New York doctor admits exploiting the Covid pandemic to steal at least $24 million from insurers

A New York physician admitted in federal court to orchestrating a multimillion-dollar fraud scheme that exploited the Covid-19 pandemic by billing insurance companies for medical services his testing clinics never provided.

Ali Rashan, 42, an anesthesiologist who founded and operated ClearMD LLC, pleaded guilty to fraudulently billing insurers for Covid-19 testing services and creating fake medical records to cover up the scheme, according to an announcement from Acting U.S. Attorney Sean S. Buckley. The fraud caused at least $24 million in losses to Medicare, Medicaid and private insurance providers.

"Ali Rashan exploited a public health crisis to bill tens of millions in fraudulent claims purportedly filed on behalf of New Yorkers — costs ultimately borne by New York residents and the public more generally," Buckley said. "That kind of conduct will be pursued, investigated and prosecuted."

Rashan pleaded guilty before U.S. District Judge Paul A. Engelmayer to one count of conspiracy to commit health care fraud and one count of false statements relating to health care matters. Each charge carries a maximum sentence of five years in prison. His sentencing is scheduled for Sept. 22.

According to court documents, Rashan opened ClearMD's first medical clinic in early 2021 and expanded to operate several Covid-19 testing facilities throughout New York City during the pandemic. The clinics conducted tens of thousands of Covid-19 tests from 2021 through 2023.

While Rashan served as the company's laboratory director, he rarely interacted with patients. The clinics were typically staffed by medical assistants, many of whom were college-aged with no formal health care training, rather than licensed doctors or nurses. These assistants swabbed patients and processed tests through machines, with results emailed to patients.

ClearMD advertised itself as a full-service testing clinic. Email confirmations sent to patients stated appointments would include a Covid-19 diagnostic test, a focused patient exam and a follow-up telehealth visit to discuss results. In reality, patients received none of these additional services. They interacted only with medical assistants who performed a single swab test, received no physical examination and got test results by email without medical guidance.

The fraud extended beyond false advertising. Rashan directed ClearMD to submit thousands of insurance claims billing for evaluation and management services that were never performed and for two to four Covid-19 testing codes, even though patients received only a single test. Insurance providers were frequently billed as much as $5,000 for a single Covid-19 test.

When insurance providers requested documentation in early 2022 to support the claims, Rashan instructed staff to write software that would generate fabricated medical records. At least one insurer also requested a refund of millions of dollars believed to have been fraudulently paid.

The software created fake patient progress notes to justify billing for services that never occurred, combining real information collected during visits, such as vital signs, with fabricated details about physical examinations that never happened. The program also generated false test results. When full results from panel tests for Covid-19, RSV and influenza were unavailable, the software was programmed to indicate that RSV and influenza results were negative.

The investigation was conducted by the Federal Bureau of Investigation, with assistance from the Office of Personnel Management's Office of Inspector General and the Department of Labor.