Tulare (Calif.) District Health Care agreed to pay the U.S. government $2.4 million to settle a whistle-blower lawsuit alleging that some of the hospital's arrangements with physicians violated the federal anti-kickback statute and the restriction on physician self-referral known as the Stark law.
The district, which includes 116-bed Tulare District Hospital, denies any wrongdoing in the settlement agreement, announced July 27 by the U.S. attorney's office in Los Angeles after the case was unsealed.
An investigation was triggered by a False Claims Act complaint filed in 2008 by former Chief Financial Officer Lucy Reimche. Reimche contended that the public hospital leased space and sold developed lots to physicians at rates substantially below market value, as well as forgave debts that some physicians owed the district. The deals, she alleged, constituted payments intended to generate referrals.
Patric Hooper of the law firm Hooper Lundy & Bookman, who represented the district, said that the arrangements in question were appropriate and common but that fighting the lawsuit would be too costly. In addition to the settlement payment, of which Reimche is set to receive about $500,000, the district agreed to enter a five-year corporate integrity agreement with HHS' inspector general's office.