Oak Street Health – a key pillar of CVS Health’s (NYSE: CVS) health care services strategy – has reached a $60 million settlement with the Department of Justice (DOJ).
The settlement is being paid to resolve allegations that Oak Street violated the False Claims Act, specifically by paying kickbacks to third-party insurance agents. The DOJ alleged that Oak Street paid kickbacks to those agents in exchange for the recruitment of seniors to its primary care clinics.
The violations occurred from September 2020 to December 2022, through Oak Street’s “Client Awareness Program,” which involved those insurance agents, who then urged seniors eligible for Medicare Advantage (MA) to consider Oak Street services.
“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,” the DOJ said. “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 acknowledges that Oak Street knowingly provided kickbacks to these insurance agents during the above time period.
As part of the overall settlement, the whistleblower will receive $9.9 million.
“Health care providers that attempt to profit from kickbacks will be held accountable,” Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, said in a statement. “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.”
Oak Street Health is a senior-focused primary care provider. CVS Health purchased the company for more than $10 billion in 2023. Like its peer Walgreens Boots Alliance (Nasdaq: WBA), CVS has built out a significant health care services arm as part of a company evolution. In addition to Oak Street – which does provide some care in the home – CVS Health has the home-focused, value-based care platform Signify Health under its belt. It also owns Aetna.
CVS acquired Signify Health for $8 billion, around the same time it acquired Oak Street.
Oak Street’s violations came before it was officially a part of CVS.
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