DOJ Sues Aetna, Humana, Elevance for Paying Illegal Medicare Advantage Kickbacks and Discriminating Against Disabled Beneficiaries

On May 1, 2025, the Department of Justice filed a False Claims Act lawsuit against three of the nation’s largest health insurance companies—Aetna (CVS Health), Humana, and Elevance Health (formerly Anthem)—along with three major insurance brokers—eHealth, GoHealth, and SelectQuote. The complaint alleges that from 2016 through 2021, these companies paid hundreds of millions of dollars in illegal kickbacks to brokers in exchange for steering Medicare beneficiaries into their Medicare Advantage plans regardless of suitability. Most disturbingly, the DOJ alleges Aetna and Humana conspired with brokers to discriminate against disabled Medicare beneficiaries, using data filters and threatening to withhold payments to pressure brokers to enroll fewer disabled individuals perceived as less profitable.

The Kickback Scheme

The DOJ alleges a systematic scheme where Medicare Advantage insurers paid brokers based on enrollments rather than legitimate marketing services:

“Marketing” Payments as Kickbacks: Insurers disguised kickbacks as payments for marketing services, but the compensation bore no relationship to actual marketing value. Internal documents revealed broker executives joking about receiving “$15 million per year for a website that drives 15 enrollments per year”—openly acknowledging the payments were kickbacks rather than compensation for services.

Steering Beneficiaries: Rather than acting as unbiased advisors helping Medicare beneficiaries choose appropriate plans, brokers directed customers to whichever insurer paid the highest kickbacks. Brokers set up dedicated teams that could only sell plans from insurers paying kickbacks and refused to offer plans from insurers who didn’t pay sufficiently.

Scale of Payments: The DOJ alleges insurers paid “hundreds of millions of dollars” in kickbacks between 2016 and 2021. These payments came from Medicare funds intended for patient care, diverted instead to broker compensation schemes.

Violation of Anti-Kickback Statute: The Anti-Kickback Statute prohibits offering or receiving payments to induce referrals of federal healthcare program beneficiaries. The insurer-broker kickback arrangements violated this statute by paying for patient “referrals” disguised as marketing services.

Discrimination Against Disabled Beneficiaries

The most disturbing allegations involve systematic discrimination against disabled Medicare beneficiaries:

Profitability Screening: Aetna and Humana viewed disabled Medicare beneficiaries as less profitable than elderly beneficiaries because disabled individuals typically have higher healthcare needs and costs. Rather than serving all eligible beneficiaries, the insurers sought to cherry-pick healthier, more profitable enrollees.

Pressuring Brokers: The insurers threatened to withhold kickback payments unless brokers enrolled fewer disabled beneficiaries. This created financial incentives for brokers to discriminate against people with disabilities in violation of federal law.

Data Filters and Call Routing: Aetna and its brokers used data analytics to identify likely disabled callers, then implemented call-routing strategies to screen out or divert these individuals from enrolling. This systematic discrimination used technology to avoid serving the most vulnerable Medicare beneficiaries.

“Not Even a Little Compliant”: Internal eHealth communications about Aetna’s agreements acknowledged the marketing payment model was “not even a little compliant”—demonstrating corporate knowledge that the arrangements violated federal law.

Violation of Americans with Disabilities Act: The discrimination against disabled Medicare beneficiaries violated the ADA’s prohibition on disability-based discrimination in the provision of services, in addition to Medicare regulations requiring insurers to accept all eligible beneficiaries without discrimination.

The Whistleblower: Andrew Shea

The case originated with a whistleblower complaint filed in November 2021 by Andrew Shea, former Senior Vice President of Marketing at eHealth:

Inside Knowledge: As a senior marketing executive, Shea had direct knowledge of the kickback arrangements between eHealth and insurers, as well as the strategies to avoid enrolling disabled beneficiaries.

DOJ Intervention: Unlike the Humana Part D fraud case where DOJ declined to intervene, in this case the Justice Department chose to join the lawsuit—indicating the evidence was particularly strong and the violations especially egregious.

Career Sacrifice: Shea’s whistleblower complaint likely ended his career in the insurance broker industry, demonstrating the personal costs of exposing corporate fraud even when doing so protects vulnerable populations.

