Chicago-based Oak Street Health has agreed to pay $60 million to settle allegations that it paid kickbacks to insurance agents in exchange for their help recruiting patients.
The U.S. government alleged that from 2020 to 2022, Oak Street had a program under which third-party insurance agents contacted seniors to market Oak Street to them. Agents would then refer interested seniors to an Oak Street employee through a three-way phone call. Oak Street would then typically pay the agents $200 per beneficiary they referred.
The federal Anti-Kickback Statute prohibits anyone from paying to induce referrals of patients on federally funded health insurance programs, including Medicare and Medicaid. The government alleged that Oak Street submitted false claims to Medicare because of violations of the Anti-Kickback Statute.
“Kickbacks, in any form, have no place in our federal health care system” said acting U.S. Attorney Morris Pasqual for the Northern District of Illinois, in a news release. “This investigation and settlement help to ensure that patient choice is prioritized above a provider’s bottom line.”
CVS Health, which acquired Oak Street in 2023, noted in a statement Thursday that in the settlement, “There was no admission of — and we expressly deny — any wrongdoing.”
“This matter dates back to before CVS Health’s acquisition of Oak Street Health,” said CVS spokesman Mike DeAngelis, in a statement. “The client awareness program associated with the allegations resolved in this settlement was discontinued by Oak Street Health more than two years ago.”
Oak Street Health, which was founded in Chicago in 2012, provides primary care for people on Medicare, focusing on low- to moderate-income seniors in underserved communities. CVS Health acquired Oak Street for $10.6 billion, and recently announced plans to open 25 Oak Street clinics in its stores, including three in the Chicago area.
The case was originally brought by a whistleblower, who will receive $9.9 million as part of the settlement. Under federal law, whistleblowers are entitled to a portion of any recovery by the government.
