BOSTON -- The state of Massachusetts has settled a lawsuit with Walgreens Co. over alleged billing improprieties, to the tune of more than $3.5 million, the state attorney general's office said Monday.

Under the terms of the agreement, Walgreens will pay $3,537,720.94 to the Massachusetts Medicaid Program, a program which provides funds for health care products and services to eligible low-income individuals, including people with disabilities, children and elder citizens.

A federal whistle-blower lawsuit filed in April 2005 in Minnesota alleged that Walgreens had received excessive Medicaid payments for prescription drugs given to people who had both Medicaid and private third‑party insurance coverage.

Four states, including Massachusetts, Minnesota, Florida and Michigan, have laws that explicitly limit the monetary amounts that Walgreens can bill to Medicaid in circumstances where the customer has both Medicaid and private third-party medical insurance.

Massachusetts regulations limit Medicaid payments on such claims to the amount of the copayments or deductibles the individual recipient is required to pay.

As a result of its billing methods, Walgreens received higher Medicaid payments for prescriptions than it was supposed to receive, according to the attorney general's office.

The billings took place during the period of January 1999 through December 2005.

Under the terms of the settlement, the Medicaid programs of the participating states will share $9.9 million in settlement proceeds, with Massachusetts receiving the largest single share.