Oak Street Health: Insurance-Agent Payments for Primary-Care Patients

In the Oak Street Health kickback settlement, the company agreed to pay $60 million to resolve allegations that it paid insurance agents to recruit Medicare patients for its primary care clinics. The revealing details sit inside the recruitment operation: the marketing message, the patient handoff and the enrollment target behind an agent’s payment.

Oak Street, headquartered in Chicago, operated primary care centers across the country, primarily serving Medicare-eligible patients. The alleged payments for primary-care patients connected its marketing budget to government-funded care. The whistleblower’s complaint describes the offer from the receiving end, including a mailer budget, free advertising and a condition for keeping referral payments coming.

How the Client Awareness Program Moved Patients

The government alleged that Oak Street’s Client Awareness Program paid third-party insurance agents to direct seniors to its clinics. According to the government, agents contacted people eligible for or enrolled in Medicare Advantage and delivered marketing messages about Oak Street. The alleged handoff sent interested seniors to an Oak Street employee through a three-way telephone call, known as a warm transfer, or an electronic referral.

The government alleged in the settlement agreement that Oak Street typically paid $200 per eligible referral. It described more than 20,000 payments totaling more than $4 million between September 2020 and January 2022. The agreement says Oak Street’s template contracts barred payment when the referred person was ineligible for Medicare.

That eligibility condition ties the recruitment budget directly to the public program. An agent’s contract and payment ledger could show that the same handoff earned money only when the prospective patient met the Medicare requirement. The government alleged that these incentives put Oak Street’s financial interests ahead of seniors’ interests when agents made their recommendations.

Some Medicare Advantage plans contract with Oak Street for primary care. The plan enrolls an insurance member; the practice gains a patient. The alleged payment to the agent bought a recommendation of the practice, with the patient’s coverage determining eligibility for that payment.

The Mailer Offer and the Conversion Target

The whistleblower’s complaint describes a proposed campaign that tied an advertising budget to a patient target. An Oak Street vice president allegedly offered a business $10,000 to finance 20,000 mailers in exchange for referring all responding patients to Oak Street. The complaint described a minimum of 200 to 240 patients as part of that offer.

The complaint also alleged that continued referral payments depended on turning referrals into enrollments. It described the condition this way:

That alleged condition gives the conversion report a different significance from an ordinary campaign summary. We would compare who reached the target with whose payments continued, and what managers told agents who fell short. The mailer invoice describes an expense; the enrollment condition describes what Oak Street allegedly expected to get for it.

Free Advertising, Patient Data and Transportation

The complaint alleged that Oak Street offered value beyond direct referral payments. It described free billboards, commercials and digital marketing in exchange for patient referrals, and said Oak Street wanted advertisements to leave out the company’s name. We find the alleged bargain telling: the clinic wanted every responding patient, but wanted its name kept out of the pitch.

The company’s own conduct code, quoted in the complaint, gave employees a plain description of the problem. It defined a kickback in terms broad enough to include services and other benefits:

The same question about noncash referral payments appears in BioTek. In that case, the Justice Department alleged that gifts, meals and free administrative and clinical support helped buy physician referrals. Oak Street’s complaint describes advertising supplied to agents instead. In both accounts, the useful question is what business the recipient was expected to send back.

Patient information allegedly opened another stream of income for referring agents. The complaint said Oak Street shared private patient information to encourage agents to steer patients to its clinics, while Medicare Advantage plans paid commissions for initial insurance enrollment or switching and subsequent renewals. Those plan-paid commissions were separate from the direct payments the complaint attributed to Oak Street.

The complaint also alleged that Oak Street advertised free transportation to prospective Medicare and Medicaid patients to induce them to choose an Oak Street facility. That allegation concerned a benefit offered to the patient, while the advertising and commission allegations concerned benefits offered to agents. Each account connected something of value to the choice of where government-funded health care would be delivered.

The Records Behind the Referral

For an insider, the useful evidence connects the promised benefit to the patient and the claim. We would compare the calls, emails and campaign terms described in the complaint with the government’s account of agent contracts and payments. Transfer records and enrollment reports could connect that offer to the patient’s arrival, while care records and claims could show how the referral reached government money.

A 2020 article in the Journal of Forensic and Investigative Accounting, A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud, focuses on the request for government money and evidence that the company knew the claim was false. Applied here, the recruitment records explain why a patient arrived, and the claims show how that relationship reached government money. Someone who knows the marketing operation may hold the explanation that the billing records alone leave out.

What the Settlement Resolved

The Justice Department announced the civil settlement on September 18, 2024. The agreement names Oak Street Health, Inc. and Oak Street Health, LLC as the settling companies and provides for payment to the United States and Illinois. The Justice Department’s Civil Division and the U.S. Attorney’s Office for the Northern District of Illinois handled the case, assisted by the Department of Health and Human Services Office of Inspector General and the FBI.

The government’s covered allegations follow the referrals into claims submitted from September 1, 2020, through December 31, 2022. Under Medicare Advantage, Oak Street allegedly submitted claims to private plans, which in turn submitted claims to the government. Under Medicare Part B, Oak Street allegedly submitted claims directly to the federal government. The agreement also describes a small number of Illinois Medicaid beneficiaries who received government-reimbursed care after contact through the program.

The government alleged that paying for those referrals violated the Anti-Kickback Statute and made the resulting claims false. The payment period and the claims period describe different parts of that alleged scheme: recruitment came first, followed by claims for the patient’s care. CVS acquired Oak Street in 2023, after both periods described in the agreement.

Why the Patient Relationship Was Valuable

A practice’s contract with a Medicare Advantage plan determines how that patient relationship produces revenue. The public program’s payment to the insurer and the insurer’s payment to the practice are separate transactions. The Oak Street agreement describes referred beneficiaries entering capitated arrangements under Medicare Part C.

CVS’s annual filing for 2025 explains the economics of its primary care risk contracts: a fixed monthly payment per patient, with responsibility for providing, managing and paying for that population’s care. The later filing helps explain why acquiring a continuing patient relationship matters to the business.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the Oak Street resolution, the Justice Department announced that the whistleblower would receive a whistleblower reward of $9.9 million.

According to the complaint, the whistleblower heard Oak Street’s pitch to an outside business directly in calls, declined to participate and reported it. The case shows the value of knowing the offer before it disappears into a marketing budget: what the company promised, what it expected in return and how those terms were communicated.

You Heard What the Agent Was Promised

If you know the referral offer, the conversion target or the commission trail, talk with our whistleblower experts about the recruitment program you saw. We build your case around the connection between patient recruitment and government payments, and bring in healthcare fraud whistleblower lawyers who understand practice and insurance-agent arrangements. Bring us the pitch, and let’s build your strongest Medicare kickback whistleblower case.