Johns Hopkins Bayview Medical Center Inc. has agreed to pay $2.75 million to settle allegations that it filed false claims to federal health benefits programs for nearly two years, the U.S. attorney for Maryland announced Tuesday.

From July 2005 though February 2007, Bayview employees claimed that patients were treated for ailments they did not have, including malnutrition and acute respiratory failure, according to the settlement agreement.

The claims inflated the severity of the center's case mix and, therefore, the rates at which it was reimbursed under schedules set by the Maryland Health Services Cost Review Commission.

In a statement, Bayview denied the allegations and said the settlement was not an admission of liability. "Rather, Bayview entered into the settlement to avoid the time, effort, expense, and uncertainty of protracted litigation so that it can continue to focus on providing high-quality patient care."

U.S. Attorney Rod J. Rosenstein's office said the fraud was discovered after Bayview employees came forward, filing a complaint in a sealed lawsuit under the False Claims Act. The complaint alleges that employees reviewed inpatient charts to see if there were opportunities to increase the severity of cases through lab test results that suggest the existence of various conditions. They advised physicians to include those diagnoses in the patient's medical record. The two employees who filed the complaint will receive $550,000, or 20 percent of the settlement.

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