Financial Incentive: Under the False Claims Act, Shea stands to receive 15-25% of any recovery—potentially tens of millions of dollars if the case succeeds. This financial incentive is designed to encourage insiders to report fraud that government agencies cannot easily detect.

The Insurers: Industry Giants

The defendants represent the largest players in Medicare Advantage:

Aetna/CVS Health: Following CVS’s acquisition of Aetna, CVS Health became a vertically integrated healthcare giant controlling insurance, pharmacy benefit management, retail pharmacies, and healthcare clinics. This vertical integration creates multiple opportunities for kickback arrangements and conflicts of interest.

Humana: One of the largest Medicare Advantage insurers, specializing in serving Medicare beneficiaries. Humana’s business model depends heavily on Medicare Advantage enrollment, creating strong incentives to maximize enrollment through any means including illegal kickbacks.

Elevance Health (Anthem): Operating Blue Cross Blue Shield plans across multiple states, Elevance is one of the largest health insurers in the country. Its involvement demonstrates kickback schemes extend across the entire industry, not just specialized Medicare insurers.

The Brokers: Enrollment Machines

The three broker defendants operate large-scale Medicare enrollment operations:

eHealth: Online insurance marketplace that claims to help consumers compare and enroll in Medicare Advantage plans. The lawsuit exposes that eHealth was actually steering customers to whichever insurer paid the most, not providing unbiased comparisons.

GoHealth: Call-center based insurance broker that aggressively markets Medicare Advantage plans through television advertising. The kickback arrangements explain how GoHealth could afford massive advertising budgets—insurers were subsidizing the marketing through kickback payments.

SelectQuote: Another major insurance broker that markets itself as helping consumers find appropriate coverage. The lawsuit reveals SelectQuote prioritized insurer kickbacks over customer welfare, recommending plans based on broker compensation rather than beneficiary needs.

False Claims Act Violations

The DOJ’s complaint is based on the False Claims Act, which prohibits knowingly presenting false claims for payment to the federal government:

Kickbacks as False Claims: When insurers submit claims to Medicare for beneficiaries enrolled through illegal kickback arrangements, those claims violate the False Claims Act. The kickbacks “taint” all resulting Medicare payments because enrollment was procured through illegal means.

Materiality: The federal government would not have paid Medicare Advantage premiums if it knew beneficiaries were enrolled through illegal kickbacks rather than legitimate marketing and honest broker recommendations.

Knowledge: The internal communications demonstrate all defendants knew the arrangements violated federal law but proceeded anyway, meeting the False Claims Act’s knowledge requirement.

Damages and Penalties: The False Claims Act allows recovery of triple damages plus penalties of $11,000-$23,000 per false claim. Given that the scheme involved hundreds of thousands of enrollments over five years, potential liability could reach billions of dollars.

Medicare Advantage Program Structure and Kickback Opportunities

The Medicare Advantage program’s structure creates systematic kickback opportunities:

Capitated Payments: Medicare pays insurers a fixed monthly amount per enrollee based on the beneficiary’s risk score. This creates incentives to maximize enrollment regardless of whether beneficiaries receive appropriate care.

Broker Commissions: Medicare regulations allow insurers to pay brokers commissions for enrollments, but these must be for legitimate services rather than kickbacks. The line between legitimate commissions and illegal kickbacks is often ambiguous, enabling fraud.

Limited Oversight: The Centers for Medicare & Medicaid Services (CMS) has limited ability to monitor broker payments and detect when “marketing” compensation actually constitutes kickbacks for enrollment referrals.

Competitive Pressure: In a competitive Medicare Advantage market, if some insurers pay kickbacks to gain enrollment advantages, other insurers face pressure to match these illegal payments to compete—creating a race to the bottom.

Systematic Cherry-Picking of Profitable Enrollees

The disability discrimination allegations expose how Medicare Advantage insurers systematically cherry-pick enrollees:

Risk Adjustment Gaming: While Medicare’s risk adjustment system is supposed to compensate insurers for enrolling sicker beneficiaries, insurers still prefer enrolling healthier people because:

• Healthier enrollees are easier and cheaper to serve
• Risk adjustment payments can be inflated through upcoding (adding false diagnoses)
• Sick patients may appeal claim denials and generate bad publicity

Cream Skimming: By discriminating against disabled beneficiaries, insurers engage in “cream skimming”—enrolling profitable patients while avoiding unprofitable ones. This defeats the purpose of Medicare Advantage, which is supposed to provide coverage for all eligible beneficiaries.

