The U.S. Department of Justice (DOJ) announced on June 3, 2026, that Community Care Health Network LLC, doing business as Matrix Medical Network (“Matrix”), agreed to pay $36.5 million to resolve False Claims Act (FCA) allegations arising from the alleged submission of false and invalid diagnosis codes to Medicare Advantage Organizations (MAOs). In a related settlement, DPN USA, doing business as HealthFair (“HealthFair”), agreed to pay $5 million, and HealthFair’s founder, Shahriah “James” Ekbatani, agreed to pay $15 million, bringing the total resolution to $56.5 million[1]. The settlements should serve as a stark warning to any provider entity operating under risk-adjusted contracts.
The Alleged Conduct: Matrix’s In-Home Assessments and Medicare Advantage Risk Adjustment
Matrix is a Nashville-based health services company that contracted with over 30 MAOs to conduct in-home health assessments of Medicare Advantage beneficiaries nationwide.[2] Under the Medicare Advantage program, CMS pays MAOs capitated amounts adjusted by each beneficiary’s health status, meaning sicker patients generate higher payments.[3] Critically, MAOs paid Matrix on a per-assessment basis for each in-home visit conducted, meaning Matrix’s revenue was directly tied to assessment volume.[4]
Matrix allegedly marketed itself to MAOs by advertising its ability to identify new diagnosis codes that would boost MAOs’ Risk Adjustment Factor (RAF) scores and, by extension, their CMS reimbursements.[5] Certain marketing materials allegedly touted the “HCC Lift” its assessments could generate, estimating the dollar-amount increase in risk-adjustment payments attributable to its services, and certain contracts allegedly required Matrix to report on the MAO’s return on investment (ROI), calculated based on the estimated increase in Medicare Part C reimbursements resulting from risk score increases attributable to Matrix’s assessments.[6] In other words, the government alleged that Matrix used these inflated risk-adjustment metrics as a sales tool to win and retain MAO contracts.
From 2014 through 2019, Matrix allegedly deployed nurse practitioners to perform in-home assessments.[7] These nurse practitioners allegedly did not provide clinical treatment or prescribe medications; rather, they collected health histories, conducted physical exams, and documented diagnostic information on electronic health assessment forms.[8] Matrix’s medical coding team then allegedly translated these assessments into diagnosis codes (including for serious chronic conditions such as proliferative diabetic retinopathy, drug-induced polyneuropathy, rheumatoid arthritis, atrial fibrillation, and chronic obstructive pulmonary disease), and reported them to MAOs for submission to CMS.[9]
The government alleged that these diagnoses:
(a) were not supported by sufficient clinical information;
(b) did not conform to ICD coding guidelines; and
(c) frequently had not been diagnosed by any other healthcare provider who treated the beneficiary during the relevant year or the two years preceding or following the assessment.[10]
Why It Matters: Medicare Advantage Risk-Adjustment Implications for Risk-Bearing Providers
The Matrix settlement carries significant implications for provider entities operating under risk-adjusted contracts, particularly those in global capitation or percent-of-premium arrangements. If your organization submits diagnosis codes to MAOs, or receives diagnosis codes from home health companies, in-home assessment vendors, or other third-party partners for upstream submission, the government’s theory of liability in this case underscores the importance of ensuring that those diagnoses are clinically supported and accurately coded.
The FCA imposes liability not only on the entity that submits a false claim, but also on any party that causes a false claim to be submitted.[11] Providers who knowingly accept and pass along unvetted or unsubstantiated diagnosis codes from downstream vendors (home health agencies, mobile assessment companies, or coding optimization firms), risk becoming a link in the same chain of liability that ensnared Matrix. The fact that a third party generated the code does not insulate the provider from liability if the provider knew, or should have known, that the codes lacked adequate clinical support.
For risk-bearing providers, the regulatory exposure is multilayered:
False Claims Act Liability.
Knowingly submitting, or causing the submission of, false or unsupported diagnosis information that results in improper Medicare Advantage payments can expose an organization to treble damages and per-claim penalties under the FCA.
Vendor Due Diligence and Oversight.
