DOJ settles CityMD Covid fraud charges for $12 million

Walgreens-backed CityMD can pay $12.04 million to fund the Ministry of Justicethe ministry announced on Friday.

From February 2020 to April 2022, CityMD, which operates greater 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 medical insurance.

The U.S. Attorney for the District of New Jersey filed the costs under the False Claims Acta law that encourages whistleblowers to file lawsuits about potential fraud by awarding them a share of the federal government's profits in the event that they are successful.

“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 an announcement Friday. “We cannot and will not tolerate the alleged misuse of these funds.”

Stephen Kitzinger, a patient of CityMD, initially claimed that the fraud was 2020As a reward for bringing the case to the federal government's attention, Kitzinger will receive over $2 million of the settlement amount.

According to the Justice Department, CityMD cooperated with the federal government's investigation and hired a third-party firm to assist the federal government determine the quantity of losses resulting from the alleged fraud.

CityMD said it denies the allegations but decided to settle to avoid the prices 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 an announcement to CNBC on Saturday. “CityMD is proud of the health care we have provided to patients throughout the pandemic.”

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