During Tuesday's meeting, members also agreed to pay $105,190 to a blind man who through the neglect of a state agency never received the equipment he needed to do his job. Members also decided to write off $56,000 in loans made to blind people who operated concessions in state buildings.

Gov. Jim Gibbons clearly was irked by having to pay the doctor. He noted a state law required Giarrusso to submit to the urine test or lose her license.

"By settling this, we are saying the state was wrong," said Gibbons, chairman of the Board of Examiners. "What information can you provide to the board to show us why a settlement in this case is the right thing to do?"

"No, by settling it we save spending additional money," responded Bonnie Brand, legal counsel to the medical board. "The amount of money saved by the state is considerable."

Giarrusso was convicted of driving under the influence of alcohol while a physician in California.

As a condition of being licensed in Nevada in 2003, she agreed to be tested periodically by the Nevada Health Professionals Assistance Foundation, a charity that contracts with Nevada's professional licensing board to test doctors and others in alcohol or drug diversion programs.

Giarrusso's license was suspended by the medical board in March 2004 after she refused to submit to a urine test.

But Brand said repeatedly when questioned by Gibbons that there was "confusion" over whether Giarrusso was required to take the test that led the board to suspend her license.

Dan Wong, a deputy state attorney general and chief state solicitor general, said after the meeting that Giarrusso had been advised by members of the Board of Medical Examiners to show up at one date for the test, while the assistance foundation said the test was on another date.

"There was confusion," Brand said. "It was a confusing situation."

Brand added the case has been before an arbitrator and it appears likely that Giarrusso could win more than $500,000 in damages, plus be awarded attorney fees.

Wong said attorney fees alone could top $500,000.

Brand said the medical board learned from the case and it won't happen again.

Checklists have been prepared for the medical board to review when it faces similar situations in the future, according to Wong.

The decision to pay the doctor was backed by Attorney General Catherine Cortez Masto, Secretary of State Ross Miller and Gibbons.

In another decision, the board agreed to pay Ronald Bussen $105,190 to drop his case against the Bureau of Services to the Blind and Visually Impaired.

Bussen claimed he was wrongly fired by the state which failed to provide a computer, Braille printer and other equipment. The computer was given to him four months after he was hired, but then malfunctioned. The bureau also did not provide him transportation so that he could visit clients while on the job.