments from CMS while ignoring those same results when they indicated Aetna was overpaid.”
The settlement also resolves further allegations that, for payment years 2018 to 2023, Aetna knowingly submitted or failed to delete or withdraw inaccurate and untruthful diagnosis codes for morbid obesity to increase the payments it received from CMS for beneficiaries enrolled in its MA plans.
Officials said the civil settlement related to morbid obesity resolves a lawsuit filed under the whistleblower provisions of the FCA, which permit private parties to sue on behalf of the government when they believe that a defendant has submitted false claims for government funds and receive a portion of any recovery. The settlement in this case provides for the whistleblower to receive a share amounting to just over $2 million.
Reuters on Wednesday identified the whistleblower as Mary Melette Thomas, an Arizona resident and former Aetna risk adjustment coding auditor.
Aetna is owned by CVS Health, which completed the approximately $70 billion acquisition in 2018. Forbes reported last month that while CVS Health recorded record revenues of $402 billion in 2025, up nearly 8 percent from the previous year, Aetna continues to battle economic headwinds, with its medical benefit expense ratio – the percentage of premium revenue going toward medical costs – recently rising from 91.2 percent to 94.8 percent. Still, the company owns a market share estimated at 10-12 percent, with more than 12 million enrollees, easily placing it among the top 10 largest U.S. health insurers.
The settlement simply extends a steady trend of aggressive enforcement action on the part of the DOJ, which worked the case against Aetna with the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). Officials in January announced that settlements and judgments under the FCA exceeded $6.8 billion in the fiscal year ending in September 2025, marking the largest single-year figure in the history of the statute, which was enacted more than 160 years ago. Whistleblowers filed nearly 1,300 qui tam lawsuits in the fiscal year, also a record, topping the previous high of 980, set in 2024.
“Of the more than $6.8 billion in (FCA) settlements and judgments reported by the (DOJ) this past fiscal year, over $5.7 billion (just under 84 percent) related to matters that involved the health care industry,” the agency said at the time. “These recoveries restore funds to federal programs such as Medicare, Medicaid, and TRICARE, the health care program for service members and their families. But just as important, in many cases, enforcement of the (FCA) also protects patients from medically unnecessary or potentially harmful conduct. As in years past, the Act was used to pursue matters involving a wide array of health care providers, goods, and services.”
The Aetna settlement was dwarfed by a similar agreement reached with Kaiser Permanente, which in January agreed to pay $556 million to resolve similar allegations. That case related to claims filed in California and Colorado.
“Medicare Advantage relies on accurate reporting, and attempts to manipulate the system undermine both the program’s integrity and the beneficiaries it serves,” Acting Deputy Inspector General for Investigations Scott J. Lampert of HHS-OIG said, in announcing the Aetna news. “Today’s settlement makes clear that no company is beyond accountability, no matter how large or well-known. Those who seek to exploit Medicare Advantage should expect to be identified and held responsible, and HHS‑OIG will continue to protect taxpayer funds and the integrity of this vital program.”
