Mayo Clinic Settles False-Claim Charges for $1.26 Million

August 06, 2012

August 6, 2012 — The Mayo Clinic in Rochester, Minnesota, last week agreed to pay $1.26 million to settle federal charges of knowingly billing Medicare, Medicaid, and other government healthcare programs for nonexistent pathology work.

The Mayo Clinic says it inadvertently submitted the errant claims until September 2007, when it discovered and corrected its mistake. It reimbursed the government roughly $260,000 about a year later, after receiving a federal subpoena about its pathology billing practices. The payment was voluntary, according to the Mayo Clinic. The settlement reached last Thursday calls on the Mayo Clinic to pay the government an additional $1 million.

The false-claim charges center on 2 different kinds of surgical pathology slides — frozen and permanent. The former are prepared by freezing a portion of patient tissue and staining a slice of it. Such slides are reviewed while a patient is in the operating room. Mayo's Rochester facilities prepared frozen slides for most surgical patients.

Permanent slides are created from the unfrozen portion of patient tissue and reviewed the next day. The clinic stated that it prepared permanent slides for most surgical patients, although an accreditation review of the clinic's lab operations — cited by federal prosecutors — said that "for a substantial portion of the tissue blocks, a pathologist never reviews a permanent slide."

Federal prosecutors said that the Mayo Clinic knowingly billed Medicare, Medicaid, and other programs not only for permanent slides it never created but also for the examination of nonexistent slides.

By their nature, settlements do not involve an admission of guilt or wrongdoing. In a statement posted on its Web site, the Mayo Clinic stated that it "agreed to settle with the [Department of Justice] for an additional $1 million 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."

The case against the Mayo Clinic in a federal district court in Minneapolis began as a whistle-blower suit filed by neurologist David Ketroser, MD, who also is an attorney, and 3 other individuals. Two of them are relatives of former Mayo Clinic patients, and the third is a former Mayo Clinic patient himself. In an article published last week, the Minneapolis Star Tribune quoted Dr. Ketroser as saying that he discovered the claims for nonexistent pathology services while he was investigating "possible malpractice cases on behalf of several Mayo patients."

The US Department of Justice intervened in the lawsuit in 2010.

The US Attorney's Office for the District of Minnesota stated in a press release that as whistle-blowers, under the Federal False Claims Act, Dr. Ketroser and the other plaintiffs are entitled to almost $230,000 of the settlement amount, which they will divide among themselves. The Mayo Clinic also must pay their attorneys' fees and legal expenses.

The Mayo Clinic did not respond to a request for an interview.