Providers should implement appropriate due diligence and oversight for third parties from which they receive diagnosis codes, including review of the clinical methodologies, coding practices, and compliance programs of home health companies, assessment vendors, and similar partners. The Matrix case demonstrates that the government will not accept a provider’s passive reliance on a vendor’s coding output as a defense.
Downstream Data and Certification Risks.
As first-tier or downstream entities, providers are often required to certify the accuracy and truthfulness of risk-adjustment data.[12] Passing through unsubstantiated codes exposes the certifying provider to liability, not merely the originating vendor.
Corporate Integrity and Exclusion Risk.
As part of its settlement, Matrix entered into a Corporate Integrity Agreement (CIA) with the HHS Office of Inspector General (HHS-OIG).[13] Providers found to have engaged in similar conduct risk exclusion from federal healthcare programs, a potential existential threat to any risk-bearing entity.
The Bottom Line
The government has made clear that it will pursue MAOs, downstream entities, and individuals who “do not play by the rules.”[14] For providers holding global capitated or percent-of-premium contracts, the message is clear: third-party vendor relationships do not eliminate the need for effective risk-adjustment compliance and oversight. Every diagnosis code your organization submits or causes to be submitted upstream must be clinically supported, properly documented, and compliant with ICD coding guidelines. Without proper vetting of vendor-supplied diagnosis codes and robust internal compliance controls, risk-bearing providers expose themselves to the very same FCA liability that cost Matrix $36.5 million, and their participation in federal healthcare programs.
How Frier Levitt Can Help
Frier Levitt advises risk-bearing providers, Medicare Advantage stakeholders, and other healthcare organizations on risk-adjustment compliance, False Claims Act exposure, and vendor oversight. Our attorneys can help organizations assess risk-adjustment practices, evaluate third-party vendor and coding arrangements, strengthen compliance and auditing protocols, and respond to government investigations or enforcement matters involving Medicare Advantage risk adjustment.
If your organization has questions about its risk-adjustment compliance obligations, is evaluating vendor-supplied diagnosis data, or is facing a Medicare Advantage risk-adjustment audit, investigation, or other enforcement matter, contact Frier Levitt to speak with an attorney.
[1] The DOJ Press Release states that “[t]he claims resolved by the settlement are allegations only and there has been no determination of liability.” DOJ Press Release No. 26-590 (June 3, 2026). However, in the Settlement Agreement itself, Matrix “admits, acknowledges, and accepts responsibility” for certain specific conduct described therein, including that its in-home assessments resulted in diagnoses reported to MAOs where the health assessment forms “did not contain sufficient clinical information to support the diagnosis.” Settlement Agreement at ¶ 2. Matrix is further prohibited from making any public statement that contradicts or is inconsistent with the Admitted Conduct. Id. at ¶ 13.
[2] Stipulation and Order of Settlement and Dismissal (“Settlement Agreement”), United States ex rel. Cahill v. Matrix Medical Network, No. 19 Civ. 11153 (S.D.N.Y.) at ¶ 2(b).
[3] Id. at ¶ 2(a).
[4] Id. at ¶ 2(b).
[5] Id. at ¶ 2(e).
[6] Id. at ¶¶ 2(e)–(f).
[7] Settlement Agreement at ¶ 2(c).
[8] Id.
[9] Id. at ¶ 2(d); DOJ Press Release No. 26-590 (June 3, 2026).
[10] Settlement Agreement at p. 3-4; ¶ 2(h); see also Complaint, United States ex rel. Oristaglio v. Community Care Health Network, Inc., No. 4:22-cv-00133 (E.D. Tex. Feb. 25, 2022) at ¶¶ 193–196, 207–211 (alleging a shift from evidence-based diagnosis toward maximizing risk-adjustment “lift,” with physician oversight of test interpretation displaced by unqualified staff and automated readings).
[11] See 31 U.S.C. § 3729(a)(1)(A).
[12] See Settlement Agreement at ¶ 2(g).
[13] Settlement Agreement at ¶ 8.
[14] DOJ Press Release No. 26-590 (June 3, 2026).
