Leaders of two Watsonville nursing homes agreed to pay $3.8 million in settlement funds after a federal lawsuit was filed against them alleging they provided “substandard or worthless services,” overly medicated residents and submitted false Medicare and Medicaid claims, U.S. Attorney Melinda Haag said. In the original complaint, the leaders received more than $20 million in Medicare and Medicaid payments for services characterized as “non-existent, grossly inadequate, materially substandard, and/or worthless,” according to the initial complaint.