Walgreens’ community clinic CityMD has reached a settlement with the Department of Justice over allegations of COVID fraud, agreeing to pay a $12.04 million settlement to avoid prosecution.
The Department of Justice announced on Friday that CityMD operates over a hundred walk-in urgent care clinics in New York and New Jersey, where between February 2020 and April 2022, they allegedly submitted false claims to a COVID program designated for uninsured patients, seeking reimbursement for COVID testing costs from the government, some of whom actually had health insurance.
According to the Department of Justice, CityMD failed to adequately confirm whether these individuals had health insurance before submitting claims to uninsured programs, including some individuals for whom CityMD had filed health insurance cards. The Department further alleges that CityMD, by issuing forms incorrectly indicating patients had no insurance, caused outside labs to submit false COVID-19 testing cost claims related to individuals with health insurance.
In line with the Department of Justice guidelines, CityMD’s voluntary disclosure, cooperation, and remedial measures in cases of fraudulent claims were considered in the settlement agreement.
CityMD has cooperated with the U.S. investigation, voluntarily entering into contracts with third parties to assist in determining the amount of losses incurred due to CityMD’s submission of claims to uninsured programs, which targeted insured patients.
U.S. Attorney Philip Sellinger stated on Friday, “Americans threatened by COVID-19 without insurance should be able to rely on emergency funding programs that provide them with necessary testing, vaccines, and treatment. The abuse of these funds is something we cannot and will not tolerate.”
Sellinger added, “Today’s settlement ensures improperly obtained funds will be returned to the government.”
The New Jersey Attorney General’s office brought the charges against CityMD under the False Claims Act. This act provides a portion of awards won in successful cases to whistleblowers, encouraging individuals to file lawsuits related to potential fraud.
CityMD patient Stephen Kitzinger initially alleged fraudulent practices at the clinic in 2020. As a reward for reporting to the government, Kitzinger stands to receive over $2 million from the settlement.
Kitzinger’s lawyer did not immediately respond to requests for comment.
According to the U.S. Department of Justice, CityMD has assisted in the government’s investigation and hired a third-party company to help determine the losses incurred due to alleged fraud.
CityMD has denied the allegations but decided to settle to avoid the costs of prolonged litigation.
In a statement to CNBC on Saturday, a CityMD spokesperson stated, “The recent settlement is not an admission of liability or fault, as CityMD denies these allegations. However, we have settled this matter to avoid the costs and burdens of lengthy litigation.”
“We are proud of the medical services CityMD has provided to patients throughout the pandemic,” the spokesperson added.