The US has set up a fund to compensate the victims of the country’s largest bio-terrorism attack – the 2001 anthrax mail-outs.
This was followed by a number of stories in the media.
Dr Hatfill had worked at the US Army’s infectious diseases laboratory from 1997 to 1999.
“Our government did this by leaking gossip, speculation and mis-information to a handful of credulous reporters,” the statement continued.
Settlement documents were filed with the Federal Court on Friday, and they state that both sides have agreed to the deal.
Under the terms of the deal, Hatfill will receive $2.825 million up front, and the rest as an annual annuity paid over 20 years.
“Our government failed us, not only by failing to catch the anthrax mailers,” Hatfill’s lawyers said in statement, “but by seeking to conceal that failure.”
“As an innocent man, and as our fellow citizen, Steven Hatfill deserved better,” they said.
Despite saying that a settlement is in the best interest of the nation, the Justice Department denies liability.
“The United States does not admit to any violation of the Privacy Act and continues to deny all liability in connection with Dr. Hatfill’s claims,” said Brian Roehrkasse, a spokesman for the Justice Department.
The anthrax attacks themselves remain unsolved.
It is not the first time that someone named as a “person of interest” in a high-profile investigation has received such a settlement.
In 1996, investigators and reporters named a security guard during the investigation into the Centennial Olympic Park bombing, which killed one person and injured more than 100 others.
Richard Jewell was later cleared and won hundreds of thousands of dollars in a series of lawsuits after claiming that his reputation had been ruined.
A year later the US Attorney General Janet Reno apologised to Jewell outright, and in April 2005 another man pleaded guilty to the attack.
Unlike “suspect” and “material witness”, “person of interest” has no legal definition under American law.