Greyed Out "Turn Off Passcode" Button -- Inherited iPhone

Hey gang,
My mother just upgraded to an iPhone 4 yesterday and passed along her iPhone 3G to me (who hasn't had a new iPhone since the original). I've managed to set up everything properly as far as I know, but I can't turn off the passcode option. She has said that the hospital she works at required her to have a passcode, which explains why, but I'm curious -- is there any way that I can turn it off, since it's no longer necessary?
Thanks a bunch!

You'll have to restore the phone as a "new" device in itunes, NOT from backup to remove that setting. Follow that by syncing your itunes content back to your phone.

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