NEW YORK PHYSICIAN PLEADS GUILTY TO MULTIMILLION-DOLLAR COVID-19 INSURANCE FRAUD SCHEME

The following information was released by the New York Field Office of the Federal Bureau of Investigation:

Attorney for the United States, Acting under Authority Conferred by 28 U.S.C. 515, Sean S. Buckley, announced that ALI RASHAN, a medical doctor and the CEO and founder of ClearMD LLC, a provider of COVID-19 testing services in New York City, pled guilty to fraudulently billing insurance companies for COVID-19 testing services and submitting fraudulent medical records in furtherance of his scheme, causing at least $24 million in losses. RASHAN pled guilty today before U.S. District Judge Paul A. Engelmayer.

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

According to statements made in court and publicly filed documents in this case:

RASHAN, an anesthesiologist, founded and ran ClearMD LLC ("ClearMD"), which operated medical clinics that offered testing for COVID-19 during the global coronavirus pandemic. From at least 2021 through 2023, RASHAN, through his ownership and operation of ClearMD, engaged in a widespread scheme to defraud healthcare benefit programs, including Medicare, Medicaid, the Health Resources and Services Administration's Uninsured Program, and private insurance providers (collectively, the "Insurance Providers"), which ultimately caused losses to the Insurance Providers of over $24 million.

RASHAN opened ClearMD's first medical clinic in early 2021 and went on to open several others throughout New York City during the pandemic. ClearMD clinics operated primarily as COVID-19 testing facilities. Individuals came to ClearMD for a variety of reasons, including for diagnosis after suspected COVID-19 exposure, or to obtain clearance to engage in certain activities, like returning to work or air travel. ClearMD clinics conductedand billed fortens of thousands of COVID-19 tests during the pandemic.

Although the defendant served as ClearMD's "laboratory director," he rarely interacted with patients. ClearMD clinics were typically staffed not with licensed doctors or nurses, but with "medical assistants," many of whom were college-aged and had no formal training in healthcare prior to working at ClearMD. Medical assistants swabbed patients and typically put their sample into a machine, which processed the test. Test results were then emailed to patients. Medical assistants generally took patient vitals, but there were typically no licensed doctors on site to conduct physical exams of patients, take pertinent medical history, or answer any questions a patient might have.

Even so, ClearMD often advertised itself as a full-service testing clinic. Many patients who booked an appointment received an email confirmation from ClearMD, which stated that the appointment would include not only a "COVID-19 Diagnostic Test" but also a "Focused patient exam" and a "Follow up telehealth visit to discuss your results." In practice, however, patients did not receive the level of care that was claimed in ClearMD's email confirmations. Instead, patients typically (1) were not given a "Focused patient exam," or any physical exam, at the time of testing; (2) were never seen by a qualified healthcare professional and instead interacted only with a medical assistant who performed a swab for a single COVID-19 test; and (3) had no such "telehealth" visit following receipt of their test results, which were instead emailed to them, with no medical guidance.

In addition to advertising services that it ultimately did not provide to patients, during certain periods, ClearMD also routinely billed Insurance Providers for multiple services it did not provide. For example, RASHAN directed ClearMD to submit or cause the submission of thousands of claims that billed for evaluation and management ("E/M") services that were never performed and for two to four COVID-19 testing codes, even though ClearMD had administered only a single COVID-19 test to patients. Insurance Providers were frequently billed as much as $5,000 for a single COVID-19 test administered by ClearMD.

By in or around early 2022, Insurance Providers requested that ClearMD provide documentation, such as progress notes of patient encounters and test results, to support its claims for reimbursement. At the time, at least one Insurance Provider also requested a refund of millions of dollars that the Insurance Provider believed to have been fraudulently paid to ClearMD. In response to such requests, the defendant instructed ClearMD staff to write a software program to generate fake medical records to support ClearMD's fraudulent billings. Specifically, the defendant instructed ClearMD staff to write software that would fabricate (1) patient progress notes that it could use to justify billing for E/M codes; and (2) test results for patient visits that it could use to justify ClearMD's billing for COVID-19 testing codes. Thereafter, ClearMD staff wrote software that created fabricated records. The fake patient progress notes typically included both information that was collected at the time of patient visits to ClearMD (e.g., vitals such as heart rate, temperature, and blood oxygen saturation) and information that was never collected (e.g., information for physical examinations that never occurred). Similar to the fabricated progress notes, the fake test result records contained information that was fabricated by ClearMD. For example, where the full results of a patient's panel test for COVID-19, RSV, and influenza were not available, the software was written to indicate that the results of the RSV and influenza components of the test were negative.

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RASHAN, 42, of New York, New York, pled guilty to one count of conspiracy to commit health care fraud and one count of false statements relating to health care matters, each of which carries a maximum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. RASHAN will be sentenced by Judge Engelmayer on September 22, 2026.

Mr. Buckley praised the outstanding investigative work of the Federal Bureau of Investigation. Mr. Buckley also thanked the Office of Personnel Management's Office of Inspector General and the Department of Labor for their assistance in this investigation.

This case is being handled by the Office's Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Timothy V. Capozzi, Jackie Delligatti, and Qais Ghafary are in charge of the prosecution.