Independence Blue Cross Pays $22,500,000 to Settle Fraud Claims

By Nicole Ramirez San Diego, CA · PHILADELPHIA —

Published Updated 4 min read

Independence Blue Cross agreed to pay $22,500,000 to resolve False Claims Act allegations involving inaccurate Medicare diagnosis codes. A former employee will receive a share of the settlement amount.

PHILADELPHIA — Independence Blue Cross agreed to pay $22,500,000 to resolve allegations that it violated the civil False Claims Act. The settlement resolves allegations that Independence Blue Cross submitted and failed to withdraw inaccurate diagnosis codes for its Medicare Advantage Plan enrollees to increase payments from Medicare.

A former Independence Blue Cross employee will receive a share of the settlement amount. The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act captioned United States ex rel. Crawford v. Independence Blue Cross, No. 20-cv-5818 (E.D. Pa.).

The allegations cover payment years 2017 through 2021. The United States alleges that Independence Blue Cross falsely certified in writing to the Centers for Medicare & Medicaid Services that the diagnosis data was accurate and truthful.

The United States contends that Independence Blue Cross operated a chart review program in which nurse reviewers identified medical conditions supported by medical records. The United States alleges that Independence Blue Cross relied on chart review results to submit additional diagnosis codes for additional payments but did not delete or withdraw diagnosis codes that the reviews did not substantiate.

"The Medicare Advantage program depends on accurate data about patient health," U.S. Attorney David Metcalf said. "When insurers inflate their profits and the government’s costs by submitting or failing to correct unsupported diagnoses, my office will continue to hold them accountable."

Assistant Attorney General Brett A. Shumate said "the government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage." "When insurers knowingly and improperly retain inflated payments based on inaccurate and untruthful diagnoses, we will hold them accountable whether they are a small regional plan or a large nationwide organization," he said.

Bennett said the settlement demonstrates a commitment to ensuring the integrity of the Medicare program and partnering with the Department of Justice to pursue allegations of risk adjustment fraud. The claims resolved by the settlement are allegations only and there has been no determination of liability.

Why It Matters

Medicare Advantage Plans have been under increased scrutiny for risk adjustment fraud, with the Department of Justice recovering settlements from insurers between 2018 and 2023. The False Claims Act has been used to recover fraudulent payments from healthcare providers, with a significant portion related to Medicare Advantage risk adjustment fraud.

The United States has consistently emphasized the importance of accurate diagnosis coding in Medicare Advantage through regulatory updates and enforcement actions, with the Department of Justice stating in 2023 that fraudulent risk adjustment practices remain one of the most significant threats to the Medicare program. The Centers for Medicare & Medicaid Services reported that a portion of Medicare Advantage risk adjustment data submissions contained errors, showing the systemic challenges in ensuring accurate diagnosis coding across the industry.

Timeline

Assistant Attorney General Brett A. Shumate stated on September 30, 2026, that the government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage. Acting Deputy Inspector General for Investigations Miranda L. Bennett said on September 30, 2026, that providing medical services to Americans is a privilege that requires strict adherence to the rules and accountability when they are not followed. She added on September 30, 2026, that private insurers enrolled in the Part C program purposely inflating diagnoses for financial gain is unacceptable. Bennett also stated on September 30, 2026, that the settlement demonstrates a commitment to ensuring the integrity of the Medicare program and to partnering with the Department of Justice to pursue allegations of risk adjustment fraud.

What's New

Keystone Health Plan East, Inc. and QCC Insurance Company, Inc. on behalf of parent company Independence Blue Cross, LLC, agreed to pay $2.25 million plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs, resulting in inflated Medicare Advantage plan bids to the Centers for Medicare and Medicaid Services. Independence Blue Cross has operated Medicare Advantage plans since at least 1999, when it first became a Medicare Advantage Organization under the Medicare Part C program.

Independence Blue Cross previously settled a $2.25 million False Claims Act case in 2020 for incorrectly calculating Medicare Advantage plan costs, inflating bids to CMS. Independence Blue Cross previously faced a $2.25 million settlement in 2020 for allegedly inflating Medicare Advantage plan bids by incorrectly calculating anticipated costs, according to reports of General. In 2021, the Centers for Medicare & Medicaid Services issued guidance clarifying that Medicare Advantage Organizations must promptly correct inaccurate diagnosis codes and return overpayments, a requirement that Independence Blue Cross allegedly violated.

