FCA recoveries hit a record, and Medicare Advantage is next

False Claims Act recoveries hit a record in fiscal 2025, and Medicare Advantage is next in line. In January, the Justice Department reported more than $6.8 billion in settlements and judgments under the False Claims Act for the fiscal year that ended in September 2025, the highest annual total in the law’s history. Health care accounted for more than $5.7 billion of it, and whistleblowers filed a record 1,297 new qui tam suits.

Just before those numbers came out, Kaiser Permanente affiliates agreed to pay $556 million to resolve allegations that they added unsupported diagnoses to Medicare Advantage patients’ records to raise payments, the largest Medicare Advantage risk adjustment settlement to date. And at the end of January, a senior Justice Department official said the department would keep pursuing health care fraud while prioritizing managed care programs like Medicare Advantage.

For health plans, the combination is the message. Enforcement and whistleblower activity are both at a high, and the government has said where it intends to look.

Key takeaways

• Record recoveries. More than $6.8 billion recovered in fiscal 2025, with about $5.7 billion, or 84%, from health care, up from $1.7 billion in fiscal 2024.
• Record whistleblower filings. 1,297 new qui tam suits, of which 458 focused on health care, plus 401 matters the government opened on its own.
• Medicare Advantage is a stated priority. The Justice Department and HHS created a joint False Claims Act working group in July 2025 that lists Medicare Advantage among its priorities, and the department has said it will lean more on data analytics.
• Risk adjustment is the main theory. Recent cases allege diagnoses added after the fact and chart reviews that only add codes. A separate case targets payments to brokers.
• Kaiser set a new benchmark. The $556 million settlement in January 2026 involved queries and addenda that added diagnoses months after visits, between 2009 and 2018.
• The qui tam device is under challenge. An appeal on whether whistleblower suits are constitutional was argued in December 2025 and remains pending.

The fiscal 2025 numbers

The Justice Department’s annual statistics, summarized by Covington and K&L Gates, show a sharp jump from the prior year.

Compiled from Justice Department fiscal 2025 statistics as summarized by Covington and K&L Gates (January 2026). Blank cells were not reported in those summaries.

The total was concentrated. According to Morgan Lewis, 10 actions accounted for more than half of all recoveries. Prescription drug matters produced most of the health care total. They included a jury verdict of about $949 million against a long-term care pharmacy accused of dispensing drugs without valid prescriptions, and more than $1.6 billion in damages against a drug manufacturer over kickbacks and off-label promotion of 2 HIV drugs. The government also recovered about $289 million from a pharmacy benefit manager accused of causing insurers to misreport drug prices paid for Medicare beneficiaries.

Medicare Advantage appeared in the department’s summary as an area of success. The government reported a substantial recovery from a Medicare Advantage organization accused of conducting retrospective medical record reviews and adding improper diagnoses to raise payments, and said it was continuing to litigate a number of cases against Medicare Advantage organizations.

Medicare Advantage cases and their theories

How risk adjustment creates the incentive

Medicare pays Medicare Advantage plans a monthly amount for each enrollee, adjusted by a risk score built from the enrollee’s demographics and documented diagnoses. An enrollee with documented heart failure or diabetes with complications produces a higher score and a higher payment than an otherwise identical enrollee without those diagnoses on record. The system is meant to pay plans fairly for sicker patients. It also means that every additional supported diagnosis has a dollar value.

The Medicare Payment Advisory Commission has estimated the aggregate effect for years. In its March 2026 report, the commission projected that Medicare would spend 14%, or about $76 billion, more for Medicare Advantage enrollees in 2026 than it would for the same people in traditional Medicare. It attributed $22 billion of that to higher coding intensity, after accounting for the statutory adjustment of 5.9% that CMS applies to Medicare Advantage risk scores, and about $57 billion to favorable selection. The industry disputes parts of the commission’s methods. But even on its own terms, coding intensity is a matter of tens of billions of dollars, not of a few bad actors.

That is the setting for the cases. Most coding differences reflect more thorough documentation, which the system allows. The cases below allege something else.

The cases

Compiled from WilmerHale’s False Claims Act year in review (February 2026) and Bass, Berry and Sims (January 2026). Allegations in settled cases were resolved without a determination of liability unless otherwise stated.

The theories fall into 4 groups.

Diagnoses added after the visit. In the Kaiser case, according to Bass, Berry and Sims, the government alleged that Kaiser identified diagnoses that had not been submitted and sent queries encouraging physicians to add them through medical record addenda, sometimes months to more than a year after the visit. It also alleged that Kaiser set aggressive targets for addenda and tied evaluations and incentives to risk adjustment goals. The relators will receive about $95 million.

