Washington, D.C., March 11, 2026– Aetna, a healthcare insurance company that contracts with Medicare to provide Medicare Part C Advantage Plans, agreed to pay $11.5 million to the federal government to settle a whistleblower lawsuit that Phillips & Cohen LLP filed under the False Claims Act. The settlement resolves allegations that from 2018 to 2023, Aetna submitted to the Center for Medicare and Medicaid Services (CMS) invalid patient diagnosis codes for morbid obesity when patient medical records did not support the diagnosis, inflating the payments that Aetna received for its Medicare Advantage members. The settlement was part of a larger settlement of a risk adjustment case against Aetna brought by the Department of Justice.
The Medicare Advantage (MA) Program, also known as Part C, provides health insurance coverage for individuals who opt out of traditional Medicare. Part C organizations operated by insurers like Aetna, receive payments from CMS to cover medical services for members enrolled in the insurer’s MA plans. The payments are based on each member’s risk factors that predict the expected health expenditures for the patient. Insurer’s submit diagnosis codes reflecting health conditions with which their members were diagnosed during the year. When patients are diagnosed with certain serious health conditions, the government increases its payment to their insurers. Insurance companies like Aetna that operate MA Plans must submit accurate and truthful patient diagnosis codes and certify that the data they submit is accurate and truthful.
The complaint in this case alleged that Aetna submitted inaccurate and untruthful diagnosis codes for Morbid Obesity, which has a high risk adjustment value and a higher payment to Aetna. The complaint alleged that Aetna submitted invalid diagnoses codes for individuals with a Body Mass Index (BMI) below 30, which is not considered morbidly obese, or when the medical record did not otherwise support the diagnosis of Morbid Obesity. The complaint alleged that some of these invalid codes were added during “chart reviews” in which Aetna coders reviewed patient medical charts and added diagnoses based on past history or problem lists, but where no physician had made a current diagnosis of Morbid Obesity. DOJ intervened in the case and settled it.
“The Part C program depends on insurance companies providing the government data that truthfully represents the health conditions that patients actually have and for which they are being treated. A diagnosis of Morbid Obesity has a high risk adjustment value, and we alleged that by encouraging coders to add this diagnosis without regard to BMI and not correcting invalid diagnoses, Aetna was inflating the government’s costs,” said Claire Sylvia, a Phillips & Cohen partner who filed the case.
“It’s unfair to patients to be coded as morbidly obese when they’re not,” said Jeffrey Dickstein, a Phillips & Cohen partner who represented the Relator, “and it’s unfair to the government to pay for medical care for conditions that don’t exist.”
“Whistleblowers are essential to alerting the government to the kind of practices we alleged” said Amy Easton, a Phillips & Cohen partner who also represented the relator. “Our client witnessed this conduct when she worked for Aetna and stepped forward to present the government with her insights into how Aetna’s chart review process worked and how it generated, or failed to correct, unsupported diagnosis codes.”
The case was brought by Jeffrey Dickstein, Amy Easton and Claire Sylvia of Phillips & Cohen, and John Crutchlow of Youman & Caputo LLC. They thank Peter Carr and Gregory in den Berken, Assistant United States Attorneys and Civil Chief Gregroy David for the Eastern District of Pennsylvania, and Nelson Wagner of the Department of Justice Civil Fraud Section who acted swiftly to investigate and resolve the allegations.
A copy of the complaint.
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