On July 27, 2009, the U.S. Attorney's Office for the Central District of California announced that Tulare Local Healthcare District, Tulare District Healthcare System, and Tulare District Hospital (collectively "Tulare") will pay $2.4 million plus interest to settle allegations that it provided remuneration in violation of the False Claims Act, the federal anti-kickback statute and the Stark Law to physicians who referred Medicare patients to Tulare. Tulare's chief financial officer from 1997-2007 initiated the whistleblower suit and was awarded $500,000.

The suit alleged that from 2001-2007, doctors received kickbacks in the form of below-market rate office space lease arrangements, below-market value commercial real estate purchase prices and debt forgiveness for office space improvements and leases in exchange for patient referrals. According to the settlement, which did not identify the doctors or entities by name, 20 physicians, a physician group and a laboratory were involved. The government contends that these inducements violated the Stark Law and anti-kickback statute and resulted in the submission of false claims to the Medicare program in violation of the False Claims Act.