A federal judge in Georgia handed Clover Health a significant legal victory on May 27, 2026. U.S. District Judge Lisa Godbey Wood partially granted Clover’s motion for summary judgment, ruling that CMS improperly included 20 measures in the calculation of the insurer’s 2026 Medicare Advantage star rating. Furthermore, she ordered CMS to recalculate Clover’s 3.5-star PPO rating. The ruling arrives just days before the June 1 Medicare Advantage bid deadline — a timing that adds urgency to an already consequential decision.
The Federal Court Ruling Against CMS
What the Judge Found
Judge Wood’s ruling centers on how CMS constructed Clover’s 2026 star rating. The court found that 20 specific measures used in the calculation did not meet the legal standards required under the statutory framework governing Medicare Advantage quality improvement programs. Additionally, the judge found that CMS bypassed a required regulatory process before including a separate group of measures. Together, these two findings rendered the rating calculation legally invalid. Consequently, the court ordered CMS to redo the calculation.
Why Clover Filed the Lawsuit
Clover filed its lawsuit against CMS in November 2025. The company alleged that its PPO plan rating dropped improperly from 4 stars to 3.5 stars for the 2026 plan year. That drop, Clover argued, cost the insurer approximately $120 million in missed quality bonus payments. The PPO plan at the center of the case covers nearly all of Clover’s Medicare Advantage membership. Therefore, the financial and operational impact of the rating drop was severe and company-wide. Clover’s HMO plan received a 4-star rating for 2026 and was not part of the litigation.
Two Grounds for the Court’s Decision
Improperly Sourced Measures
The court ruled in Clover’s favor on two distinct legal grounds. First, the judge found that CMS improperly relied on 10 measures — including medication adherence measures and call center data — that did not come from data collected under CMS authority governing Medicare Advantage quality improvement programs. In other words, those measures lacked the proper legal basis to be included in the star rating calculation at all.
Failure to Follow Rulemaking Process
Second, the judge deemed the calculation procedurally invalid because CMS failed to undergo required notice-and-comment rulemaking before including a separate set of 10 disputed measures. This procedural failure is significant. Federal agencies must follow established rulemaking procedures before implementing changes that carry major financial consequences. The judge made this point directly, writing that the fact star ratings trigger statutorily mandated funding increases is more than mere influence or an indirect effect — it is a deciding principle in the payment amount.
The Financial Stakes Behind Star Ratings
Medicare Advantage star ratings carry enormous financial consequences for health plans. Plans that achieve four stars or above qualify for quality bonus payments that significantly increase their federal reimbursements. A drop from four to 3.5 stars removes access to those bonus payments entirely. For Clover, that loss translated to approximately $120 million in missed revenue for the 2026 plan year. Moreover, star ratings directly influence a plan’s ability to offer competitive supplemental benefits, attract new members and retain existing ones. Higher-rated plans can reinvest bonus payments into richer benefits — creating a compounding competitive advantage over lower-rated rivals.
Potential Implications Beyond Clover Health
A Ruling With Broader Reach
While the ruling applies only to Clover Health, its legal reasoning could carry implications far beyond a single insurer. The court’s analysis centers on the statutory framework governing the Medicare Advantage star ratings program broadly — not on facts unique to Clover’s situation. This means other plans that faced similar measure inclusions in their own star rating calculations could potentially use this ruling as a foundation for their own legal challenges. However, those implications depend heavily on whether the decision survives appeal.
CMS Pushes Back on the Ruling
CMS has already asked the court to reconsider its ruling. The agency’s request for reconsideration signals that it intends to contest the decision rather than accept it. If the court declines to reconsider, CMS could pursue an appeal to a higher court. The outcome of that process will determine whether Clover’s ruling remains an isolated win or becomes a broader precedent reshaping how CMS constructs Medicare Advantage star ratings across the entire market.
Other Insurers Challenging Star Ratings
Clover Health is not alone in its legal challenge. CareFirst BlueCross BlueShield has also filed a lawsuit against CMS over its 2026 Medicare Advantage star ratings. CareFirst alleges that improper calculations cost the insurer approximately $32 million in quality bonus payments. Furthermore, CMS has faced a wave of star ratings litigation in recent years. In some cases, the agency revised ratings for specific contracts following successful legal challenges — though those earlier cases were narrower in scope than Clover’s lawsuit. The growing volume of star ratings litigation suggests that health plans are increasingly willing to challenge CMS methodology in court rather than absorb the financial consequences of disputed calculations.
