NEW YORK, March 11 (Reuters) - Aetna, a unit of CVS Health, agreed to pay $117.7 million to resolve U.S. government charges it defrauded Medicare by knowingly submitting inaccurate diagnosis codes for morbid obesity and other health conditions in Medicare Advantage Plan enrollees.

The civil settlement announced by the U.S. Department of Justice on Wednesday resolves charges that Aetna violated the federal False Claims Act.

Under Medicare Advantage, also known as Medicare Part C, patients who opt out of traditional Medicare may enroll in private health plans known as Medicare Advantage Organizations, or MAOs.

The U.S. Centers for Medicare & Medicaid Services generally pays MAOs higher amounts for sicker patients, after calculating "risk adjustments" based on diagnosis codes it collects.

According to the Justice Department, between 2018 and 2023 Aetna submitted untruthful diagnosis data to CMS for morbid obesity in patients whose reported Body Mass Index was inconsistent with that diagnosis.

Aetna was also accused of failing to withdraw inaccurate diagnosis codes it uncovered during a review of patients' medical records for 2015.

Private insurers receive more than $530 billion annually from the government to care for Medicare Advantage patients, Assistant Attorney General Brett Shumate said in a statement.

CVS, based in Woonsocket, Rhode Island, said it settled to avoid the uncertainty and expense of litigation.

"Aetna continues to disagree with the DOJ's industry-wide allegations, and this settlement should not be seen as an acknowledgment of liability," CVS added. CVS bought Aetna in 2018.

The settlement related to morbid obesity resolves a January 2024 lawsuit filed in Philadelphia federal court by Mary Melette Thomas, an Arizona resident and former Aetna risk adjustment coding auditor.

She will receive $2.01 million from the settlement, the Justice Department said. The False Claims Act lets whistleblowers sue on the government's behalf, and share in recoveries.