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Post date: June 5 2018

A.G. Underwood Announces $883,000 Settlement With CityMD For Submitting False Claims To A Government Health Plan

News from the New York Attorney General's Office 

June 5, 2018

Attorney General’s Press Office / 212-416-8060 


CityMD Admits That It Caused Its Affiliates to Bill the Empire Plan for Facility Fees to Which They Were Not Entitled; Admits to Violating New York’s False Claims Act

NEW YORK—Attorney General Barbara D. Underwood announced today a $883,000 settlement with City Practice Group of New York, LLC (“CityMD”) for causing the submission of false claims to New York State’s Empire Plan, a health insurance plan for state and local government employees and their dependents. CityMD, a Delaware company with a principal place of business in New York City, manages urgent care practices primarily in the New York City metropolitan area.

“My office will not tolerate healthcare providers who overbill government healthcare plans,” said Attorney General Underwood. “Today’s settlement makes clear that we will hold accountable any entity responsible for false payment claims to the Empire Plan or other government health plans.” 

The Attorney General’s investigation revealed that from December 2010 to September 2013, CityMD knowingly caused its affiliates to overbill the Empire Plan for facility fees to which they were not entitled – which resulted in a total amount of $197,390.52 in overbilling. A facility fee is a charge for the use of a clinic facility that is intended to help a practice recover costs for overhead. In entering into Empire Plan contracts with United HealthCare, CityMD’s affiliates were prohibited from billing for facility fees – as referenced in their contract manuals that explicitly prohibited it. Despite United HealthCare’s repeated advisement that facility fees were not permitted under the Empire Plan, CityMD affiliates continued to claim facility fees that were separate from, and in addition to, the fees claimed for professional services.

As part of the settlement, CityMD admitted that despite the prohibition in the manual and UnitedHealthCare’s instructions to refrain from submitting facility fee bills, CityMD continued to cause its practice affiliates to bill for facility fees. CityMD also admitted that it violated the New York False Claims Act and paid $706,400 to the State—including the $37,363.10 that was overbilled and not yet repaid, and over $669,000 in additional damages, fees, and costs.

The CityMD investigation arose from a whistleblower’s allegations under the qui tam provisions of the New York False Claims Act. The Act allows private persons (known as “relators”) to file civil actions on behalf of the government and to share in any recovery. The relator here will receive over $176,000 from the settlement for bringing this misconduct to light.  

The Attorney General’s investigation of CityMD was led by Assistant Attorney General Laura Jereski, with assistance from Legal Support Analyst Bianca LaVeglia.

The Taxpayer Protection Bureau, overseen by Bureau Chief Thomas Teige Carroll and Deputy Chief Scott J. Spiegelman, enforces the New York False Claims Act. It is a unit of the Economic Justice Division, which is headed by Executive Deputy Attorney General Manisha M. Sheth.

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