The investigation focused on claims made by patients enrolled in both Medicare and Medicaid.
"The investigation found that WellStar filed claims which did not reflect the full amount of Medicare prior payments, allowing WellStar to receive excessive Medicaid reimbursements," according to the Attorney General's Office.
For patients covered under both federal health plans, Medicare, which covers the elderly and disabled, acts as the primary coverage and Medicaid, which is for low-income Americans, functions as the secondary insurance.
Under the terms of the civil settlement, WellStar, which has five hospitals in Cobb, Douglas and Paulding counties, denied any wrongdoing, but agreed to pay the Georgia Department of Community Health $2.72 million and an additional $10,000 to cover costs associated with the investigation.
"Active enforcement and oversight are the keys to ensuring that Georgia taxpayers are not overpaying for Medicaid services, which is critical at all times but especially when demand for Medicaid services is so high and public monies to pay for Medicaid are scarcer than ever," Baker said in a statement.
According to the AG's Office, "WellStar cooperated fully with the state's investigation and implemented corrective actions to ensure that similar billing problems do not reoccur."
Jim Budzinski, the health system's chief financial officer who was also abruptly appointed as acting president Thursday night, said the overpayments from Medicaid date back four years. He said the health system repaid the Medicaid system, dollar for dollar, on Monday.
He said every time the health system notices that it has been overpaid, "We immediately try to return funds."
However, with the four years of overpayments WellStar received from Medicaid, "our system was inadequate" in spotting them, Budzinski said.
"So we hired outside auditors and worked with the state," he said. "Auditors found no other issues to any other payers. We have implemented other measures to more accurately evaluate payments from the state."
The Georgia Medicaid Fraud Control Unit and the Department of Community Health conducted the investigation.
"Reviews of other hospitals for similar billing issues are on-going and any identified will be referred to the Fraud Unit for further investigation," DCH Inspector General Robert Finlayson said.
WellStar spokesman Keith Bowermaster said the settlement was unrelated to WellStar's board of trustees' surprise move late Thursday to fire the health care provider's president and CEO, Dr. Greg Simone.
It remains unknown why Simone was terminated, effective immediately. The vote was unanimous with the exception of two board members, who are physicians employed by the health system.
Simone did not return calls for comment Friday.
Randall Bentley, chairman of the 18-member board of trustees, said Thursday, "It was just time for a change." Budzinski was appointed acting president and CEO while the board prepares for a national search for Simone's replacement, Bentley said.
Bonnie Wilson, WellStar's executive vice president and general counsel, received notice earlier this week that her employment agreement will not be renewed either.