The $34 million settlement is one of hundreds the Department of Justice (DOJ) has reached since launching the False Claims Act Working Group with the Department of Health and Human Services (HHS) last summer.
Around that same time, the DOJ updated its corporate enforcement policy to encourage proactive compliance. Traditions’ relatively lenient settlement reflects the benefits of detecting misconduct early and self-disclosing as soon as possible.
What exactly did Traditions self-disclose?
First self-disclosure
In November 2024, Traditions first reported that several Oklahoma-based offices billed and were reimbursed by Medicare for home health care services that patients were ineligible to receive, triggering the False Claims Act. From January 2021 to November 2024, Traditions’ billing offices lacked adequate documentation of either a face-to-face doctor’s visit or a demonstrated need for skilled nursing services, both of which are required for eligible Medicare coverage.
Supplement to first disclosure
In a February 2025 supplement, Traditions reported findings of additional potential misconduct taking place from January 2021 to February 2025. Traditions reported improper arrangements between referring physicians and the previously reported Oklahoma offices, wherein directors were compensated for services they either failed to perform, were not necessary, or were rendered prior to parties’ fully executed written agreement—all potential violations of the Stark Law and Anti-Kickback Statute.
Second self-disclosure
In April 2025, Traditions reported additional potential violations of the Stark Law and the Anti-Kickback Statute between referring physicians and six additional subsidiaries in Oklahoma and Texas from January 2019 to March 2025.
Laws at play:
Anti-Kickback Statute
The Anti-Kickback Statute (AKS) prohibits providing anything of value to induce referrals for products or services covered by Medicare or other Government healthcare programs.
In the settlement, the DOJ claims Traditions “knowingly and willfully” paid remuneration to medical directors in exchange for patient referrals to the home health care provider—a violation of the AKS.
Stark Law
The Stark Law, formally known as the Physician Self-Referral Law, prohibits physicians from referring Medicare patients to services or entities the physician or an immediate family member holds a financial interest in (unless a specific exception applies).
In the case of Traditions, “financial interests” were created through kickbacks received from the healthcare provider to referring medical directors.
False Claims Act
The False Claims Act (FCA) imposes liability on any entity that knowingly submits false claims for payment for the government, in this case for Medicare reimbursement.
When Traditions billed Medicare for services stemming from these prohibited referrals, the illegality of the financial relationship triggered each billed claim to be a ‘false claim’ under the FCA.
Did Traditions benefit from self-reporting the potential misconduct?
The size of the settlement relative to the damages suggests Traditions saved millions by self-disclosing and implementing its own corrective action. Under the False Claims Act, the government can seek up to treble the amount in damages at trial. Most settlements range from 1.5x to 2.5x actual damages depending on cooperation. Traditions paid $34 million—just 1.5x the $22.68 million in restitution—demonstrating the substantial discount available for self-disclosure.
Traditions first detected the misconduct during a routine audit, seven years after it began. That the misconduct continued after the first disclosure, and that Traditions had to continuously report new findings of misconduct, suggests the home health care provider lacked proper compliance monitoring. Had Traditions implemented tools to proactively monitor and flag misconduct, it could have greatly decreased the damages from false claims and resulting $34 million settlement.
Proactive compliance monitoring can help organizations detect issues like potential kickbacks before they escalate. Global Relay solutions enable healthcare organizations to monitor business communications across high-risk channels for potential misconduct, enabling them to disclose at the earliest possible moment and limit overall liability.
Learn more about Global Relay for Healthcare and Life Sciences
