PHILADELPHIA — In a major enforcement action targeting the integrity of the Medicare Advantage (MA) program, Aetna Inc. has agreed to pay $117.7 million to resolve allegations that it violated the False Claims Act. The settlement, announced by the U.S. Department of Justice on Wednesday, March 11, 2026, addresses claims that the insurer knowingly submitted inaccurate diagnosis codes to the federal government to inflate its reimbursement payments.
The agreement marks a significant victory for the Department’s “war room” on healthcare fraud, as federal regulators intensify their scrutiny of the private insurance industry’s billing practices.
The Anatomy of the Allegations: Chart Reviews and “Upcoding”
The Department of Justice asserted that Aetna engaged in a years-long scheme to portray its enrollees as sicker than they actually were—a practice commonly known as “upcoding.” Under the Medicare Advantage program, the Centers for Medicare & Medicaid Services (CMS) pays insurers more for patients with complex or chronic conditions.
- The 2015 Chart Review Program: The largest portion of the settlement—$106.2 million—resolves claims that Aetna hired coders to review old medical records specifically to find “additional” conditions. The DOJ alleged that Aetna submitted these new codes to CMS even when its own internal reviews showed they were unsupported by medical evidence.
- The “Morbid Obesity” Discrepancy: The remaining $11.5 million settles allegations that between 2018 and 2023, Aetna knowingly submitted diagnosis codes for morbid obesity for patients whose recorded Body Mass Index (BMI) did not qualify them for the diagnosis.
The Whistleblower’s Role
The investigation into the obesity-related coding was triggered by a “qui tam” lawsuit filed by Mary Melette Thomas, a former risk-adjustment coding auditor for Aetna. Under the False Claims Act, private citizens can sue on behalf of the government and share in the recovery. As part of this settlement, Thomas will receive approximately $2.01 million.
“Medicare Advantage relies on accurate reporting, and attempts to manipulate the system undermine both the program’s integrity and the beneficiaries it serves,” said Scott J. Lampert, Acting Deputy Inspector General for the U.S. Department of Health and Human Services (HHS-OIG).
Aetna Denies Liability
Despite the significant payout, Aetna—a subsidiary of CVS Health—has not admitted any wrongdoing. In a statement, the company maintained that it entered the settlement purely to avoid the “uncertainty and expense of prolonged litigation.”
- Corporate Stance: Aetna emphasized that the settlement should not be seen as an acknowledgment of liability, stating they “continue to disagree” with the Department’s industry-wide allegations.
- OIG Scrutiny: Notably, Aetna reportedly declined a Corporate Integrity Agreement with the HHS-OIG. Consequently, federal regulators have reserved the right to use “various tools” to monitor the insurer’s future compliance, including potential exclusion from federal programs if further misconduct is found.
The Industry Context
The Aetna settlement is part of a broader federal crackdown on the $530 billion Medicare Advantage market. It follows a record $556 million settlement with Kaiser Permanente in January 2026 and coincides with new CMS audits designed to recover billions in estimated overpayments.
As the government shifts from a “pay first, chase later” model to real-time AI-driven auditing, this settlement serves as a clear warning to MA organizations: the cost of inaccurate data will no longer be considered a standard “cost of doing business.”