The United States has filed False Claims Act cases against multiple Medicare Advantage insurers in recent years, including Aetna, which settled for $117.7 million in May 2026 for similar coding violations.

How Sources Differ

Sources differ on details regarding Independence Blue Cross. The Office of General reports that Keystone Health Plan East, Inc. and QCC Insurance Company, Inc. on behalf of parent company Independence Blue Cross, LLC, agreed to pay $2.25 million plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs.

The U.S. District Court for the Eastern District of Pennsylvania docket shows that the civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act captioned United States ex rel. Crawford v.

The U.S. Department of Justice press release states that the settlement resolves allegations that Independence Blue Cross submitted and failed to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees to increase payments from Medicare.

fact_check Facts

Independence Blue Cross agreed to pay $22,500,000 to resolve allegations that it violated the civil False Claims Act.
The settlement resolves allegations that Independence Blue Cross submitted and failed to withdraw inaccurate and untruthful diagnosis codes for its Medicare Advantage Plan enrollees to increase payments from Medicare.
A former Independence Blue Cross employee will receive a $3,825,000 share of the settlement amount.
The United States alleges that Independence Blue Cross falsely certified in writing to the Centers for Medicare & Medicaid Services that the diagnosis data was accurate and truthful.
The United States contends that Independence Blue Cross operated a chart review program in which nurse reviewers identified medical conditions supported by medical records.
The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act captioned United States ex rel. Crawford v. Independence Blue Cross, No. 20-cv-5818 (E.D. Pa.).
David Metcalf, U.S. Attorney
"The Medicare Advantage program depends on accurate data about patient health."
Brett A. Shumate, Assistant Attorney General
"The government pays private insurers over $530 billion each year to care for Americans enrolled in Medicare Advantage."
Miranda L. Bennett, Acting Deputy Inspector General for Investigations
"Private insurers enrolled in the Part C program purposely inflating diagnoses for financial gain is unacceptable."
Miranda L. Bennett, Acting Deputy Inspector General for Investigations
"Today’s settlement demonstrates our commitment to ensuring the integrity of the Medicare program and to partnering with the Department of Justice to pursue allegations of risk adjustment fraud."

menu_bookBackground & Context

Context and data our newsroom added to the originating report.

Under the Medicare Advantage 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.
The Centers for Medicare & Medicaid Services pays Medicare Advantage Organizations a fixed monthly amount adjusted for various risk factors that affect expected health expenditures for the beneficiary.
Independence Blue Cross has operated Medicare Advantage plans since at least 1999, when it first became a Medicare Advantage Organization under the Medicare Part C program.
Independence Blue Cross previously settled a $2.25 million False Claims Act case in 2020 for incorrectly calculating Medicare Advantage plan costs, inflating bids to CMS.
Keystone Health Plan East, Inc. and QCC Insurance Company, Inc., on behalf of parent company Independence Blue Cross, LLC, agreed to pay $2.25 million plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs, resulting in inflated Medicare Advantage plan bids to the Centers for Medicare and Medicaid Services.
Medicare Advantage Plans have been under increased scrutiny for risk adjustment fraud, with the Department of Justice recovering over $2.5 billion in settlements from insurers between 2018 and 2023.
Independence Blue Cross previously faced a $2.25 million settlement in 2020 for allegedly inflating Medicare Advantage plan bids by incorrectly calculating anticipated costs, according to the Office of Inspector General.
In 2021, the Centers for Medicare & Medicaid Services issued guidance clarifying that Medicare Advantage Organizations must promptly correct inaccurate diagnosis codes and return overpayments, a requirement that Independence Blue Cross allegedly violated.
The United States has consistently emphasized the importance of accurate diagnosis coding in Medicare Advantage through regulatory updates and enforcement actions, with the Department of Justice stating in 2023 that 'fraudulent risk adjustment practices remain one of the most significant threats to the Medicare program.'
The United States has filed False Claims Act cases against multiple Medicare Advantage insurers in recent years, including Aetna, which settled for $117.7 million in May 2026 for similar coding violations.

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