DOJ settles CityMD Covid fraud allegations for $12 million

The U.S. Attorney’s Office for the District of New Jersey brought the allegations under the False Claims Act, a law that incentivizes whistleblowers to file lawsuits related to potential fraud by providing them a portion of the government’s winnings in successful cases.

“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,” U.S. Attorney Philip R. Sellinger said in a Friday statement. “The alleged misuse of these funds is something we cannot and will not tolerate.”

Stephen Kitzinger, a CityMD patient, initially alleged the fraud in 2020. As a reward for bringing the case to the government’s attention, Kitzinger will receive over $2 million of the settlement.

Kitzinger’s attorney did not immediately respond to a request for comment sent outside of regular business hours.

CityMD cooperated with the government’s investigation and hired a third-party firm to help the government determine how much was lost in connection as a result of the alleged fraud, according to the DOJ.

CityMD said it denies the allegations but has decided to settle in order to to avoid the costs of dragged-out litigation.

“The recent settlement is neither a finding of liability nor an admission of wrongdoing, and CityMD denies the allegations. However, we settled this matter to avoid the cost and burden of prolonged litigation,” a CityMD spokesperson said in a statement to CNBC on Saturday. “CityMD is proud of the health care services we provided to patients throughout the pandemic.”