LAKE COUNTY, Fla. – Another health insurer is accusing a large health care company in The Villages of falsely adding thousands of diagnostic codes to patient files, in a new objection to the company’s bankruptcy plan.

The Villages Health System is currently undergoing Chapter 11 bankruptcy, and plans to be put up for sale next month, with CenterWell, a company owned by insurer Humana, putting in a stalking horse bid.

Blue Cross Blue Shield of Florida, also known as Florida Blue, filed an objection to TVH’s plan on Thursday. You can read the objection at the bottom of the story.

In the complaint, Florida Blue says The Villages Health System added diagnostic codes to patient files through Medicare over a four-year period, resulting in overpayments by Florida Blue of $25 million.

Florida Blue’s attorneys say that in 2024 alone, TVH falsely added diagnostic codes for “Coagulation Defects and Other Specified Hematological Disorders” and “specified Heart Arrhythmias.”

Those codes led to an overpayment of approximately $8 million alone, according to the complaint.

Attorneys for Florida Blue say TVH is in default of its contracts with the health insurer because of the overpayments, and is asking the court to make sure TVH settles its contract default with Florida Blue, rather than letting TVH’s eventual buyer handle that settlement.

Florida Blue’s objection is one of several against the current bankruptcy agreement for The Villages Health system, a health care center that promotes a holistic approach to care, with an emphasis on team care for patients, a range of specialty doctors and wellness programs, and 10 locations serving 55,000 patients, according to the company’s website.

TVH announced in July that it was filing for Chapter 11 bankruptcy, around six months after the company admitted it had found a “problem with some of our Medicare billing practices.”

The company’s biggest debtor is the U.S. government. Bankruptcy filings show the company owes more than $360 million to the government.

Another objection came from United Healthcare last month, which also had Medicare overpayments because of erroneous billing from TVH, the health insurance company says.

United Healthcare said in court documents that the bankruptcy plan allows TVH to hide insider dealings. United Healthcare accused TVH of distributing some $183 million, from 2022 to 2024, to the Morse family, to pay down a line of credit.

The Morse family controls The Villages through several companies.

The health insurer also says that it is one of the largest providers of Medicare Advantage plans to The Villages Health System, and the companies have an exclusive marketing agreement. Yet the bankruptcy announcement blindsided United Healthcare officials.

United Healthcare says it wants the bankruptcy deal and TVH’s finances to undergo more scrutiny before the sale.

TVH, meanwhile, says it has had to borrow millions of dollars to keep its health centers going and pay the doctors, so that patient care is not affected during the transition. The court approved additional funds at a hearing on Aug. 18.

The deadline for bidding in The Villages Health System sale is expected to be Sept. 3 at 4 p.m. EST. CenterWell is expected to set the floor price, which other companies would have to counterbid.

If necessary, an auction for the company will be held on Sept. 7.

A sale order hearing is expected to be held on Sept. 9.

[READ the Blue Cross Blue Shield of Florida objection in The Villages Health bankruptcy case]