Whistleblower Receives Almost $10 million in Oak Street Health Settlement

In late September 2024, Oak Street Health, a subsidiary of CVS Health since 2023, agreed to pay $60 million to resolve allegations of an illegal Medicare Advantage patient recruitment scheme. The whistleblower who reported the illegal activity will receive $9.9.

The Case

In December of 2020 (later amended in April 2023), a whistleblower filed a complaint in the United States District Court alleging that Oak Street Health 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. According to the allegations, in 2020 Oak Street Health developed a program designed to increase patient membership in their clinics. Pursuant to the program, third-party insurance agents contacted seniors who were in or eligible for Medicare Advantage. The insurance agents delivered marketing messages touting Oak Street Health, and then referred interested seniors to an Oak Street Health employee via a three-way phone call or an electronic transfer. In exchange, the insurance agents would receive $200 per beneficiary referred, incentivizing agents to recommend Oak Street Health rather than a plan chosen for the best interests of the senior. This kickback scheme took place between September 2020 and January 2022.

The Settlement

Oak Street Health settled the case for $60 million. “Kickbacks, in any form, have no place in our federal healthcare system” said Acting US Attorney Morris Pasqual for the Northern District of Illinois in a press release. “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.”

Legal Background

The lawsuit was brought under the qui tam provision, which allows a private individual (known as the ‘relator’) to bring a case on behalf of the government. It is often used in whistleblower cases brought by employees. If the government’s case succeeds, the relator receives a share of the award or damages. The Federal False Claims Act, under which this case was filed, authorizes qui tam actions against those who have defrauded the government and awards a relator up to 30% of the damages.

The Bottom Line

The government is extremely motivated to pursue Medicare fraud of all types and will reward those who assist it in succeeding in this goal.

References

Oak Street Health agrees to pay $60M to resolve alleged False Claims Act liability for paying kickbacks to insurance agents in Medicare Advantage patient recruitment scheme. News release. US DOJ. Published September 18, 2024. Accessed October 10, 2024. https://www.justice.gov/opa/pr/oak-street-health-agrees-pay-60m-resolve-alleged-false-claims-act-liability-paying-kickbacks

OIG-HHS v Oak Street Health, LLC. No. 20-cv-7381. United States District Court for the Northern District of Illinois; 2024.