Tapestry Hospice: More Referrals, More Pay

In the Tapestry Hospice lawsuit, the company and its owners and managers agreed to pay $1.4 million to resolve health care kickback allegations that medical-director payments bought patient referrals. A former employee brought the case. For someone who approved those payments or tracked incoming patients, the allegation reaches a familiar part of the business: what made the doctor’s pay go up or down, and who decided it should.

The Department of Justice announced the settlement on June 20, 2024. The company was Tapestry Hospice of Northwest Georgia, LLC, and the hospice fraud case was in the Northern District of Georgia.

Do Doctors Get Kickbacks for Referrals?

Doctors can receive kickbacks through medical-director pay. The government alleged that Tapestry paid medical directors monthly stipends and a signing bonus to induce hospice referrals. Compensation allegedly increased when a director referred more patients and decreased when the director failed to make referrals. The amount followed the patient flow.

The medical-director label sat over an alleged price for access to patients. In these hospice referral kickback allegations, an employee who knew why a stipend changed could explain something the payment’s description alone would leave out.

The government alleged that those arrangements violated the Anti-Kickback Statute and caused the submission of false claims under the False Claims Act. The allegation connects the money paid to the physician, the patients referred and the government bills that followed.

A bought referral can make the resulting claim false even when the patient received appropriate hospice care.

The patient has a stake in that financial arrangement too. As the Justice Department explained, kickbacks can move a doctor’s medical decisions toward personal financial gain and away from the patient’s interests. The family is choosing end-of-life care. The referring doctor has money riding on that choice.

Why Referral-Linked Pay Matters in Hospice

Medicare pays a hospice for enrolled days, including days when nobody visits. That gives a referral value beyond the initial admission: it brings a patient into a service that continues generating daily payments. The person who influences where patients go can influence which hospice receives that revenue.

The Medicare Payment Advisory Commission’s March 2026 hospice report describes the difference between the payment and the work. Hospices furnish more services at the beginning and end of a stay and fewer in the middle. The routine home care rate changes over the stay, but payment still follows enrolled days. Referral access sits at the front of that business.

A 2026 Kansas State University working paper, Quality, Reputation, and Reimbursement Design in the Hospice Industry, studied competition among California hospices. Its estimates found that reputation mattered to patients’ choice of provider, and its model linked better care to a stronger reputation and future patient demand. The paper describes why a referral should carry information about care:

A payment for steering patients puts a different incentive into that relationship. The doctor gains from the referral itself. A hospice investing in care has to compete for patients against a business willing to pay for access to them. That is the competitive problem behind the alleged Tapestry compensation formula, as well as the patient-care problem.

What Evidence Is Needed to Prove Fraud?

For referral-linked medical-director pay, the evidence connects the work, the payments, the referrals and the government claims. Making those connections takes the documents and an insider who knows how the arrangement operated. A contract says what the job was supposed to be; an employee may know why management actually raised or cut the fee. We work through that account with the insider and hospice fraud whistleblower lawyers who understand physician compensation, turning knowledge of the business into a case.

The Same Payment Pattern in Other Hospice Cases

The same alleged payment pattern carried a larger settlement at Creative Hospice Care: $9.2 million, announced by the Justice Department on June 11, 2025. The government again alleged monthly stipends and a signing bonus, with medical-director compensation increasing with referrals and decreasing without them. Both settlements came from the Northern District of Georgia.

A whistleblower’s complaint against Odyssey Healthcare described another way referral expectations allegedly entered a medical director’s job. It alleged that the company required the doctors to market the hospice and account for that activity:

The allegation makes the employment records worth reading alongside the contract. Marketing reports and evaluations can explain what management expected the physician to deliver. In Tapestry’s case, the alleged connection was visible in changing compensation. In the separate Odyssey complaint, it appeared in the duties and reporting expected of the medical directors. Both accounts direct attention to how the business valued a doctor’s access to patients.

The Former Employee’s Whistleblower Reward

The former Tapestry employee received a whistleblower reward from the settlement recovery, according to the Justice Department. The employee brought the qui tam case on the government’s behalf under the False Claims Act.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. For a hospice insider, the contribution can be knowing why a payment changed, who approved it and which patient referrals it rewarded. That is the business knowledge we help turn into a healthcare fraud case.

You Know Why the Stipend Changed

If you saw a medical director’s pay rise or fall with patient referrals, speak to one of our whistleblower experts about how that pay was set. We bring in hospice fraud whistleblower lawyers who understand physician compensation and work with you to build your strongest hospice whistleblower case. We stay beside you as partners throughout the case.