Traditions Health Pays $34M to Settle False Claims Act Charges of Medically Unnecessary Home Health Services

By the Constantine Cannon Whistleblower Team

Last Thursday (January 22), the Department of Justice (DOJ) announced that Tennessee-based Traditions Health agreed to pay $34 million to settle allegations it violated the False Claims Act and Anti-Kickback Statute and Stark Law by billing Medicare for medically unnecessary home health services and paying kickbacks to physicians in exchange for referrals.[1]  Traditions provides home healthcare services to patients in Kansas, Missouri, Oklahoma and Texas.

How Did the Government Learn of Traditions’ Alleged Medicare Fraud?

Notably, the Government learned of the conduct through the company’s own voluntary self-disclosures through the Health and Human Services Department Office of Inspector General (HHS-OIG) Provider Self-Disclosure Protocol.  This is a program where healthcare providers can report actual or potential violations of HHS rules and regulations in exchange for Government leniency.  Traditions learned of its alleged violations during an internal audit.

What Was the Nature of Traditions’ Alleged Medicare Fraud?

Traditions’ first disclosure was in September 2024 where it reported that some of its Oklahoma operations billed Medicare for medically unnecessary home healthcare services they provided to patients ineligible to receive them because Traditions lacked adequate documentation of: (i) a face-to-face doctor’s visit, and/or (ii) a need for skilled nursing service.  Both of these are required for Medicare coverage for home health services.

Traditions supplemented its disclosure in February 2025 and again in April 2025 where it reported potential violations of the Anti-Kickback Statute and Stark Physician Self-Referral Law relating to payments Traditions was making to certain referring physicians.  These payments were in the form of medical director arrangements where Traditions apparently compensated the participating physicians for services that (i) the medical directors may have failed to perform, (ii) may not have been reasonable and necessary, and/or (iii) the medical directors provided prior to entering into an agreement with Traditions.

The Anti-Kickback Statute prohibits providing anything of value to induce referrals for products or services covered by Medicare or other Government healthcare programs. The Stark Law prohibits certain physician self-referrals for products or services covered by Medicare unless they meet certain requirements or statutory exceptions generally relating to the purpose or value of the consideration the self-referring physician receives.

As part of its voluntary disclosure, Traditions reported taking disciplinary action against the offending employees, terminating the medical director contracts, providing compliance training to its staff, and retaining an outside consultant to further assist the company with remediation and going-forward compliance.  DOJ gave credit to Traditions for its voluntary reporting and remediation efforts, meaning the penalty would have been significantly higher had the company not stepped forward.

Did Traditions Benefit From Self-Reporting the Alleged Medicare Fraud?

In announcing the settlement, the Government highlighted the steps Traditions took to self-report the alleged violations and how doing so mitigated the enforcement approach the Government would otherwise have taken.  DOJ used the settlement to encourage other companies to follow suit if they similarly uncover potential Medicare fraud.

According to Deputy Assistant Attorney General Brenna Jenny: “As today’s settlement reflects, when healthcare providers fail to uphold the rules of the Medicare program, they can mitigate the consequences by making timely self-disclosures, cooperating with the Government’s investigation, and promptly taking appropriate remedial measures.”

U.S. Attorney Christopher Wilson (Eastern District of Oklahoma) echoed this sentiment: “The disclosure and settlement agreed to by Traditions Health LLC in this case demonstrates that early mitigation goes a long way towards addressing fraud and mitigating the loss of taxpayer dollars.”

Were Whistleblowers Involved in Reporting Traditions’ Alleged Medicare Fraud?

Companies would be wise to heed DOJ’s advice about self-reporting.  Otherwise, they can face substantial fines and penalties for engaging in healthcare fraud.  And given the prevalence of whistleblowers — and their ability to bring lawsuits on behalf of the Government under the qui tam provisions of the False Claims Act — there is a real risk the Government will ultimately learn of the fraud anyway.

Unfortunately, many companies look the other way when they learn of potential fraud.  Even worse, they punish whistleblowers for internally reporting it.  That is what drives whistleblowers to bring these cases or otherwise report the fraud to the Government.

Constantine Cannon whistleblower partner Marlene Koury notes the prevalence of this kind of whistleblower retaliation with the majority of whistleblowers with whom she works. According to Koury, “Most of our clients come to us only after they have reported the misconduct internally and have either been ignored or punished for doing so.”  Koury says that in these situations, “If the company had embraced the whistleblower and their concerns, instead of trying to silence them, the company could have avoided a whole lot of trouble.”

Virtually all the False Claims Act cases Koury and her colleagues bring are for whistleblowers who have followed this path.  It is not clear whether whistleblowers were involved in Traditions’ path to self-reporting.  Either way, the proactive action the company took in working with the Government is a good example of how cooperation and transparency is in everyone’s interest — the offending company, the Government, the public, and most importantly, the patient-victims of the offending conduct.

Constantine Cannon Has Substantial Experience Representing False Claims Act Whistleblowers

Constantine Cannon has substantial experience representing whistleblowers under the False Claims Act and securing numerous groundbreaking settlements.  If you would like to learn more about our whistleblower successes in this area, the False Claims Act, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.

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Sources:

[1]  See https://www.justice.gov/opa/pr/traditions-health-agrees-pay-34m-resolve-false-claims-act-liability-relating-home-health.

Tagged in: Anti-Kickback and Stark, False Claims Act, qui tam,