A health clinic in Apple Valley has agreed to pay $195,000 to settle a suit that accused it of improperly billing the federal Medicare and Medicaid programs for outpatient services, the U.S. Attorney's Office in Minnesota said Friday.

Under the terms of the settlement-which was finalized on Thursday-the Apple Valley Medical Clinic, Ltd., (AVMC) will pay $182,882 to the federal government and $12,118 to the State of Minnesota.

The AVMC will pay its settlement to the State through the Minnesota Department of Human Services, which administers the Medicaid program in Minnesota.

According to federal prosecutors, the AVMC submitted false claims for payment to the Medicare and Medicaid programs-specifically by improperly billing for outpatient services. The clinic is accused of “upcoding,” meaning that it used misleading billing codes to receive more than the proper reimbursement.

Through many instances of “upcoding,” the AVMC allegedly caused Medicare and Medicaid to overpay for services between 2003 and 2008.

The AVMC denies the allegations, but it has agreed to pay in order to have all civil and administrative claims against it dropped. Under the terms of the agreement, the AVMC may continue to participate in the Medicare and Medicaid programs.