January 15, 2026
The Department of Justice announced a $556 million settlement with affiliate organizations of Kaiser Permanente (“Kaiser”), an integrated healthcare consortium headquartered in Oakland, California. Kaiser agreed to pay $556 million to resolve allegations that they violated the False Claims Act (“FCA”) by submitting invalid diagnosis codes for Kaiser Medicare Advantage Plan enrollees in order to receive higher payments from the government.
As we previously wrote about, in September 2021, the United States intervened in six separate False Claims Act (FCA) whistleblower cases alleging Medicare fraud by Kaiser. The lawsuits generally alleged that Kaiser knowingly submitted inaccurate diagnosis codes for their Medicare Advantage Plan enrollees. The purpose was to receive higher reimbursements from the government. The initial whistleblower suit was filed in 2012. Years of investigation and, ultimately, litigation followed.
The United States alleged that Kaiser systematically pressured its physicians to alter medical records after patient visits to add diagnoses that the physicians had not considered or addressed at those visits, in violation of CMS rules. The government’s complaint included examples of an annual rush to capture diagnoses via “addenda” to the patient records as “the dash for cash.” As alleged by the United States, Kaiser singled out underperforming physicians and facilities and emphasized that the failure to add diagnoses cost money for Kaiser, the facilities, and the physicians themselves. It also alleged that Kaiser linked physician and facility financial bonuses and incentives to meeting risk adjustment diagnosis goals.
Significantly, the United States alleged that Kaiser knew that its addenda practices were widespread and unlawful. Kaiser ignored numerous red flags and internal warnings that it was violating CMS rules, including concerns raised by its own physicians that these were false claims and audits by its own compliance office identifying the issue of inappropriate addenda.
As the New York Times reported, this is a record breaking settlement in the Medicare Advantage space. Government officials hailed the resolution as a demonstration of their commitment to rooting out fraud perpetrated by Medicare Advantage insurers and others in the system.
Medicare Advantage is a vital program that must serve patients’ needs, not corporate profits.
U.S. Attorney Craig H. Missakian for the Northern District of California.
Medicare relies on the accuracy of the information submitted by [Medicare Advantage] plans. This resolution sends a clear message that we will hold health care plans accountable if they seek to game the system and pad their profits by submitting false information.
U.S. Attorney Peter McNeilly for the District of Colorado
Deliberately inflating diagnosis codes to boost profits is a serious violation of public trust and undermines the integrity of the Medicare Advantage program. This outcome demonstrates HHS-OIG’s commitment to protecting Medicare through a unified approach — leveraging the expertise of our investigators, auditors, and counsel, alongside our law enforcement partners. We will continue to hold accountable any entity that seeks to compromise the integrity of the risk adjustment program.
Acting Deputy Inspector General for Investigations Scott J. Lampert at the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG)
WLC’s Erica Blachman Hitchings was the initial Assistant U.S. Attorney assigned to the Kaiser Medicare Advantage investigation. She continued to lead and work on the investigation until her departure from the DOJ in 2018, at which time she joined WLC. Her experience with the Kaiser investigation, as well as the Sutter Health Medicare Advantage matter, has enabled her to emerge as a leader in this space within the whistleblower bar.
Fighting Medicare Advantage fraud remains a government priority. It is, and will continue to be, an area ripe for whistleblower actions. If you have information about possible Medicare Advantage fraud, please contact us for a free consultation. We have the expertise and desire to help.