KINGSPORT, Tenn. (AP) _ Columbia/HCA Healthcare has fired its top two executives at a local hospital after an investigation found they probably inflated cost reports and then tried to cover it up.

Indian Path Medical Center chief executive officer Robert Bauer Jr. and chief financial officer Jim Matney were dismissed Monday. Both of the Tennessee hospital managers deny any wrongdoing, and Bauer said today that he's being used as a ``scapegoat'' by Columbia.

Columbia officials say Bauer and Matney reported as geriatric psychiatric costs certain billings that were generated by other departments. That would have allowed higher reimbursement under the federal Medicare program.

``There was an investigation performed by our outside counsel and it was determined that the allegations were probably true,'' said George Asbell, a Columbia executive who has been named interim CEO at the hospital. ``And there was some evidence of a cover-up of those costs.''

Asbell said he does not know if the cost shifting resulted in the government paying the hospital more money it should not have.

No criminal charges have been filed, but federal prosecutors have subpoenaed information from Indian Path, Asbell said.

Bauer and Matney said they are innocent.

``These allegations are completely unfounded and insupportable,'' Bauer said in a statement. ``The only misconduct and unethical behavior in my situation is Columbia/HCA trying to make me a scapegoat, and they should be ashamed.''

Matney said if he made any reporting mistakes they were unintentional.

``I am not guilty of anything intentional,'' he said.

The firings come as federal investigators continue looking into whether Columbia, under its former senior management team, overcharged Medicare and other federal health programs. Three middle managers have been indicted in Florida.

In a memo sent to employees Tuesday, Columbia chief executive Thomas Frist Jr. and president Jack Bovender called the firings ``sobering.''

``Based on our experience of the last 11 months, we are convinced this is an isolated incident and certainly does not reflect the ethical standards of the vast majority of our colleagues,'' the memo said.

Frist took over for Richard Scott last July after Scott was ousted by Columbia's board. Scott's aggressive management style produced huge profits but brought allegations of wrongdoing and prompted the federal investigation.

Frist has announced a major restructuring that includes the sale or spin off of about one-third of the company's more than 330 hospitals, its home health business and some surgery centers.

Today Columbia officials said they've completed the sale of Value Behavioral Health to FHC Health Systems of Norfolk, Va., for $206.5 million, creating the nation's second largest behavioral health management company.

Scott had bought Value Health for $1.3 billion just before he left. Frist immediately announced plans to sell three-quarters of the business. Today's announcement completes the sales.

Last month, Columbia announced a deal to sell 22 hospitals, including Indian Path, to a nonprofit consortium.

Johnson City Medical Center, which is part of the consortium, is buying Indian Path. The medical center's attorney, Tim Belisle, said it was unlikely the revelations at Indian Path would affect the sale.

The allegations against Bauer and Metney, and the results of two internal investigations, have been reported to federal officials, Asbell said. Federal authorities have filed a subpoena seeking information on the allegations and the company has complied, he said.

Russ Dedrick, first assistant U.S. Attorney, said he cannot confirm or deny an investigation or comment on the allegations.

Columbia learned of the alleged wrongdoing through a call to the company's compliance hotline, but a company investigation turned up little proof, Asbell said.

He said the company got a federal subpoena and decided to have outside lawyers and accountants conduct a second internal investigation, which turned up more evidence.