Kaiser Permanente Set to Pay Over $500M to Resolve Fraud Claims

Five Kaiser Permanente affiliates are set to pay a record $556 million to settle claims brought by the Department of Justice alleging improper Medicare Advantage risk-adjustment practices.

The agreement is with regards to allegations that the organization exerted “systemic” pressure on doctors to append diagnoses that were not related to patients’ care – and were often entered long after clinical encounters – thereby boosting the MA plans’ monthly reimbursement rates.

According to the DOJ, Kaiser Permanente carried out this conduct for around 9 years, from at least 2009 through 2018, during which time roughly 500,000 diagnoses were added, resulting in what the government described as approximately $1 billion in excess Medicare payments, as detailed in a press release.

The agreement does not constitute an acknowledgment of fault or legal responsibility. In a statement, Kaiser Permanente said it opted to resolve the matter to sidestep the time, expense and unpredictability associated with extended court proceedings.

The Department of Justice said the $556 million resolution represents the largest settlement ever reached in a Medicare Advantage enforcement case.

Assistant Attorney General Brett A. Shumate of the DOJ’s Civil Division stated that over 50% of the country’s Medicare beneficiaries are covered through Medicare Advantage plans and that the government expects program participants to submit honest and accurate data. He added that the settlement signals the U.S. will hold healthcare providers and health plans responsible when they knowingly provide, or cause the submission of, false data to CMS to secure improperly inflated Medicare payments funds.

The DOJ initiated the lawsuit in October 2021. The settlement also resolves allegations raised by two qui tam relators – a former medical coder and a former physician at Kaiser Permanente – who are set to receive $95 million from the total payout.

According to the government’s complaint, which draws on the whistleblowers’ assertions, Kaiser Permanente submitted diagnosis codes that were not connected to the purpose of patients’ visits, as well as codes for medical conditions patients did not actually have at the time of care. Federal officials said both practices run counter to rules established by the Centers for Medicare & Medicaid Services (CMS).

As per the DOJ, the disputed diagnosis codes were frequently pulled from patients’ historical records and later surfaced for clinicians to insert into charts through addenda, often long after the original appointment, sometimes more than a year later. Federal officials also pointed to internal performance targets that encouraged doctors and care sites to add such diagnoses, alleging that meeting those benchmarks was linked to financial incentives.

According to the government’s 2021 complaint, as the year came to an end, certain staff members described Kaiser’s push to log as many diagnostic codes as it could as a ‘dash for cash’. The filing said Kaiser used additional methods, including so-called coding sessions, during which doctors were assembled and instructed to review diagnosis lists and insert those entries into patient visit records afterward routinely and systematically at scale.

Kaiser Permanente Set to Pay Over $500M to Resolve Fraud Claims

In January 2026, Kaiser Permanente agreed to pay approximately $556 million to resolve federal fraud claims related to its Medicare Advantage operations, marking one of the largest settlements of its kind in U.S. healthcare history. The settlement stems from allegations that Kaiser’s affiliates systematically submitted unsupported diagnosis codes to inflate risk-adjusted payments from the federal Medicare program.

According to the Kaiser Permanente settlement, five affiliated entities in California and Colorado reached an agreement with the U.S. Department of Justice to resolve allegations that they violated the False Claims Act by reporting inaccurate patient information to secure higher Medicare reimbursements. The claims were originally brought by whistleblowers and later joined by federal prosecutors, and while Kaiser Permanente did not admit liability, it agreed to pay the record-setting amount to avoid extended litigation.