DOJ settles CityMD Covid fraud charges for $12 million

People wait in line to enter CityMD, a health clinic offering coronavirus disease (COVID-19) testing, on the Upper West Side as the Omicron variant of the coronavirus continues to spread in Manhattan, New York City, U.S., December 19 2021.

Andrew Kelly | Reuters

Walgreens– CityMD-backed will pay $12.04 million to settle Covid fraud charges brought by the Justice Department, the department announced Friday.

From February 2020 to April 2022, CityMD, which operates over 100 urgent care practices in New York and New Jersey, allegedly received fraudulent government reimbursements for Covid tests by submitting false claims to a specially designated Covid program for uninsured patients, even when their patients had health insurance.

The U.S. Attorney’s Office for the District of New Jersey brought the charges under the False Claims Act, a law that encourages whistleblowers to file lawsuits about potential fraud by providing them with a share of the government’s profits in cases successful.

“Uninsured Americans who were at risk from COVID-19 were covered by emergency funding programs that made available to them the testing, vaccines and treatments they needed,” U.S. Attorney Philip R. Sellinger said in a statement Friday. “The alleged misuse of these funds is something we cannot and will not tolerate.”

Stephen Kitzinger, a CityMD patient, first alleged fraud in 2020. As a reward for bringing the matter to the government’s attention, Kitzinger will receive over $2 million in payouts.

“There was no reason to bill the government’s uninsured program for people like me who are fully insured,” Kitzinger said in a press release Friday. “It angered me and clearly showed what is wrong with the for-profit health care system.”

CityMD cooperated with the government’s investigation and hired a third-party firm to help the government determine how much it had lost on the bond as a result of the alleged fraud, according to the DOJ.

CityMD said it denies the allegations but has decided to settle in order to avoid the costs of protracted litigation.

“The recent settlement is neither a finding of liability nor an admission of wrongdoing, and CityMD denies the allegations. However, we settled this matter to avoid the cost and burden of protracted litigation,” a CityMD spokesperson said in a statement to CNBC on Saturday. . “CityMD is proud of the healthcare services we provide to patients throughout the pandemic.”

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