BALTIMORE, JAN. 7 -- Maryland prosecutors said in court today they are investigating allegations that a private Bethesda mental health center gave below-standard treatment to hundreds of troubled children and billed the government for nonexistent therapy.

The Oak Leaf Center, at 4332 Montgomery Ave., billed Medicaid for days when the center was closed because of snow or holidays, prosecutors said, and its owners joked that officials would not catch them because "the right hand never knows what the left hand is doing."

Assistant Maryland Attorney General Carolyn J. McElroy estimated that the center received a total of $1.6 million in state and federal Medicaid reimbursements from 1986 to 1990.

The allegations against the center came in Baltimore Circuit Court as Jane Margolius, 31, of Silver Spring, a former billing clerk for the center, pleaded guilty to Medicaid fraud.

McElroy said the state is now going after the center's owners and read a "statement of facts" outlining the case against Margolius and detailing the allegations.

An attorney for the center said in an interview that it has been stripped of its state Medicaid support and is scheduled to close Friday.

McElroy said the center has been a target of the Medicaid fraud control unit of the state Attorney General's Office since May.

Prosecutors said Oak Leaf was one of the largest recipients of Medicaid funds for outpatient psychiatric care in Maryland. Since at least 1982, it has offered after-school programs for hundreds of low-income children suffering the effects of separated or divorced parents and other family stress. Many have been foster children.

McElroy said in court that the center, owned by Keith Wagner and Lynn Chertkov, was licensed to run a "therapeutic day-care" operation. To qualify for Medicaid payments for therapy sessions, she said, a psychiatrist was supposed to be on hand to supervise the center's staff, but in fact came only "once a week for a two- to four-hour staff meeting and to sign the Medicaid invoices."

In addition, McElroy said, Margolius, Wagner and Chertkov instructed counselors to write daily notes to make it appear children had attended the center when they had not. Margolius and the owners then submitted false claims for Medicaid reimbursement, McElroy alleged.

Medicaid paid the center $33 to $37 a child for each 45- to 50-minute session of individual therapy and $16 to $17 for each period of group therapy, McElroy said.

State investigators raided the center in May, McElroy said, and among other things found a set of memos in which Margolius and the owners joked about the alleged scam and their concern that they might be caught and imprisoned.

At one point, she said, Margolius suggested billing Medicaid for Wagner's and Chertkov's own children on Memorial Day and Sundays. But Wagner shot back a memo, she said, replying, "No, I don't want to push a good thing too far."

Chertkov's attorney, Kenneth R. West, said he questioned much of the Margolius statement of facts and will oppose it in court. Wagner's attorney could not be reached for comment. Margolius's attorney, John Diuguid, said she is cooperating with prosecutors in the investigation. She faces up to five years in prison and $10,000 in fines.