One-way chart reviews. Several cases allege that plans reviewed medical records to find diagnoses that would add payment but did not use the same reviews to remove diagnoses the records did not support. A review that only ever adds is, in the government’s view, evidence of intent.

Provider-side coding. The Seoul Medical Group settlement involved a provider group rather than a plan, with allegations of false diagnoses of spinal conditions. Risk adjustment fraud does not require a plan’s direct participation, and plans that pay provider groups based on risk scores share the exposure.

Enrollment kickbacks. The case against Aetna, Elevance Health, Humana and brokers is different in kind. It alleges payments to brokers to steer enrollment and alleged discrimination against enrollees with disabilities. It shows that the department’s interest in Medicare Advantage extends beyond coding to how plans acquire members.

What the government must prove

The False Claims Act is not a strict liability statute, and the distinction matters for how plans should think about risk. To win a case, the government or a relator generally must prove that a claim was false and that the defendant acted knowingly. It must also show that the falsity was material to the government’s payment decision.

Knowledge has a broad definition. Under the statute, acting knowingly reaches beyond actual knowledge to deliberate ignorance or reckless disregard of the truth. A company does not need to intend fraud. Building a process that predictably produces unsupported claims, and declining to look at the results, can satisfy the standard.

Subjective belief counts. In its 2023 decision in United States ex rel. Schutte v. SuperValu, the Supreme Court held that liability turns on what a defendant actually knew and believed, not on whether an objectively reasonable person could have read a rule differently. A plan cannot rely on an after-the-fact argument that its practices were permissible if its own people understood they were not. Internal emails and audit findings that were not acted on become central evidence.

Materiality is demanding but not a shield. Since the Supreme Court’s 2016 Escobar decision, the government must show that a violation actually mattered to payment. In risk adjustment cases, the connection is direct, because the diagnosis determines the payment.

The stakes multiply. The law provides for treble damages plus a civil penalty for each false claim, which the Justice Department adjusted in 2025 to a range of $14,308 to $28,619 per claim. In a program where each enrollee’s payment is a claim, exposure can grow quickly.

The practical lesson is that the line between honest error and liability runs through what a company knew and what it did about it. Errors that are found and corrected look very different, legally and factually, from errors that are found and left in place.

Why Medicare Advantage is a priority now

Several forces are pointing at the same target.

Stated priorities. In July 2025, the Justice Department and HHS announced a joint False Claims Act working group whose priority areas include Medicare Advantage and barriers to patient access to care, such as violations of network adequacy requirements, among others. The group said it would expedite investigations through increased use of data mining.

Data as a whistleblower. In January 2026, Deputy Assistant Attorney General Brenna Jenny said the department would continue pursuing health care fraud while prioritizing managed care programs like Medicare Advantage, and warned companies that their next whistleblower could be their data. Risk adjustment cases are well suited to that approach, because the government holds both the submitted diagnoses and the claims that should support them.

Audits feeding cases. CMS has also expanded its own review. As we described in January, CMS has said it will audit every eligible Medicare Advantage contract each year through risk adjustment data validation. Audits and enforcement are separate processes, but the same patterns that produce audit findings can also attract whistleblowers and investigators.

Scale. With 55% of eligible Medicare beneficiaries enrolled in Medicare Advantage in 2025, according to the commission, the program is now the majority of Medicare. Enforcement attention has followed the money.

A chart review that can only add diagnoses is not a quality program. In the government’s view, it is evidence.

The qui tam question

The False Claims Act’s whistleblower provisions let private parties, called relators, sue on the government’s behalf and share in any recovery. They drive a large share of enforcement. In fiscal 2025, cases pursued by relators produced more than $2.2 billion.

Those provisions are under constitutional challenge. In United States ex rel. Zafirov v. Florida Medical Associates, a Medicare Advantage case, a federal district court in Florida held in 2024 that the qui tam provisions violate the Constitution’s Appointments Clause. The relator and the United States appealed. According to WilmerHale’s year in review, the Eleventh Circuit heard argument in December 2025, and the panel appeared skeptical of some arguments against the provisions while engaging seriously with others. A decision was pending as of this writing.

The outcome matters for health plans in 2 ways. If the provisions survive, the record pace of whistleblower filings is likely to continue. If they do not, at least in that circuit, the government would have to bring more cases on its own, which practitioners expect it would try to do. Either way, the government’s own data analytics are becoming a larger source of cases.

What plans should do now

The cases describe practices that plans can examine without waiting for a subpoena.

