AIDS Healthcare Foundation Agrees to Pay $1.44M to Settle False Claims Act Allegations

AIDS Healthcare Foundation, a non-profit organization based in Los Angeles, California, has agreed to pay $1.44 million to resolve allegations that it violated the False Claims Act by submitting or failing to delete false or invalid diagnosis codes in order to increase payments that it received from the Medicare Advantage program.

"The government relies on Medicare Advantage participants to submit accurate, substantiated diagnosis codes that are adequately documented in a medical record to ensure proper payment," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "The Justice Department will continue to protect the public fisc and hold accountable those who receive inflated payments by knowingly providing or failing to correct false information."

"The integrity of our federal healthcare programs, including Medicare Advantage, must be preserved," said First Assistant U.S. Attorney Bill Essayli for the Central District of California. "We will not tolerate companies undermining the interests of Medicare patients for financial gain."

"Medicare Advantage organizations have a responsibility to ensure the accuracy of diagnosis codes they submit for payment. When entities fail to correct information they know is wrong, they undermine the integrity of a program millions of seniors rely on," said Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). "HHS-OIG will continue to safeguard taxpayer funds by holding organizations accountable when their failures inflate federal payments and compromise program trust."

Under the Medicare Advantage (MA) Program, also known as Medicare Part C, Medicare beneficiaries may opt out of traditional Medicare and enroll in private health plans offered by insurance companies known as Medicare Advantage Organizations, or MAOs. The Centers for Medicare & Medicaid Services (CMS) pays the MAOs a fixed monthly amount for each Medicare beneficiary enrolled in their plans. CMS adjusts these monthly payments to account for various "risk" factors that affect expected health expenditures for the beneficiary. In general, CMS pays MAOs more for sicker beneficiaries expected to incur higher healthcare costs and less for healthier beneficiaries expected to incur lower costs. To calculate the payment amounts, CMS uses a health-based risk adjustment model - the Hierarchical Conditions Category (HCC) model - that takes into account diagnoses reported by healthcare providers. In general, the more severe the diagnosis or costly the associated treatment, the higher the risk score and the higher the corresponding payments to the MAO. Diagnosis codes submitted to CMS must be supported by the beneficiaries' medical records and be accurate, complete, and truthful, based on the best knowledge, information, and belief of the MAO making the submission.

AIDS Healthcare Foundation (AHF) provides care and services to HIV patients in the United States and other countries. AHF's Managed Care Division (doing business as Positive Healthcare Partners) operated special needs MA plans for Medicare beneficiaries who have HIV and lived in Florida, Georgia, or California.

The settlement announced today resolves allegations that, for payment years 2017 to 2023, AHF failed to timely investigate and delete diagnosis codes that were either inaccurate or not documented in medical records. Beginning in around 2017, AHF's risk adjustment coders conducted chart reviews to identify inaccurate or unsupported diagnosis codes for deletion. As part of this process, AHF's risk adjustment coders maintained "Delete Research" spreadsheets, which listed diagnosis codes they identified as potentially lacking support in the medical record but needing further research. Although AHF knew that it was required to investigate and delete inaccurate and unsupported diagnosis codes within 60 days, AHF failed to timely investigate and delete the codes. AHF did not delete most of the inaccurate or unsupported diagnosis codes in the "Delete Research" spreadsheets until 2024 or 2025 - well after AHF was on notice that the codes potentially lacked support and only after being notified of the United States' investigation.

The United States further alleges that, for payment year 2017, AHF knowingly submitted diagnosis codes for HIV (ICD-10 B20) where the diagnosis was not documented in any medical record for a face-to-face visit, in violation of CMS requirements that all diagnosis code submissions must be documented as a result of a face-to-face visit.

The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by Donna Irons, a former risk adjustment coder at AHF. Under the qui tam provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Irons v. AIDS Healthcare Foundation d/b/a Positive Healthcare Partners, Civil Action No. 23-cv-2160 (C.D. Cal.). Ms. Irons will receive $259,200 as her share of the federal recovery.

AHF received credit under the Department of Justice's guidelines for taking disclosure, cooperation, and remediation into account in False Claims Act resolutions, Justice Manual § 4-4.112. In addition to cooperating in the government's investigation and enhancing its compliance program, AHF proactively remediated its conduct during the course of Department's investigation by submitting deletes for diagnosis codes that, based on review of medical records, were not supported.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney's Office for the Central District of California, with assistance from the Department of Health and Human Services, Office of Inspector General.

The investigation and resolution of this matter illustrate the government's emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

This year the Administration launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to enhance the Administration's war on fraud, waste, and abuse in federal programs. When unscrupulous actors exploit these programs for their own financial gain, they defraud the government, harm the people these programs are designed to aid and protect, and undermine American businesses that play by the rules. The Civil Division's FCA enforcement plays a critical role in combatting such fraudulent schemes, recovering billions of dollars for the American taxpayers, and holding wrongdoers accountable. FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division's FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.

Trial Attorney Tiffany L. Ho of the Civil Division's Commercial Litigation Branch, Fraud Section and Assistant U.S. Attorney S. Desmond Jui for the Central District of California handled this case.

The claims resolved by the settlement are allegations only and there has been no determination of liability.