DOJ joins lawsuit against major carriers alleging Medicare kickback scheme

Federal prosecutors have accused three of the country’s biggest health insurers—Aetna, Humana, and Elevance Health (formerly Anthem)—of taking part in a massive kickback scheme that allegedly defrauded Medicare and put some of the nation’s most vulnerable citizens at risk.

According to a newly unsealed lawsuit in Boston, the companies paid hundreds of millions of dollars in illegal commissions to insurance brokers to push Medicare Advantage plans, even if those plans were not the best fit for patients, particularly seniors and people with disabilities.

The lawsuit alleging Medicare kickbacks was originally filed by a whistleblower, Andrew Shea, a former executive at the online insurance brokerage eHealth. The federal government has now joined parts of the case, which also names several large brokers—including eHealth, GoHealth, and SelectQuote—as defendants, as well as CVS, Aetna’s parent company.

Suit alleges money secretly funneled to brokers

From 2016 to 2021, the Medicare kickbacks complaint alleges, insurers used misleading “marketing” or “administrative” payments to secretly funnel money to brokers. In return, brokers steered clients toward certain plans, often prioritizing insurer profits over patients’ needs.

“In public statements, the Defendant Brokers claimed to be ‘unbiased,’ ‘carrier-agnostic,’ and to ‘have your best interests in mind,’” the complaint says. “In private, however, the Defendant Brokers repeatedly directed Medicare beneficiaries to the plans offered by insurers that paid them the most money.”

The illegal inducements allegedly allowed brokers to set up sales teams that only pitched favored insurers’ plans or refused to sell plans from competitors unwilling to pay more fees. In one internal message cited in the complaint, an eHealth executive joked that Humana was paying the company "$15M/year for a [web]site that drives 15 enrollments per year," mocking government regulators by adding, “Luckily the govt are generally morons.”

The alleged kickbacks, prosecutors said, violate federal Anti-Kickback Statutes and the False Claims Act. These laws prohibit financial incentives that can distort healthcare decisions and lead to over-billing or medically unnecessary services.

Companies deny wrongdoing

A spokesman for Aetna and CVS Health said the company’s marketing programs and compensation to brokers all complied with CMS rules.

“We remain committed to providing high-quality insurance products for diverse individual needs and strive to ensure that each individual is in the best plan for their needs,” the Aetna statement said. “We dispute the allegations and intend to defend ourselves vigorously.”

A nearly identical statement was provided by Elevance.

“We strongly disagree with the allegations in this suit and plan to defend ourselves vigorously,” according to SelectQuote CEO Tim Danker. “SelectQuote has been in business for over 40 years and has helped millions of Americans find the right coverage for their needs. We have always been a high-integrity organization that has abided by all applicable rules and regulations. We put the best interests of the customers at the forefront of what we do and believe these claims are baseless.”

Medicare kickbacks, enrollment reduction alleged

The suit also levels a rare and explosive claim: that some insurers used these arrangements to deliberately reduce enrollment by disabled Medicare beneficiaries, who were considered costlier to insure. According to the complaint, Aetna and Humana conspired with brokers to reject or avoid referrals from disabled individuals and used call-routing systems to minimize their engagement with such beneficiaries

“Humana strongly disagrees with the allegations in the complaint and we look forward to vigorously defending ourselves in the legal proceedings,” a Humana statement said. “As always, Humana’s highest priority remains ensuring our members are provided with outstanding healthcare coverage and access to care, while also continuing to support healthcare innovation, better health outcomes, and deeper patient engagement.”

Federal law prohibits insurers from discriminating against Medicare-eligible individuals with disabilities and requires all Medicare Advantage Organizations to accept eligible applicants regardless of health status.

“This type of discrimination is illegal, unethical, and dangerous,” the complaint states, noting that brokers sometimes received bonuses not just for enrolling seniors but for avoiding enrolling people with disabilities.

The government claims the defendants “knew what they were doing was illegal,” and that they tried to cover their tracks by creating sham contracts that mischaracterized kickbacks as reimbursement for marketing or other administrative services. One Humana employee allegedly described the arrangement as creating “pods” of agents incentivized to only sell Humana plans, saying the goal was “semi exclusivity” to “scale growth in a challenged product year.”

GoHealth, for example, received a $750,000 payment in 2016 for what it claimed was the purchase of 300,000 sales leads. But internal documents showed that the money was in fact meant to drive 3,000 Humana enrollments—a deal that directly violated Medicare regulations, the suit alleges.

Terms like 'bonuses,' 'rewards,' and 'kickers' cited

Similarly, the lawsuit cites Aetna’s use of terms like “bonuses,” “rewards,” and “kickers” to incentivize sales through eHealth and SelectQuote. In one email, an eHealth executive acknowledged that Aetna’s “marketing” payment model was “not even a little compliant.”

The alleged conduct, according to the Justice Department, resulted in the submission of false claims for Medicare reimbursement. Because Medicare Advantage plans are paid a fixed amount per enrollee by the government, misrepresenting the basis of enrollment decisions violates both the Anti-Kickback Statute and False Claims Act.

The lawsuit does not specify the total financial damage but says the government will seek treble damages and penalties, which under current law could reach up to $27,894 per false claim.

The case is being heard in the U.S. District Court in Boston.

If proven, the case would be one of the most significant Medicare Advantage fraud schemes in recent years, affecting a program that covers more than 33 million Americans and accounts for over half of all federal Medicare spending.

The government’s complaint concludes: “The Defendants violated the trust of millions of elderly and disabled Americans—and defrauded the taxpayers who fund Medicare—by corrupting the very process meant to ensure they get the care they need.”

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].