Two area hospitals are among 23 Indiana health care providers agreeing to pay more $435,000 in penalties for hiring individuals excluded from the Medicaid program, state Attorney General Steve Carter said Wednesday.

The Methodist Hospitals, with campuses in Gary and Merrillville, agreed to pay $23,897, and St. Catherine Hospital in East Chicago agreed to pay $17,295 in the settlement.

Federal rules prohibit employers from having Medicaid-reimbursed services performed by certain employees, including those convicted of certain crimes.

A database of excluded individuals maintained by the U.S. Department of Health and Human Services permits health care providers to compare employee rosters against excluded individuals.

According to information provided by Carter's office, The Methodist Hospitals from mid-2001 to early 2003 employed a licensed practical nurse whose name had been on the exclusion list since early 2001.

The hospital screened the nurse using a married name she provided rather than a prior name, which was on the exclusion list, Carter reported.

The nurse was employed by Methodist hospitals for two years until the hospital was approached by an investigator with the Medicaid Fraud Control Unit, Carter said.

Methodist Hospitals officials did not respond to Times' requests for comments as of press time Tuesday.

A nurse by the same name was employed by Sebo's Nursing and Rehabilitation Center in Hobart from November 2004 to January 2005. In that case, a background check by Sebo's revealed the nurse was on the excluded list, Carter said. However, Sebo's personnel did not thoroughly review the report, according to Carter's office.

An administrator with the nursing home's corporate office did not return a phone call requesting a comment.

Sebo's agreed to pay a fine or $14,316, according to Carter.

A registered nurse employed by St. Catherine Hospital from January 2006 to October 2007 had been excluded in mid 2006.

The hospital told investigators it believed the nurse's name had been typed incorrectly by a company doing a background check.

"St. Catherine Hospital has taken steps to ensure that the hospital remains compliant with federal hiring regulations," said Mylinda Cane, spokeswoman for St. Catherine Hospital owner Community Healthcare System.

A registered nurse employed by Christian Home Health Services in Merrillville for one week in April 2004 had been excluded in February 2003.

The nurse had not been screened against the exclusion list but was terminated when a criminal background check revealed she had a previous conviction.

Christian Home Health Services agreed to pay a fine of $3,582.

A person who answered the phone at the facility Tuesday said she could not comment.