Prime Healthcare Services Inc., which owns three Philadelphia-area hospitals, has agreed to pay $65 million in a False Claims Act settlement involving 14 California hospitals, the U.S. Department of Justice said Friday.

The settlement calls for the company's founder and chief executive Prem Reddy, a cardiologist, to pay $3.25 million, with the remainder to be paid by Prime, Prime Healthcare Foundation Inc., and Prime Healthcare Management Inc.

Prime's Philadelphia-area hospitals are Lower Bucks, Roxborough Memorial, and Suburban Community. Nationwide, the Ontario, Calif., company owns 45 hospitals.

The California settlement resolves allegations that from 2006 through 2013 Prime engaged in a "deliberate corporate-driven scheme" to admit Medicare beneficiaries from emergency departments for hospital stays even though they could have been treated in a less-costly setting. Additional allegations involved upcoding ailments to increase Medicare reimbursement.

A former employee at a Prime hospital in San Diego blew the whistle on the scheme and will collect $17.23 million from the settlement.