REM Connecticut Community Services has entered into a civil settlement with the federal and state governments in which it will pay $1.5 million to resolve allegations that it received overpayments from the state Medicaid program.

REM, formerly of Middletown, operated multiple group homes that provided residential and day services to the intellectually disabled and at-risk youth. The company ceased state operations at the end of 2014.

It is alleged that REM reported certain interest expenses as allowable costs in the annual reports of residential and day services that were not allowable under the state’s cost standards. Consequently, the government alleges the company received overpayments from Medicaid that it was not entitled to.

REM has agreed to pay $1.5 million to the federal and state governments. A portion of the settlement amount will be satisfied by the government retaining nearly $1.2 million that was suspended by the state due to the company’s questionable billing practices. The remaining $310,975 will be paid by REM collectively to the federal and state governments.