SAN FRANCISCO (AP) — A large hospital chain based in Northern California agreed Thursday to pay $37 million to settle allegations that it overcharged the federal Medicare program.

San Francisco-based Dignity Health also agreed to hire an independent auditor to review its Medicare claims. The settlement resolves a 2009 whistleblower lawsuit filed in San Francisco federal court by a former Dignity worker who claimed the hospital chain submitted false and inflated Medicare claims from 2006 to 2010. The former worker, Kathleen Hawkins, will receive about $6.25 million.

Hawkins’ lawsuit claimed that 13 of Dignity’s hospitals often admitted patients for procedures that could have been done less expensively in an outpatient setting. Operations such as installing pacemakers and stents in patients’ hearts were billed as expensive in-patient procedures instead of less expensive out-patient operations.

Four of the hospitals were also accused of overcharging for minimally invasive spinal cord compression operations.

“Hospitals that attempt to boost profits by admitting patients for expensive and unnecessary inpatient hospital stays will be held accountable,” said Health and Human Services investigator Ivan Negroni. “Both patients and taxpayers deserve to have medical decisions made solely on what is best for the patient based on medical necessity.”

Dignity said it resolved the lawsuit to avoid the expense of litigation and admits to no improper conduct.

“The billing disputes reflect widespread confusion in the health care industry on unclear federal standards for approving coverage of patient admissions,” the company said in a statement. “As a result, it is often challenging for physicians to ensure their documentation adequately reflects their decision making in order to comply with complex regulations when making their best medical judgments.”

A person who has knowledge of fraud can sue on behalf of the federal government to recover money under the Federal False Claims Act with so-called whistleblower lawsuits.

Since January 2009, the Justice Department has recovered more than $23 billion through False Claims Act cases. Nearly $15 billion of that amount was recovered in cases involving fraud against federal health care programs. Successful plaintiffs share in any recovery.