San Francisco – A telehealth unicorn that promised seamless, accessible care has been quietly exposed as a massive billing machine that systematically defrauded federal healthcare programs for nearly a decade. While the U.S. Department of Justice secured a $3.325 million settlement last week, internal records and patient testimonies suggest the true scale of the alleged fraud could be exponentially larger—potentially reaching tens of millions of dollars in improperly obtained reimbursements.

At the center of the storm is Circle Medical’s Chief Medical Officer and Medical Director, Dr. Nicole Tsang, D.O., who is not merely a corporate figurehead but a named defendant in the federal lawsuit alongside the company’s corporate entities. The case, built on whistleblower testimony, accuses the company of a sophisticated, en masse scheme that involved substituting provider identities on insurance claims—a practice that regulators say endangered patients and bilked taxpayers.

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The Fraud Unraveled: A Systematic Billing Machine

The investigation, spanning allegations from January 1, 2018, to May 31, 2025, revealed a deeply troubling operational pattern. Circle Medical operated a sprawling remote healthcare platform, relying heavily on a fleet of contract-based nurse practitioners and physician assistants to handle the bulk of patient consultations, particularly for mental health and attention-deficit/hyperactivity disorder (ADHD) management.

However, when it came time to bill Medicare, Medicaid, TRICARE, and California commercial insurers, the company allegedly engaged in a deliberate bait-and-switch. According to the settlement documents, Circle Medical routinely listed the names and National Provider Identifiers (NPIs) of supervising physicians—often Dr. Tsang’s roster of doctors—on claims for services that these physicians never actually provided, reviewed, or supervised.

The federal government argued that this was not a simple administrative error but a systemic, en masse policy designed to maximize reimbursement rates. Claims submitted under a physician’s NPI typically command higher payouts than those submitted under a nurse practitioner or physician assistant. By “up-coding” the provider identity, Circle Medical allegedly extracted millions in undue profits from the public coffers.

Whistleblower Sounds the Alarm as CMO Is Personally Named

The DOJ’s intervention was triggered by a qui tam, or whistleblower, lawsuit filed by Jason Vellen. The case, docketed as United States and State of California ex rel. Jason Vellen v. Circle Medical Care of California, Circle Medical Technologies, Inc., Dr. Nicole Tsang, D.O, and George Favvas (No. 3:24-cv-02024-TSH), carries significant weight because it directly implicates Dr. Tsang in her personal capacity.

By naming the Chief Medical Officer as a defendant, federal prosecutors sent a clear signal that clinical leadership cannot hide behind corporate shields when billing fraud becomes systemic. As part of the settlement, Circle Medical agreed to pay $475,000 to the federal government and $2.85 million to the State of California, totaling $3.325 million. Whistleblower Vellen will receive a relator’s share of $80,750 from the federal portion and nearly $1 million ($997,500) from the California settlement.

Federal prosecutors were blunt in their assessment. U.S. Attorney Craig H. Missakian stated: “The integrity of our federal healthcare system depends on the accuracy of information submitted by providers. This resolution sends a clear message that we will hold anyone accountable who compromises that integrity.”

Patient Complaints Allege a Pattern of Exploitation and Neglect

While the legal settlement addresses the government’s financial losses, a growing chorus of patient experiences suggests the fraud extended into the quality of care itself. Dozens of individuals have come forward in recent months, describing their interactions with Circle Medical as predatory, negligent, and financially exploitative.

Patients widely report being charged exorbitant fees for consultations that last less than five minutes, often with practitioners who provide no meaningful medical guidance. In numerous accounts, individuals describe paying upwards of $100 for a brief video call, only to be told to “find a local provider”—effectively receiving no actual treatment while Circle Medical pocketed the fee.

Billing irregularities are a recurring theme. Several patients have complained that the company aggressively attempts to collect multiple copayments for single visits or refuses to rectify overcharges, leaving consumers in an endless bureaucratic loop with unresponsive billing departments. Some individuals reported that local pharmacies, particularly in California, have outright refused to honor prescriptions issued by Circle Medical’s remote practitioners, citing concerns over the legitimacy of the provider credentials and the lack of proper in-state supervision.

One aggrieved patient characterized the entire operation as a “rigged system,” stating that the company appears designed to process high-volume claims rather than deliver competent healthcare. Another individual lamented that after spending nearly $400 on three fruitless appointments, the only tangible outcome was a depleted bank account and a prescription that a local pharmacist deemed invalid.

These accounts align perfectly with the DOJ’s core allegations: a high-volume, low-oversight business model where supervising physicians are listed on paper but are functionally absent from the care equation.