Adverse Selection for Traditional Medicare: When Medicare Advantage plans cherry-pick healthy enrollees, sicker and more expensive beneficiaries remain in traditional Medicare. This creates adverse selection that undermines traditional Medicare’s financial stability.

Regulatory Failure: Despite Medicare regulations prohibiting discriminatory enrollment practices, insurers found ways to avoid serving disabled beneficiaries through broker steering arrangements—demonstrating that regulations without enforcement are meaningless.

Internal Communications: Smoking Gun Evidence

The DOJ complaint cites damning internal communications proving corporate knowledge of illegality:

eHealth Executive on Humana: When discussing a supposed “marketing” agreement with Humana, one eHealth executive joked that Humana was paying “$15 [million]/year for a [web]site that drives 15 enrollments per year,” adding sarcastically, “[Centers for Medicare & Medicaid Services] will surely never figure that one out.”

This communication proves:

• Executives knew payments bore no relationship to marketing value
• The payments were kickbacks for enrollments, not legitimate service compensation
• Executives believed they could evade regulatory detection
• The fraud was deliberate and knowing, not inadvertent

eHealth Executive on Aetna: Commenting on Aetna’s agreements, another eHealth executive acknowledged the “marketing” payment model was “not even a little compliant”—explicitly recognizing the arrangement violated federal law.

Discovery Process: These communications came from the whistleblower’s knowledge, but the discovery process in the lawsuit will likely uncover many additional incriminating documents proving systematic knowledge of illegality across all defendants.

Corporate Responses: Denying the Obvious

All defendants issued statements rejecting the allegations and vowing to fight “vigorously”:

Aetna/CVS Health: “Aetna designed and executed its marketing programs and compensation to brokers to comply with CMS rules, and we continue to believe that we did so.” This defense ignores internal communications acknowledging non-compliance.

Humana: Denied wrongdoing and claimed compliance with all regulations. Given Humana’s recent $90 million settlement for Part D fraud, this defense lacks credibility.

Elevance Health: Claimed its broker arrangements complied with federal law and expressed confidence in defending against the charges.

SelectQuote: Rejected accusations and claimed compliance with Medicare regulations.

These uniform denials, despite strong documentary evidence, suggest coordinated defense strategies and confidence that corporate resources can outlast government prosecution—demonstrating regulatory capture dynamics where powerful corporations believe they can escape accountability.

Regulatory Capture and Delayed Enforcement

The case raises questions about regulatory capture and enforcement delays:

Five-Year Scheme: The fraud occurred from 2016-2021, yet the DOJ lawsuit wasn’t filed until May 2025—four years after the fraud allegedly ended. This delay allowed insurers to profit from illegal enrollments for years.

CMS Oversight Failure: The Centers for Medicare & Medicaid Services apparently failed to detect the kickback arrangements despite overseeing the Medicare Advantage program. This suggests either inadequate oversight systems or regulatory capture where CMS protects industry interests.

Whistleblower Dependence: The case only came to light because of Andrew Shea’s whistleblower complaint, not through proactive government enforcement. This demonstrates that regulators cannot or will not detect fraud without insider revelations.

Industry Lobbying: Medicare Advantage insurers and brokers spent hundreds of millions on lobbying during the fraud period, potentially influencing CMS enforcement priorities and preventing regulatory reforms that would detect kickback schemes.

Impact on Medicare Beneficiaries

The kickback scheme directly harmed Medicare beneficiaries:

Inappropriate Plan Recommendations: Brokers steered beneficiaries to plans offering the highest kickbacks rather than plans best suited to beneficiaries’ needs. This resulted in enrollees paying higher out-of-pocket costs or receiving inadequate coverage for their medical needs.

Disabled Beneficiaries Denied Access: Disabled Medicare beneficiaries faced systematic discrimination preventing them from enrolling in Medicare Advantage plans, forcing them to remain in traditional Medicare or go without adequate supplemental coverage.

