Chicago-based Oak Street Health, a wholly owned subsidiary of CVS Health since 2023, has agreed to pay $60 million to settle allegations that it paid kickbacks to insurance agents in a complex Medicare Advantage patient recruitment scheme. The settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act.
The Anti-Kickback Statute prohibits anyone from offering or paying anything of value to induce referrals of patients or recommendations of items or services covered by federal healthcare programs, including Medicare and Medicaid. Claims for payment for goods or services provided in violation of that statute are false claims under the False Claims Act.
The case against Oak Street Health involves the Medicare Advantage (MA) Program, also known as Part C, which covers a growing number of the Medicare eligible beneficiaries. Under Part C, Medicare beneficiaries may obtain healthcare through privately-operated insurance plans known as MA plans. MA Plans, in turn, may contract with health care providers like Oak Street Health to provide their members with services. MA Plans and providers compete for lucrative MA patients for whom the government pays a set rate for each patient. There has long been concern that aggressive marketing tactics directed at vulnerable seniors may lead them to sign up for MA plans or services that may not be in their best interests.
The lawsuit alleged that Oak Street Health typically paid third-party insurance agents $200 for each MA patient they recruited to use Oak Street Health, which provides primary healthcare services. The agents contacted seniors to market Oak Street Health and referred interested people to an Oak Street Health employee via a three-way phone call or an electronic submission. According to the settlement agreement, under this program, called the “Client Awareness Program,” Oak Street Health paid more than $4 million in kickbacks to insurance agents between September 2020 and January 2022.
“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.”
“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.”
The qui tam whistleblower who brought the lawsuit against Oak Street Health will receive $9.9 million.
Phillips & Cohen has extensive experience representing whistleblowers in medical kickback cases, among other False Claims Act violations. Some of our kickback case successes include a settlement of $50 million with Wheeling Hospital, a $45 million settlement with Modernizing Medicine, a $37.5 million settlement with Prime Healthcare and others, and a $17 million settlement with Southeast Eye Specialists.
If you are aware of kickbacks involving healthcare services and would like to get a free, confidential review of your case by experienced whistleblower attorneys, contact Phillips & Cohen for a confidential review of your case.