• Make every chart review 2-way. Any review that looks for diagnoses to add should also look for submitted diagnoses the record does not support, and delete them. The deletion rate is one of the first numbers an investigator will ask for.
• Govern queries and addenda. Queries to physicians should be neutral and documented. Addenda added long after a visit, especially in volume, are a pattern the Kaiser case put at the center.
• Separate incentives from coding outcomes. Targets and compensation tied directly to risk adjustment results invite exactly the conduct the government alleges. Incentives tied to documentation quality and accuracy, measured both ways, do not.
• Audit provider groups paid on risk. Plans that share risk adjustment revenue with provider groups should audit those groups’ coding patterns, especially for high-value conditions that are easy to over-document.
• Act on what compliance finds. The most damaging evidence in False Claims Act cases is often an internal warning that went unanswered. A documented response to every finding, including the decision not to change something and why, is part of the defense.
• Watch the access side too. The working group’s inclusion of barriers to access and network adequacy means that utilization management and provider networks are within the scope of enforcement interest, not only billing.
• Use the data the government uses. Analytics that compare diagnoses against claims and prescriptions can identify unsupported codes before anyone else does.

Where Redlake stands

We build tools health plans use in utilization review, not coding tools, but the principle behind these cases is the same one we apply in review. Every fact a plan relies on should be traceable to the record that supports it, and every decision should be reconstructable from the evidence available at the time. A diagnosis submitted to CMS for payment is a claim about a patient’s record. If the record does not support it, the claim should not be made, and a process that only looks for support in one direction is not a process that can be defended.

We also think the distinction we drew in February between honest error and deliberate fraud matters here. Most coding errors are mistakes, and plans should fix them as design problems. The False Claims Act is aimed at the other kind, practices a company knows, or recklessly disregards, will produce false claims. The surest way to stay on the right side of that line is to build processes that would produce the same answer whether or not anyone was watching.

That standard applies to utilization management as well. A review process that records the facts and reasons behind every decision can show, years later, that it decided each case on its merits. A process that cannot is asking investigators and juries to take its word for it.

What to watch in 2026

• The Zafirov decision. Whether the Eleventh Circuit upholds the qui tam provisions, and whether the question reaches the Supreme Court.
• Medicare Advantage litigation. How the ongoing cases against UnitedHealth and Anthem proceed, and whether the broker kickback case produces settlements.
• Data-driven cases. Whether the department brings cases built mainly on analytics rather than whistleblowers, as officials have signaled.
• Risk adjustment audits. How CMS’s expanded audits proceed, and whether their findings begin to appear in enforcement actions.
• Access-related theories. Whether network adequacy or barriers to care become the basis of a False Claims Act case against a Medicare Advantage plan.

About this analysis

Basis. The enforcement figures and case descriptions come from law firm summaries of the Justice Department’s fiscal 2025 statistics and of the cases themselves, including WilmerHale’s year in review. The risk adjustment estimates come from the Medicare Payment Advisory Commission’s March 2026 report.

Data notes. Figures are as reported in the cited summaries of Justice Department statistics. Settlement amounts reflect announced resolutions, and settled allegations were resolved without a determination of liability unless the source says otherwise. The table of Medicare Advantage cases is illustrative, not exhaustive. The description of the law’s elements is a summary and not legal advice.

Sources. Covington (January 2026). K&L Gates (January 2026). Morgan Lewis (January 2026). Bass, Berry and Sims (January 2026). WilmerHale, False Claims Act year in review (February 2026) and alert on the working group (July 2025). Medicare Payment Advisory Commission, March 2026 report. Sidley Austin, FCA penalty adjustment (July 2025).

Frequently asked questions

How much did the government recover under the False Claims Act in fiscal 2025?

More than $6.8 billion, the highest annual total on record, according to the Justice Department’s statistics. More than $5.7 billion came from health care matters.

Why is Medicare Advantage a False Claims Act priority?

Medicare Advantage payments depend on diagnoses that plans and providers submit, which creates an incentive to over-code. The Justice Department and HHS named Medicare Advantage a priority in July 2025, and officials have said they will rely more on data analytics to find cases.

What did the Kaiser Permanente settlement involve?

Kaiser affiliates agreed to pay $556 million in January 2026 to resolve allegations that they used queries and addenda to add diagnoses to Medicare Advantage patients’ records months after visits, between 2009 and 2018, to increase payments.

Does a coding error create False Claims Act liability?

Not by itself. Liability generally requires that a false claim was submitted knowingly, which includes reckless disregard, and that the falsity was material to payment. Errors that are found and corrected are treated very differently from errors that are found and ignored.

What is the Zafirov case?

It is a Medicare Advantage False Claims Act case in which a district court held in 2024 that the law’s whistleblower provisions are unconstitutional. The Eleventh Circuit heard the appeal in December 2025, and its decision was pending as of April 2026.