CVS Subsidiary Oak Street Health Agrees to $60M Settlement in Medicare Kickback Violations

Wednesday, Oak Street Health, a subsidiary of CVS Health Inc CVS, agreed to settle for $60 million following allegations that it violated the False Claims Act.

The claims involved paying kickbacks to third-party insurance agents to recruit seniors to its primary care clinics, a practice that led to false Medicare submissions.

Also Read: Pharmacy Chains Like CVS Health, Walgreens Boots Alliance Confront Shifting Consumer Habits And Profit Pressures.

The allegations center around Oak Street Health’s Client Awareness Program, launched in 2020, which aimed to increase membership through third-party insurance agents.

These agents targeted seniors enrolled or eligible for Medicare Advantage (MA) plans, directing them toward Oak Street's services.

In exchange, agents received approximately $200 per referral, incentivizing them to prioritize financial gain over seniors’ best interests.

This behavior violated the Anti-Kickback Statute, which prohibits offering payment to induce patient referrals under federally funded programs like Medicare.

The U.S. Department of Justice (DOJ) claimed that Oak Street Health knowingly submitted false claims to Medicare between September 2020 and December 2022 due to these illegal kickbacks.

"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."

Additionally, the settlement resolves claims brought under the whistleblower provisions of the False Claims Act by Joseph Stinson. Stinson will receive $9.9 million as part of the settlement.

Last week, Walgreens Boots Alliance Inc. WBA agreed to pay $106.8 million to settle allegations that it submitted false claims to government healthcare programs, violating the False Claims Act and state regulations.

Price Action: CVS stock is up 0.27% at $58.58 at the last check Thursday.

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