MINNEAPOLIS - Mayo Clinic and three related Mayo entities have agreed to a $1.26-million settlement in a federal government lawsuit alleging that Mayo submitted false claims for payment to the government, according to the U.S. Department of Justice.

The claims allegedly included payments for surgical pathology services covered by Medicare and Medicaid programs, officials said.

The suit was originally brought in 2007 under the qui tam, or "whistleblower," provisions of the False Claims Act. That statute allows private individuals to file civil actions on behalf of the United States and share in any recoveries obtained as a result of those actions.

Dr. David Ketroser, the lead whistleblower in this case, is a physician and an attorney. The suit focused on Mayo's billing practices at its pathology laboratories in Rochester.

In Sept. 2010, the U.S. Department of Justice intervened in the part of the qui tam action that alleged that Mayo knowingly billed Medicare, Medicaid and other federal health care programs for the preparation and examination of permanent human-tissue slides Mayo never made or examined, officials said.

After the government issued Mayo a subpoena regarding its surgical pathology billing, Mayo paid about $263,000 to the government, officials said. The settlement agreement reflects this payment, and Mayo agreed to pay an additional $1 million.

Mayo must make its settlement payment within the next seven business days. Once payment has been received, the federal government will pay $229,822 to the whistleblowers who participated in the qui tam action, officials said.

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