A New York City physician admitted to a multi-million dollar COVID testing fraud that billed public and private insurance programs for services never provided, generating at least $24 million in alleged losses and prompting federal prosecution and a scheduled sentencing date.
Ali Rashan, 42, the CEO and founder of ClearMD LLC, 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 count carries a maximum term of five years in prison under the statutes cited in the plea. The case centers on billing practices and fabricated documentation tied to ClearMD’s COVID-19 testing operations.
“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,” said Deputy U.S. Attorney Sean S. Buckley. “That kind of conduct will be pursued, investigated, and prosecuted.”
According to court filings, Rashan founded and ran ClearMD, which opened its first clinic in early 2021 and expanded to multiple locations across New York City during the pandemic. The clinics operated mainly as COVID-19 testing sites where people came for diagnosis after exposure or to obtain clearance for work or travel. ClearMD billed Medicare, Medicaid, the Health Resources and Services Administration’s Uninsured Program, and private insurers for tens of thousands of tests between 2021 and 2023.
The filings describe Rashan as ClearMD’s registered “laboratory director,” though he rarely saw patients in person. Many sites were staffed by medical assistants—often college-aged workers without prior clinical training—rather than licensed clinicians. Those assistants collected swabs, ran sample-processing machines, and emailed results, with little or no clinical oversight on site.
ClearMD’s scheduling confirmations often promised more than patients received, listing services such as a “COVID-19 Diagnostic Test,” a “Focused patient exam,” and a “Follow up telehealth visit to discuss your results.” In practice, patients typically (1) did not receive a focused 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 single swab; and (3) did not receive the promised telehealth follow-up, with results instead sent by email and no medical guidance provided.
Prosecutors say ClearMD routinely submitted claims for services that were not provided, at times billing multiple testing codes and evaluation and management services for a single encounter. Insurance Providers were sometimes billed as much as $5,000 for a single COVID-19 test tied to ClearMD claims. Those billings, combined with the alleged upcoding and redundant coding practices, contributed to losses exceeding $24 million to covered programs.
By early 2022, insurers began requesting supporting documentation, including progress notes and test results, and at least one insurer sought a refund of millions it believed had been paid in error. The defendant allegedly instructed staff to develop software that would fabricate patient progress notes and test results to justify ClearMD’s billing. Staff then wrote code that automatically generated records containing the information prosecutors say was necessary to support reimbursement claims.
The fabricated progress notes reportedly mixed actual, limited data collected at visits—such as temperature or pulse oximetry—with invented physical exam findings that were never taken. Similarly, the fake test-result files created by the software sometimes indicated negative results for RSV and influenza when full panel results were not actually available. Those fabricated records were used, according to the filings, to substantiate claims for evaluation and management codes and multiple testing codes billed for individual patients.
Sentencing guidelines and maximum potential sentences are set by Congress, and any final sentence will be determined by Judge Engelmayer at the defendant’s sentencing hearing on September 22, 2026. The prosecution credited investigative work by the Federal Bureau of Investigation and acknowledged assistance from the Office of Personnel Management’s Office of Inspector General and the Department of Labor. The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit, with Assistant U.S. Attorneys Timothy V. Capozzi, Jackie Delligatti, and Qais Ghafary leading the matter.
