$581 Million Settlement Resolves Medicare Advantage Whistleblowers Allegations
San Francisco, January 14, 2026—The Kaiser Foundation Health Plan, Inc. (KFHP), Kaiser Foundation Health Plan of Colorado (KFHP-CO), Kaiser Foundation Health Plan of the Northwest (KFHP-NW), The Permanente Medical Group, Inc. (TPMG), Southern California Permanente Group (SCPMG), and Colorado Permanente Medical (CPMG) have agreed to collectively pay $581 million to the federal government to settle multiple whistleblower cases alleging that the companies engaged in “risk adjustment” fraud and other misconduct. Phillips & Cohen brought one of the lawsuits in 2014 on behalf of a whistleblower client under the qui tam provisions of the False Claims Act.
“This remarkable outcome highlights the scope and significance of health care fraud and the importance of whistleblowers in recovering money that should be going to patient care and affordability instead of the pockets of health care companies. It reflects a long-term and highly effective collaboration between the government, the whistleblowers, and the multiple law firms who were involved during the life of these cases,” said George Collins, Senior Counsel and Evidentiary Data Scientist with Phillips & Cohen.
Allegations of Medicare Advantage Risk Adjustment Fraud
Some of the defendants have contracts with the Centers for Medicare & Medicaid Services (CMS) to provide healthcare as Medicare Advantage (MA) organizations, also called Medicare Part C. CPMG provides medical services to MA beneficiaries enrolled in KFHP-CO MA plans.
Under the MA program, the government pays MA plans a fee to cover medical services for plan members. That fee is “risk adjusted” based on each member’s health status, age, and other factors that could affect the need for more or fewer medical services. MA payments are based in part upon MA health plans’ submission of data (“diagnosis codes”) concerning health conditions with which their MA beneficiaries were diagnosed during the year. When MA beneficiaries are diagnosed with certain serious health conditions, the government increases its payment to their insurers.
The lawsuit filed by Phillips & Cohen alleges that, beginning in 2004, KFHP-CO and CPMG identified multiple categories of diagnosis codes that consistently had extremely high error rates. For example, according to the complaint, patients who had a prior history of cancer were often miscoded as if they had active cancer, which caused the government to make significantly higher payments to the defendants. The complaint alleges that KFHP-CO and CPMG failed to take appropriate corrective action, which would have required refunding the prior overpayments and giving up their inflated revenue going forward.
False Claims Act and Whistleblower Compensation
The False Claims Act allows private citizens who know of entities and individuals defrauding the federal government to file lawsuits against them and recover funds on the government’s behalf. Whistleblowers are entitled to 15% to 25% of the recovery when the government joins the lawsuit.
Phillips & Cohen’s Role and Whistleblower Recovery
Phillips & Cohen is the most successful law firm representing whistleblowers, with recoveries from cases totaling over $13 billion and 24 awards for clients under Dodd-Frank whistleblower reward programs. If you have information about health care fraud or other misconduct involving government funds, contact Phillips & Cohen for a confidential consultation to learn how experienced whistleblower counsel can protect your rights.