A South Shore Hospital physicians group agreed to pay $1.8 million in state and federal fines to settle charges that it inflated patient bills and paid kickbacks to doctors in exchange for referrals to hospital affiliates over a 10-year period.

The agreement, jointly announced by outgoing Attorney General Martha Coakley and US Attorney Carmen Ortiz, said the South Shore Physician-Hospital Organization had made more than 100 grants to doctors between 2001 and 2010 in exchange for the physicians agreeing to increase the number of patients they sent to affiliates of the hospital.

“The program was deceptive in that neither the defendants nor the grant recipients disclosed to patients or third-party payers that the program required physicians to increase the number of patients referred to SSPHO-participating physicans,” according to the complaint filed in Suffolk Superior Court Tuesday by Coakley’s office. “As a result, patients who were referred to higher-cost physician and health care facilities suffered financial harm, as did third-party payers.”

The complaint said the grant agreement stipulated the terms for funneling patients to hospital affiliates and was signed off by members of the hospital’s board of directors and top officials. The complaint also said the hospital started an “inpatient incentive” program where physicians were given cash kickbacks paid from revenues from health care plans if they admitted a minimum number of patients to South Shore Hospital.

“Instead of giving patients lower-cost options and flexibility in health care services, we allege these defendants looked to increase their referrals through an unlawful kickback operation,” Coakley said in a statement.  The case was one of Coakley’s final official duties as she leaves office Wednesday morning.

The settlement comes at a sensitive time for South Shore Hospital and Partners Healthcare, who are seeking to merge under a consent agreement negotiated with Coakley’s office. Opponents of the merger say it would create less competition in the marketplace and drive up health care costs. Coakley said the agreement she negotiated with Partners will allow the company’s acquisition of South Shore and two other hospitals to proceed but subject to pricing and other restrictions for years to come. The consent agreement requires the approval of Suffolk Superior Court Judge Janet Sanders, who has been sitting on the case since last fall and may be waiting for incoming Attorney General Maura Healey to come into office.

The settlement agreement announced Tuesday said the doctor kickbacks were voluntarily reported by South Shore officials. Matthew Whalen, executive director of the South Shore physicians group, said hospital officials and physicians cooperated with law enforcement throughout.

“Several years ago, during a self-review, we realized that some of the language used to describe a physician recruitment grant program should have been clearer to avoid misinterpretation under applicable health care laws,” Whalen said in a statement. “The physician recruitment grant program was intended to help our member medical practices meet community health needs by recruiting primary and specialty care physicians.”