Federal whistleblowers have been exposing health care fraud for years. The False Claims Act (“FCA”) contains robust whistleblower provisions and protections that reward whistleblowers with financial payouts. The process for whistleblower submissions is well-established, and the Justice Department has a robust investigative function to sift through the whistleblower complaints. If the Justice Department decides to intervene in support of the whistleblower’s claim, nearly 100 percent of the cases are resolved in the government’s favor.
The latest healthcare provider to fall under the FCA axe was Oak Street Health, which is headquartered in Chicago and a subsidiary of CVS Health since 2023. In a recent settlement, Oak Street agreed to pay $60 million to settle FCA violation for paying kickbacks to third-party insurance agents in exchange for recruiting seniors to Oak Street’s primary care clinics.
The Anti-Kickback Statute (“AKS”) prohibits anyone from offering or paying, directly or indirectly, any remuneration — which includes money or any other thing of value — to induce referrals of patients or to provide recommendations of items or services covered by Medicare, Medicaid and other federally funded programs. Under the Medicare Advantage (MA) Program, also known as Part C, Medicare beneficiaries have the option to obtain their health care through privately-operated insurance plans known as MA plans. Some MA Plans contract with health care providers, including Oak Street Health, to provide their plan members with primary care services.
As explained in the settlement, in 2020, Oak Street developed a program to increase patient membership called the Client Awareness Program, pursuant to which third-party insurance agents contacted seniors eligible for or enrolled in Medicare Advantage and delivered marketing messages designed to generate interest in Oak Street. The insurance 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. In exchange, Oak Street 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 rather than the best interests of seniors.
Between September 2020 through January 2022, Oak Street Health made more than 20,000 payments to agents under the Client Awareness Program, totaling more than $4 million in remuneration. Thousands of Medicare beneficiaries and a small number of Illinois Medicaid beneficiaries received Government reimbursed care at Oak Street Health following contact through the Client Awareness Program. Oak Street Health submitted thousands of claims and caused thousands of claims to be submitted for these beneficiaries, but these claims were false in violation of the False Claims Act and/or the Illinois False Claims Act.
The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Joseph Stinson. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Stinson v. Oak Street Health, et al., No. 20-cv-7381 (N.D. Ill.). As part of today’s resolution, Mr. Stinson will receive $9.9 million.
