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Prime Healthcare Services, Inc., Prime Healthcare Foundation, Inc., and Prime Healthcare Management, Inc. as well as Prime's Founder and Chief Executive Officer, Dr. Prem Reddy, agreed to pay the United States 65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required only less costly, outpatient care and by billing for more expensive patient diagnoses than the patients had (a practice known as up-coding). Under the settlement agreement, Dr. Reddy will pay 3,250,000 and Prime will pay 61,750,000.