Universal Health Services Inc., of King of Prussia, and its subsidiary Psychiatric Solutions Inc. agreed to pay $3.45 million to settle allegations of Medicare fraud at a California psychiatric facility before UHS purchased it.

The alleged fraud, involving the failure of BHC Sierra Vista Hospital Inc. to provide all the services required under a certain Medicare program, occurred between January 2003 and September 2009. UHS's purchased Psychiatric Solutions in November 2010.

The Sacramento hospital denied wrongdoing. UHS said in a statement that it "is committed to ensuring that its facilities provide the highest quality health care and comply with all legal and regulatory requirements." Separately, UHS said it had agreed to sell a 213-bed acute-care hospital in Auburn, Wash., for $98 million.

— Harold Brubaker