The United States Department of Justice settled a case against several medical practice management groups doing business as “CityMD” for allegations of fraud in connection to a COVID-19 reimbursement program. Under the terms of the settlement, the medical practices have agreed to pay $12.04 million to resolve allegations that it violated the False Claims Act. In a somewhat unusual twist of fate for a healthcare fraud False Claims Act case, a patient reported the fraud. The whistleblower will receive $2 million or almost 17% of the settlement as a reward.

Understanding the Case

The settlement involves several entities operating under the CityMD brand, which manages approximately 177 urgent care practices in New Jersey and New York. The Justice Department alleged that CityMD knowingly submitted false claims for COVID-19 testing reimbursement to the Health Resources & Services Administration program for uninsured patients.

Key Allegations

From February 4, 2020, to April 5, 2022, CityMD reportedly submitted false claims for COVID-19 testing to the HRSA’s Uninsured Program, despite knowing that many of the tested individuals had health insurance coverage. The Justice Department contended that CityMD failed to verify the insurance status of these individuals before submitting claims. Furthermore, it was alleged that CityMD caused a cascade of false claims by incorrectly indicating on requisition forms to external laboratories that patients were uninsured.

Whistleblower Involvement

This case also sheds light on the significance of whistleblowers in uncovering healthcare fraud. The claims were initially brought under the qui tam provisions of the False Claims Act by a patient of CityMD. The whistleblower will receive over $2 million as his share of the recovery, demonstrating the vital role that private parties can play in holding organizations accountable.

The Ripple Effects of Fraud on COVID-19 Relief Programs

Defrauding COVID-19 relief programs not only undermines the integrity of vital public health initiatives but also inflicts significant harm on taxpayers and patients alike. As one of the U.S. Attorneys on the case remarked, “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 that they needed. The alleged misuse of these funds is something we cannot and will not tolerate. Today’s settlement ensures that the money that was obtained inappropriately will be returned to the government.”

When healthcare providers submit false claims, they divert critical resources away from government-insured patients, thereby exacerbating the challenges faced by an already strained healthcare system. Taxpayers ultimately bear the financial burden, as funds intended to support public health measures are misappropriated, leading to increased government spending and potential tax hikes. Moreover, fraudulent activities erode public trust in healthcare institutions, compromising the perceived reliability and fairness of medical services available to the community. Ensuring transparency and accountability in such programs is essential for maintaining public confidence and safeguarding the health and financial well-being of all citizens. Whistleblowers are the cure for the pandemic fraud epidemic.