Oak Street Health, headquartered in Chicago and a wholly-owned subsidiary of CVS Health since 2023, has agreed to pay $60 million to resolve allegations that it violated the False Claims Act by paying kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street Health’s primary care clinics.

The Anti-Kickback Statute prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of patients or to provide recommendations of items or services covered by Medicare, Medicaid and other federally funded programs. Under the Medicare Advantage (MA) Program, also known as Part C, Medicare beneficiaries have the option to obtain their health care through privately-operated insurance plans known as MA plans. Some MA Plans contract with health care providers, including Oak Street Health, to provide their plan members with primary care services.

The United States alleged that, in 2020, Oak Street Health developed a program to increase patient membership called the Client Awareness Program. Under the Program, third-party insurance agents contacted seniors eligible for or enrolled in Medicare Advantage and delivered marketing messages designed to generate interest in Oak Street Health. Agents then referred interested seniors to an Oak Street Health employee via a three-way phone call, otherwise known as a “warm transfer,” and/or an electronic submission. In exchange, Oak Street Health paid agents typically $200 per beneficiary referred or recommended. These payments incentivized agents to base their referrals and recommendations on the financial motivations of Oak Street Health rather than the best interests of seniors. The settlement resolves allegations that, from September 2020 through December 2022, Oak Street Health knowingly submitted, and caused the submission of, false claims to Medicare arising from kickbacks to agents that violated the Anti-Kickback Statute.

“Health care providers that attempt to profit from kickbacks will be held accountable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department's Civil Division. “We are committed to rooting out illegal practices committed by Medicare Advantage providers, insurance agents and brokers that undermine the interests of federal health care programs and the patients they serve.”

“Kickbacks, in any form, have no place in our federal healthcare system” said Acting U.S. Attorney Morris Pasqual for the Northern District of Illinois. “My office is alert for kickbacks that can subvert patient choice and defraud federal health care programs. This investigation and settlement help to ensure that patient choice is prioritized above a provider’s bottom line.”

“Kickbacks impose hidden costs on the federal health care system and compromise medical choice and decision-making,” said Special Agent in Charge Mario Pinto of the Department of Health and Human Services Office of the Inspector General (HHS-OIG). “Working determinedly with our law enforcement partners, HHS-OIG will continue to protect the integrity of federal health care programs, and we encourage the public to come forward with information about violative conduct.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Joseph Stinson. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Stinson v. Oak Street Health, et al., No. 20-cv-7381 (N.D. Ill.). As part of today’s resolution, Mr. Stinson will receive $9.9 million.

The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Illinois, with assistance from HHS-OIG and the FBI.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).

Trial Attorney David G. Miller of the Justice Department's Civil Division and Assistant U.S. Attorney Jonathan C. Haile for the Northern District of Illinois handled the matter.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

Settlement