Investigators looking into the Mayo Foundation's research-grant awards said they had "never seen an accounting system with such basic failures," according to court documents released last week.

In late May, the foundation settled a $6.5-million civil court case brought by a former employee (who received more than $1 million in the settlement) under the False Claims Act, although the foundation denied wrongdoing. The foundation has said the documents show the federal government's failure to put together a criminal case and that it has changed its research-grant accounting procedures as a result of the investigation.

The government questioned if, when research grant money ran out for a particular project, the clinic charged other grants for remaining costs, and said in several cases the foundation could not explain how funds got from one grant to another. The foundation receives millions of dollars in grants the National Institutes of Health and its parent agency, the U.S. Department of Health and Human Services, each year.

More than 2,500 physicians and scientists and 42,000 health staff work at the original clinic in Rochester, Minn., as well as newer clinics in Florida and Arizona. The three clinics treat more than a half-million people each year. Any earnings the nonprofit Mayo Foundation makes beyond what is needed to operate the clinics is used for education and research.

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