Urgent Care Clinic CityMD Settles False Claims Act Case for $12 Million Over COVID-19 Fraud

Washington, DC, June 7, 2024 – Urgent care walk-in clinic chain CityMD agreed to pay $12.037 million to the federal government, including approximately $7 million that it returned to the government while the litigation was pending, to settle a whistleblower lawsuit filed by Phillips & Cohen LLP under the False Claims Act. The lawsuit alleges CityMD and a third-party laboratory it used billed the federal COVID-19 uninsured program for COVID-19 tests performed on insured patients. City MD operates urgent care walk-in clinics in New Jersey and New York.

“CityMD took advantage of scarce tax dollars intended for the uninsured during a pandemic,” said Stephen Hasegawa, a whistleblower attorney and partner at Phillips & Cohen. “Money the government has set aside to help vulnerable people during a health crisis should not be diverted to the use of insured patients. Worse yet, the government would never have found out about it if it weren’t for Stephen Kitzinger.”

As the COVID-19 crisis was escalating, Congress passed several bills appropriating money to fund COVID-19 testing and care for the uninsured population. The funds were dispersed through the COVID-19 Uninsured Program run by the Health Resources and Service Administration (HRSA), an agency within the US Department of Health and Human Services (HHS). The defining requirement for HRSA funds is a patient’s uninsured status.

CityMD offered COVID-19 testing to walk-in patients. Stephen Kitzinger, the whistleblower in the qui tam case, obtained a COVID test and unambiguously disclosed that he was fully insured by entering both his primary and secondary insurance information on CityMD’s patient information portal. When Mr. Kitzinger checked his information in CityMD’s patient portal, he discovered that CityMD listed him as uninsured, which could affect both CityMD’s and its third-party laboratory partners’ billings to the HRSA uninsured program.

“There was no reason to bill the government’s uninsured program for people like me, who are fully insured. That wasted limited government money, misused taxpayer dollars, and potentially deprived those without insurance of necessary testing and care,” said Stephen Kitzinger, the whistleblower in the case. “It angered me and clearly demonstrated what is wrong with the for-profit healthcare system.”

DOJ investigated Mr. Kitzinger’s complaint. During DOJ’s investigation, CityMD returned $7,022,522 to the United States. DOJ negotiated a settlement with CityMD that credited CityMD for the amount it returned and provided for CityMD’s payment of an additional $5,014,587. The case was made public today when the seal was lifted and the US Attorney’s Office for the District of New Jersey announced the settlement.

The whistleblower and his attorneys thanked Daniel Meyler, a Trial Attorney with the United States Department of Justice, for conducting the government’s investigation and negotiating the settlement with CityMD.

A copy of the settlement agreement.

A copy of the complaint.

ABOUT PHILLIPS & COHEN LLP

Phillips & Cohen is the nation’s most successful law firm representing whistleblowers. The firm’s cases have helped recover more than $13 billion in civil settlements and criminal fines. Phillips & Cohen represents whistleblowers in qui tam lawsuits as well as whistleblower claims with the reward programs of the SEC, CFTC, and IRS.

 

 

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