Mayo Clinic Settles Federal Billing Fraud Suit for $1.26M

The settlement includes $263,000, which Mayo has already paid to the government, and an additional $1 million payment.

The settlement includes $263,000, which Mayo has already paid to the government, and an additional $1 million payment.
The Mayo Clinic has agreed to pay $1.26 million to settle a federal lawsuit accusing it of billing the government for surgical pathology services that were never provided, according to Minnesota’s U.S. Attorney’s office.
The lawsuit was originally filed in 2007 by whistleblower David Ketroser, who is licensed to practice both medicine and law in Minnesota. The lawsuit was unsealed in 2010 when the U.S. Department of Justice joined the suit.
The government alleged that Rochester-based Mayo Clinic knowingly billed Medicare, Medicaid, and other federal health care programs for the preparation and examination of human-tissue slides that Mayo never made or examined.
After being subpoenaed, Mayo paid roughly $263,000 to the government. The settlement agreement announced Thursday includes that payment, as well as an additional $1 million, the U.S. Attorney’s office said.
The government will pay $229,822 to the whistleblowers who participated in the suit, and Mayo will pay their attorney fees and legal expenses, the U.S. Attorney’s office said. In addition to Ketroser, the case involved three other whistleblowers.
“Billing government health programs for services never rendered, as Mayo allegedly did, is totally unacceptable,” Lamont Pugh, III—special agent in charge of the Department of Health and Human Services’ office of inspector general for the Chicago region, which includes Minnesota—said in a statement.
Mayo Clinic spokesman Karl Oestreich said in a statement that the company “corrected the error prior to knowledge of the Department of Justice’s suit and voluntarily refunded $262,975 to the government,” but it agreed to the additional $1 million settlement “because we believe the prolonged legal process would have been more costly than the settlement itself, and allows us to best direct our resources to patient care, education, and research.”
Oestreich also pointed out that the original complaint against the company included two other allegations in addition to the billing error. Those allegations, which pertained to how Mayo Clinic performs tissue pathology, were dismissed by the court—and the justice department’s complaint focused solely on the billing error issue, he said.