The District Court for the District of Massachusetts issued a sweeping decision on March 25, 2026 in United States ex rel. Shea v. eHealth, Inc., No. 21-cv-11777-DJC, denying nearly all of the defendants’ motion to dismiss in a partially-intervened qui tam action brought against three major Medicare Advantage Organizations (MAOs)—Aetna, Humana, and Elevance (Anthem)—and three independent insurance brokers—eHealth, GoHealth, and SelectQuote.[1] While the case’s Anti-Kickback Statute (AKS) allegations are themselves significant, the court’s endorsement of a novel False Claims Act (FCA) theory, one that ties violations of federal non-discrimination regulations directly to false claims liability, should command the attention of every provider operating in the value-based care ecosystem.
The Kickback Scheme in Brief
The government alleges that from 2016 through 2021, the defendant MAOs paid hundreds of millions of dollars in so-called “marketing” payments to the defendant brokers, which were, in substance, per-enrollment kickbacks designed to induce the brokers to steer Medicare beneficiaries toward those insurers’ MA plans. The court found these allegations sufficient, rejecting arguments that the payments were authorized by CMS or constituted permissible fair-market-value administrative fees. Notably, the court held that the substance of the arrangements, not their contractual labels, controls the AKS analysis, citing internal correspondence in which defendants discussed how to characterize payments to avoid CMS scrutiny.
The court further concluded that MA plans qualify as “items or services” under the AKS, and that the brokers’ unique position of influence over beneficiary enrollment decisions was sufficient to establish inducement.
The Novel Theory: Discrimination as a Basis for FCA Liability
Of particular significance to the value-based care community are Counts III and V. The government alleges that Aetna and Humana conditioned their kickback payments on the brokers limiting enrollment of under-65 disabled Medicare beneficiaries (“U65” beneficiaries), whom the insurers viewed as costlier to cover. The brokers allegedly complied by evading calls from disabled beneficiaries, disabling online enrollment buttons, halting telephonic sales in certain states, and outright removing the option to enroll in certain plans.
The government’s theory is that by falsely certifying compliance with federal anti-discrimination regulations—including 42 C.F.R. § 422.110 (prohibiting discrimination in MA beneficiary enrollment) and Section 504 of the Rehabilitation Act (incorporated through 45 C.F.R. Part 92)—while simultaneously engaging in systematic discrimination, the MAOs submitted false claims to CMS each time they sought capitation payments. The court agreed, holding that the complaint plausibly alleged falsity, materiality, and causation.
On materiality, the court’s reasoning is especially instructive. Relying on United States ex rel. Williams v. City of Brockton, the court held that compliance with non-discrimination requirements goes “to the very essence of the bargain” between MAOs and CMS, because the MA program’s explicit purpose is to connect all eligible beneficiaries, including those with disabilities, to health insurance coverage[2]. The court further reasoned that intentionally minimizing U65 enrollment was “neither minor nor insubstantial” and “directly undercuts the purpose of the MA program.”
Implications for Value-Based Care Providers
Providers in the value-based care space should take careful note. This decision signals that the government views non-discrimination compliance not as a collateral regulatory obligation, but as a condition material to federal payment, one whose breach can independently sustain FCA liability. For providers participating in MA networks, ACOs, or other risk-bearing arrangements, this means that any practice that could be characterized as cherry-picking healthier patients, discouraging enrollment of costlier beneficiary populations, or conditioning downstream referral relationships on patient demographics may now carry FCA exposure, independent of any kickback allegation.
This is especially salient in value-based models, where patient mix directly impacts financial performance, creating inherent incentive structures that could, if not carefully managed, give rise to discriminatory conduct.
The case remains at the pleading stage, and none of the allegations have been proven. But the court’s willingness to let this novel theory proceed past a motion to dismiss, over vigorous opposition from sophisticated defendants, is itself a significant development. Providers would be well-served to audit their enrollment, referral, and network participation practices now, with fresh eyes toward non-discrimination compliance, and to ensure that financial incentives embedded in value-based contracts do not inadvertently penalize or discourage participation by higher-acuity or disabled beneficiaries.
How Frier Levitt Can Help
Frier Levitt’s attorneys have extensive experience representing providers in Medicare Advantage and False Claims Act matters, including internal investigations, compliance program development, and defense against government enforcement actions. Our team advises healthcare organizations on structuring value-based arrangements, auditing enrollment and referral practices, and ensuring compliance with anti-kickback and non-discrimination requirements. We also assist clients in identifying and mitigating FCA exposure, responding to government inquiries, and developing proactive strategies to align financial incentives with regulatory obligations. If your organization participates in value-based care arrangements or Medicare Advantage networks, contact Frier Levitt to assess your risk and strengthen your compliance posture.
Frequently Asked Questions
What is the False Claims Act (FCA)?
The False Claims Act is a federal law that imposes liability on individuals and entities that knowingly submit false or fraudulent claims for payment to the government, including claims submitted to Medicare and Medicaid.
Can discrimination violations create FCA liability?
Yes. As highlighted in this case, courts may allow FCA claims to proceed where a provider or plan falsely certifies compliance with federal non-discrimination requirements while engaging in conduct that undermines those obligations.
Why is this decision important for value-based care providers?
The decision signals that compliance with non-discrimination laws may be considered material to government payment. This means providers participating in value-based arrangements could face FCA exposure if their practices are perceived as discouraging enrollment of higher-risk or disabled patients.
What types of practices could raise compliance concerns?
Practices that may raise risk include steering healthier patients, discouraging enrollment of higher-cost beneficiaries, restricting access to certain patient populations, or structuring financial incentives in ways that indirectly promote discriminatory outcomes.
What should providers do now to reduce risk?
Providers should review their enrollment, referral, and contracting practices to ensure compliance with non-discrimination requirements. This includes evaluating financial incentives, auditing internal processes, and implementing safeguards to prevent conduct that could be interpreted as discriminatory.
[1] United States ex rel. Shea v. eHealth, Inc., No. 21-cv-11777-DJC, slip op. at 1–2 (D. Mass. Mar. 25, 2026).
[2] Id. at 32-33 (citing United States ex rel. Williams v. City of Brockton, No. 12-cv-12193-IT, 2016 WL 7429176, at *7 (D. Mass. Dec. 23, 2016)).
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