The En Masse Scale: Why $3.3 Million Is Just the Tip of the Iceberg

Legal experts and healthcare finance analysts emphasize that the $3.325 million settlement represents only the amount the company has agreed to pay to resolve the government’s claims—not the total amount of alleged fraudulent billing. Given that the scheme operated continuously for over seven and a half years, involving thousands of consultations primarily for high-cost ADHD medication management, the cumulative value of the improperly submitted claims could easily run into the tens of millions, if not higher.

Medicare and Medicaid reimbursement rates for physician-attributed psychiatric and behavioral health visits are significantly elevated. If Circle Medical processed even a modest fraction of its total patient volume (which reportedly numbers in the hundreds of thousands) using this false NPI substitution, the total financial exposure to federal and state programs would be staggering. While the settlement caps the company’s immediate liability, the government’s investigative files likely contain evidence of far broader systemic abuse that, had it gone to trial, could have exposed losses surpassing $10 million to $20 million.

The settlement agreement includes a standard “no admission of liability” clause, allowing Circle Medical to settle without formally conceding guilt. However, the sheer length of the alleged misconduct period (2018–2025) suggests that this was an entrenched practice, not a one-off mistake by a junior billing clerk.

Chief Medical Officer Nicole Tsang: A Clean Record or a Clean Slate of Oversight?

Dr. Nicole Tsang is a board-certified family physician with over two decades of experience, holding active licenses in both California and Colorado. She completed her residency at the prestigious Harbor-UCLA Medical Center and maintains certifications that, on paper, present her as a reputable clinician.

However, a comprehensive audit of state medical board records—including the Medical Board of California—reveals no prior public disciplinary actions, license suspensions, or formal reprimands against Dr. Tsang. This absence of a paper trail raises a critical question: Was Dr. Tsang a passive figurehead who failed to notice a systemic billing fraud occurring under her clinical watch, or was she an active participant who signed off on supervision protocols she knew to be fictitious?

In the healthcare industry, the Chief Medical Officer bears ultimate responsibility for clinical governance. If a company systematically submits claims for services that the named physicians did not supervise, the CMO is typically the first executive expected to detect and halt such practices. The fact that federal prosecutors named Dr. Tsang individually—rather than just the corporate entities—implies that investigators believe she played a direct, knowing role in the scheme or was grossly negligent in fulfilling her oversight duties.

When contacted for comment regarding her specific involvement and whether she disputes the allegations, Dr. Tsang’s legal representatives did not respond to multiple inquiries. Circle Medical’s parent company, WELL Health Technologies Corp., issued a brief corporate statement noting that the matter has been “resolved” historically, while vigorously maintaining that the company “denies any wrongdoing.”

Systemic Failure: The End of Telehealth’s Regulatory Gray Area

The Circle Medical case is not an isolated incident but rather a watershed moment signaling a regulatory crackdown on telehealth providers who have exploited the pandemic-era boom to operate in a legal gray area. As remote healthcare exploded, oversight mechanisms struggled to keep pace, allowing some companies to prioritize rapid scaling over compliance.

Federal investigators, however, are now circling back. The HHS Office of Inspector General, which participated in this probe, made its position abundantly clear. Special Agent Robb R. Breeden stated: “Submitting claims in another person’s name undermines the integrity of federal healthcare programs and puts patients at risk. This settlement reflects our commitment to holding accountable those who knowingly circumvent Medicare safeguards and misrepresent who is truly providing care.”

Conclusion: A Multimillion-Dollar Warning to the Industry

For Circle Medical, the $3.325 million settlement is a costly financial bandage. But for the thousands of patients who feel defrauded, for the taxpayers who subsidized inflated claims, and for Dr. Nicole Tsang, who now carries the stain of a federal lawsuit on her professional record, the consequences are far more enduring.

The en masse nature of the alleged fraud—which involved substituting provider credentials on a massive scale to maximize billable revenue—paints a picture of a company that treated regulatory compliance as an inconvenient obstacle rather than a sacred duty. While the settlement allows Circle Medical to move forward without a formal admission of guilt, the public record now firmly links Dr. Tsang to one of the most significant telehealth billing scandals in recent memory.

As federal and state regulators sharpen their knives for the next wave of healthcare audits, the Circle Medical case stands as a cautionary tale: in the age of remote medicine, convenience cannot come at the cost of integrity, and clinical leadership—specifically the Chief Medical Officer—will be held personally accountable when the bill comes due.

This investigation will continue to follow the case, including any potential disciplinary reviews by state medical boards concerning Dr. Tsang’s ongoing fitness to practice medicine.