Trust Violation: Beneficiaries trusted that brokers would provide honest advice about plan selection. The kickback arrangements converted brokers from advisors into salespeople working for insurers rather than beneficiaries.

Higher Costs to Medicare: The kickback payments came from Medicare funds intended for patient care. Every dollar paid to brokers as kickbacks was a dollar diverted from medical services, increasing overall program costs without improving beneficiary care.

Vertical Integration and Conflicts of Interest

The CVS/Aetna case exemplifies how vertical integration facilitates fraud:

Multiple Profit Centers: CVS Health profits from:

• Insurance premiums through Aetna
• Pharmacy benefit management through CVS Caremark
• Retail pharmacy sales through CVS stores
• Healthcare clinic services through MinuteClinic

Self-Dealing: When Aetna enrollees fill prescriptions at CVS pharmacies processed by CVS Caremark, CVS Health profits at every step while controlling costs and coverage decisions—creating conflicts of interest where the company judges its own claims.

Data Control: Vertical integration gives CVS access to comprehensive patient data across insurance, pharmacy, and clinical services, enabling sophisticated strategies to maximize profits through selective enrollment, formulary manipulation, and prior authorization requirements.

Broker Kickbacks: The kickback arrangements ensured beneficiaries were steered to Aetna, feeding customers into CVS’s vertically integrated profit machine regardless of whether Aetna was the appropriate choice.

Medicare Advantage vs. Traditional Medicare

The case highlights systematic problems with Medicare privatization:

Profit Motive Corruption: Traditional Medicare operates on a non-profit basis with no incentive to pay kickbacks or discriminate against beneficiaries. Medicare Advantage’s profit motive creates systematic incentives for fraud and discrimination.

Complexity Enables Fraud: Medicare Advantage’s complexity—with multiple plans, brokers, and private insurers—creates opportunities for kickback schemes. Traditional Medicare’s simplicity prevents such fraud.

Cherry-Picking: Traditional Medicare must accept all beneficiaries without discrimination. Medicare Advantage plans found ways to cherry-pick profitable enrollees despite regulations prohibiting discrimination.

Administrative Waste: The hundreds of millions in kickback payments represent pure administrative waste that traditional Medicare avoids. These funds could have provided patient care instead of broker and insurer profits.

Potential Outcomes and Penalties

The case could result in:

Multi-Billion Dollar Liability: Given the scale of enrollments procured through kickbacks over five years, triple damages plus penalties under the False Claims Act could reach billions of dollars.

Corporate Settlements: More likely than trial, defendants will negotiate settlements allowing them to continue operating without admitting guilt—the standard corporate fraud resolution that demonstrates regulatory capture.

No Executive Accountability: As with most corporate fraud cases, no executives will likely face criminal charges despite internal communications proving knowledge of illegality.

Minimal Deterrence: Even if settlements reach billions of dollars, they will represent a fraction of profits generated through illegal enrollments, ensuring fraud remains profitable.

No Structural Reforms: Settlements will likely impose no requirements for structural reforms to prevent future kickback schemes, allowing the same practices to continue with more careful documentation.

Systematic Corruption in Medicare Privatization

The kickback case exemplifies systematic corruption in Medicare Advantage:

Legal Framework Enables Fraud: Medicare Advantage’s structure—with private insurers, brokers, risk adjustment, and limited oversight—creates systematic opportunities for kickback schemes.

Regulatory Capture: CMS failed to detect five years of kickback arrangements involving the largest insurers and brokers, demonstrating that regulators protect industry interests rather than beneficiary welfare.

Discrimination as Business Model: The systematic discrimination against disabled beneficiaries reveals that Medicare Advantage insurers view serving vulnerable populations as a cost to be avoided rather than a mission to be fulfilled.

Whistleblower Dependence: Fraud detection depends on insiders willing to sacrifice their careers, rather than proactive enforcement, proving government agencies lack capability or will to police the industry.

Industry Impunity: Corporate defendants’ confident denials despite documentary evidence demonstrate expectation of impunity—they believe their political power and resources will prevent meaningful accountability.

The case proves Medicare Advantage has become a vehicle for systematic fraud, with insurers and brokers enriching themselves through illegal kickbacks while discriminating against the disabled beneficiaries who most need coverage, all while regulatory capture ensures minimal consequences for systematic violations of federal law.