AIDS Healthcare Foundation Settles Medicare Advantage False Claims Allegations

Key Takeaways

• Medicare Advantage coding accuracy remains a federal enforcement focus. The settlement centers on allegations that inaccurate or unsupported diagnosis codes were not investigated and deleted in a timely manner, affecting risk-adjusted Medicare Advantage payments.
• Corrective action can factor into False Claims Act resolutions. The US Department of Justice (DOJ) credited the AIDS Healthcare Foundation (AHF) for cooperating with investigators, deleting unsupported diagnosis codes, and strengthening its compliance processes.
• The settlement does not establish liability. AHF agreed to a $1.44 million resolution, but the agreement does not constitute an admission of liability, and the DOJ states that the resolved claims remain allegations.

The AHF has agreed to pay $1.44 million to resolve federal allegations that it violated the False Claims Act by submitting or failing to correct inaccurate or unsupported diagnosis codes that affected payments under the Medicare Advantage program. The settlement resolves claims involving AHF’s Managed Care Division, which does business as Positive Healthcare Partners and operated special needs Medicare Advantage plans for beneficiaries with HIV in parts of California, Florida, and Georgia.¹

The allegations stem from a whistleblower lawsuit filed in March 2023 by Donna Irons, a former AHF risk adjustment coder. The case, United States ex rel. Irons v. AIDS Healthcare Foundation d/b/a Positive Healthcare Partners, was filed in the US District Court for the Central District of California under the False Claims Act’s qui tam provisions.^1,2

DOJ Alleges Unsupported Diagnosis Codes Affected Medicare Advantage Payments

Under Medicare Advantage, the Centers for Medicare & Medicaid Services (CMS) makes fixed monthly payments to private Medicare Advantage organizations, with payments adjusted based in part on beneficiaries’ expected health care costs. Diagnosis information submitted for risk adjustment can therefore affect the amount CMS pays a Medicare Advantage organization. Federal requirements call for submitted diagnosis codes to be accurate and supported by medical records.¹

According to the DOJ, AHF failed to timely investigate and delete diagnosis codes that were inaccurate or unsupported by medical records for payment years 2017 through 2023.^1,2 The AHF risk adjustment coders conducted chart reviews and maintained “Delete Research” spreadsheets containing diagnosis codes identified as potentially unsupported and requiring further investigation.²

The government alleged that although AHF knew inaccurate and unsupported codes were required to be investigated and deleted within 60 days, most of the codes identified in the spreadsheets were not deleted until 2024 or 2025. According to the settlement agreement, those deletions occurred after AHF had been notified of the federal investigation.²

The DOJ also alleged that, for payment year 2017, AHF knowingly submitted HIV diagnosis codes, identified as ICD-10 B20, when the diagnoses were not documented in medical records from face-to-face visits, contrary to CMS requirements.^1,2

Settlement Terms and Resolution

Under the settlement agreement, AHF will pay $1.44 million, including $800 000 designated as restitution.² AHF will receive credit for $800 000 that CMS will recoup through the Medicare Risk Adjustment reconciliation process based on diagnosis codes AHF deleted after learning of the government investigation. AHF also agreed to pay $640 000, plus applicable interest, to the United States.²

Irons will receive $259 200 as her share of the federal recovery under the False Claims Act’s whistleblower provisions.^1,2

The DOJ said AHF received cooperation and remediation credit in connection with the settlement.¹ According to the settlement agreement, AHF provided information that assisted the investigation, submitted deletions for diagnosis codes determined to be unsupported after medical record review, and represented that it strengthened its compliance policies and processes.²

AHF Responds to Settlement

In a statement following the settlement announcement, AHF said it appreciated the opportunity to resolve the allegations and emphasized its history of operating health plans for people living with HIV.³

AHF said the identified weaknesses “were not the result of any bad intent” and stated that it had used the process to strengthen its compliance program. The organization also pointed to the DOJ’s acknowledgment of its cooperation and proactive remediation.³

The settlement agreement specifies that it does not constitute an admission of liability by AHF or a concession by the government and the whistleblower that their claims were unfounded.² The DOJ similarly emphasized that the resolved claims are allegations and that there has been no determination of liability.¹

Bloomberg Law reported that the settlement concludes the DOJ’s False Claims Act case involving AHF’s Medicare Advantage risk-adjustment practices.⁴

Implications for Pharmacy and Health Care Stakeholders

For pharmacists, health plans, pharmacy organizations, and other entities participating in federal health care programs, the settlement highlights the compliance considerations associated with diagnosis coding and Medicare Advantage risk adjustment. The case also demonstrates the potential False Claims Act implications when organizations identify potentially unsupported information affecting federal reimbursement but allegedly do not investigate or correct that information within required timeframes.^1,2

The resolution further illustrates the role whistleblower actions can play in federal health care enforcement. In this case, the former AHF employee who initiated the lawsuit will receive a portion of the government’s recovery, while AHF’s cooperation, remediation, and compliance enhancements were taken into account as part of the resolution.^1,2

References

1. US Department of Justice. AIDS Healthcare Foundation agrees to pay $1.44M to settle False Claims Act allegations. Published October 6, 2026. Accessed October 7, 2026. https://www.justice.gov/opa/pr/aids-healthcare-foundation-agrees-pay-144m-settle-false-claims-act-allegations
2. Settlement Agreement among the United States of America, AIDS Healthcare Foundation, and Donna Irons; US Dist Court for the Central District of California, Civil Action No. 23-cv-2160. US Dept of Justice. Published September 8, 2026. Accessed October 7, 2026. https://www.justice.gov/opa/media/1464401/dl
3. Kenslea G. AHF statement on Department of Justice settlement. AIDS Healthcare Foundation. Published October 6, 2026. Accessed October 7, 2026. https://www.aidshealth.org/2026/10/ahf-statement-on-department-of-justice-settlement/
4. Castro-Pagán C. AIDS Healthcare pays $1.4 million to end DOJ’s False Claims suit. Bloomberg Law. Published October 6, 2026. Accessed October 7, 2026. https://news.bloomberglaw.com/ip-law/aids-healthcare-pays-1-4-million-to-end-dojs-false-claims-suit