People wait in line to enter CityMD, a health clinic offering testing for the coronavirus disease (COVID-19), on the Upper West Side as the omicron coronavirus variant continues to spread, in Manhattan, New York City, U.S., December 19, 2021.
Andrew Kelly | Reuters
WalgreensThe CityMD-backed company will pay $12.04 million to settle Covid fraud allegations brought by the Justice Department, the department announced Friday.
From February 2020 to April 2022, CityMD, which operates more than 100 no-appointment urgent care practices in New York and New Jersey, allegedly obtained fraudulent government reimbursements for Covid tests by making false claims in a Covid program specifically designed for uninsured patients, even when the 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 alleging potential fraud by awarding them a share of government profits if they win.
“Uninsured Americans at risk from COVID-19 were protected by emergency funding programs that provided them with the tests, vaccines and treatments they needed,” U.S. Attorney Philip R. Sellinger said in a statement Friday. “We cannot and will not tolerate the alleged misuse of these funds.”
Stephen Kitzinger, a patient of CityMD, first made the fraud allegation in 2020. As a reward for bringing the case to the government's attention, Kitzinger will receive over $2 million of the settlement amount.
“There was no reason to charge people like me, who are fully insured, for the government's program for the uninsured,” Kitzinger said in a news release Friday. “This made me angry and clearly demonstrated what is wrong with the for-profit health care system.”
According to the Justice Department, CityMD cooperated with the government's investigation and hired a third-party firm to help the government determine the amount of losses resulting from the alleged fraud.
CityMD said it denies the allegations but decided to settle to avoid the costs of a lengthy litigation.
“The recent settlement is neither a conviction nor an admission of wrongdoing, and CityMD denies the allegations. However, we settled this matter to avoid the expense and burden of protracted litigation,” a CityMD spokesperson said in a statement to CNBC on Saturday. “CityMD is proud of the health care we have provided to patients throughout the pandemic.”
