Mayo Clinic settles whistle-blower lawsuit alleging Medicare fraud by paying 1.3M

A federal lawsuit brought by a whistle-blower against the Mayo Clinic ended with Mayo paying $1.26 million to settle charges of Medicare fraud, according to a recent announcement from the Minnesota U.S. Attorney’s Office.

The lawsuit brought by lead whistle-blower Dr. David Ketroser, a physician and attorney, alleged that Mayo submitted bills for payment related to surgical pathology services it never provided. The focus of the federal scrutiny was on Mayo’s billing practices at its pathology laboratories in Rochester, Minnesota.

“Billing government health programs for services never rendered —  as Mayo allegedly did — is totally unacceptable,” said Lamont Pugh, III, special agent in charge of the U.S. Department of Health and Human Services, Office of Inspector General for the Chicago Region, which includes Minnesota, in a statement.


The lawsuit dates back to 2007,  but three years later after the whistle-blower lawsuit was filed, the federal government joined the lawsuit and alleged that Mayo knowingly “billed Medicare, Medicaid and other federal healthcare programs for the preparation and examination of permanent human-tissue slides Mayo never made or examined,” according to the DOJ announcement.

Mayo Clinic described the alleged overbilling as an error

“Upon discovering a billing error in 2007, Mayo promptly corrected it and voluntarily refunded $262,975 to the government. We worked with outside accounting experts to ensure this figure represented the complete and appropriate reimbursement amount. The error was identified and corrected long before Mayo became aware that a sealed complaint had been filed and before Mayo was notified that the DOJ was evaluating whether to become involved in the complaint,” the hospital said in a statement.

Fighting what it believes to be healthcare fraud is one of the priorities of the Obama administration. The DOJ has hauled in a record amount of cash from alleged offenders including Abbott, GSK, St. Jude Medical and Medtronic, to name a few.

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