“This settlement should send a message that institutions who accept federal grant money, no matter who they are, must strictly adhere to the terms and conditions of those grants,” U.S. Attorney Michael J. Sullivan said in a statement.

Gibbons said Harvard does not anticipate repercussions when dealing with NIH in the future.

“Even the Feds say the case is closed,” Gibbons said. “They are absolutely happy with our new procedures. They are exceptional.”

HMS created an Office of Research Compliance in late 1999. The Office of Research Compliance now administers training programs for grants administrators, clarifies measures necessary to ensure compliance with grant rules to grant administrators, and generally oversees grant expenditures, according to the statement.

The settlement ended legal investigations of Harvard and Beth Israel, but individuals involved with the alleged misuse of money may still be prosecuted.

Harvard had already paid a separate and additional $850,118 fine in August 2002 in response to the same allegations of misuse of NIH funds. In total, Harvard and Beth Israel have paid a combined $3.25 million to settle the government allegations.

—Staff writer Alan J. Tabak can be reached at tabak@fas.harvard.edu.