The Apparent Scheme Oak Street Health Used to Prey on the Elderly
A for-profit primary care company built its Medicare patient base by paying brokers to deliver elderly people through a call-center pipeline. Federal prosecutors say every claim filed afterward was fraudulent. The company paid $60 million to make the case go away.
TL;DR
- Oak Street Health, a for-profit primary care chain serving Medicare patients across the United States, built a covert referral machine called the “Client Awareness Program” between September 2020 and January 2022. The company paid third-party insurance brokers and agents $200 per elderly patient they handed over, which federal law explicitly prohibits as an illegal kickback.
- Oak Street Health made more than 20,000 separate payments to brokers under this program, totaling over $4 million in kickbacks. Every single one of those payments violated the federal Anti-Kickback Statute, which exists to protect Medicare patients from being steered by people acting on financial motives rather than medical ones.
- The agents weren’t acting as neutral advisors. They were cold-calling Medicare beneficiaries, delivering scripted marketing pitches, and then routing people into “warm transfer” calls directly to Oak Street Health staff. Oak Street Health’s own contracts barred payments unless the person referred was Medicare-eligible; healthy working-age adults were not the target.
- Thousands of Medicare claims filed after patients entered through this pipeline were deemed false and fraudulent under the False Claims Act. Oak Street Health also caused Medicare Advantage Organizations to submit false claims to the federal government on its behalf.
- The case was originally filed in December 2020 by a whistleblower, Joseph Stinson, under the qui tam provisions of the False Claims Act. He will receive approximately $9.9 million as his share of the $60 million settlement.
- Oak Street Health agreed to pay $60 million to settle the case: $59.93 million to the federal government and $69,557 to the State of Illinois. Half of the total is classified as restitution. Oak Street Health denies the allegations in the settlement agreement, which is itself a standard clause that lets corporations pay millions without calling it an admission of guilt.
- The settlement was signed on September 16, 2024. Criminal liability, personal liability of individual executives, and consumer protection claims were all explicitly carved out and reserved; none were resolved by this agreement.
The company’s own contracts prohibited broker payments unless the person referred was Medicare-eligible. That clause is in Legal Receipts, and it tells you exactly who Oak Street Health was hunting.
What a $200 Bounty on Your Grandmother Actually Means
Imagine you are 72 years old. You live alone. Your phone rings, and the voice on the other end knows your name, knows you’re on Medicare, and tells you about a primary care clinic that could really help someone in your situation. The person sounds like an insurance expert. They seem to be looking out for you. You didn’t ask for the call. You don’t know the person has a financial contract that pays them $200 the moment they transfer you to a clinic employee. You don’t know the clinic designed the script they’re reading from. You don’t know any of this because you were never supposed to.
That is what the “Client Awareness Program” was. It was a systematized assembly line for converting elderly Medicare recipients into billable patients, using brokers as the intake mechanism and a phone call as the handoff point. The program ran from September 2020 through January 2022. In that window, Oak Street Health made more than 20,000 payments to the agents running those calls. Every payment was $200. Every payment was for a person on Medicare.
The federal Anti-Kickback Statute exists precisely because of this dynamic. The law recognizes that when the person advising you about your health care has a financial stake in where you go, their advice is corrupted. You can no longer trust that the recommendation reflects your medical needs. You have lost the most basic protection you are supposed to have as a patient: the assurance that no one is being paid to steer you. Oak Street Health knew this statute existed. They built their program anyway, ran it for 16 months, and made over $4 million in broker payments before it ended.
The people on those calls were not abstract Medicare “beneficiaries.” They were elderly individuals who trusted that the healthcare system, for all its dysfunction, at least wasn’t hunting them by demographic. The Client Awareness Program explicitly targeted Medicare-eligible people and only Medicare-eligible people. Oak Street Health’s template contracts with brokers barred any payment if the referred person was not Medicare-eligible. The elderly were the product. Medicare was the revenue stream. The program was built around that equation.
And when thousands of those people ended up enrolled at Oak Street Health and the government paid claims for their care, federal prosecutors concluded those claims were false. Not just improperly filed. False. Because they originated in an illegal referral scheme, the care itself arrived in a corrupted chain of custody. The human cost of that corruption is not in the settlement amount. It is in the thousands of patients who made healthcare decisions based on a call they didn’t ask for, from a broker they didn’t know was being paid, recommending a clinic that designed the entire encounter.
Directly From the Documents: What They Admitted
The following text is drawn verbatim from the Settlement Agreement between Oak Street Health, the United States Department of Justice, and the State of Illinois. These are not paraphrases. These are the facts as the government put them on record.
“From approximately September 2020 through January 2022, Oak Street Health paid remuneration to third-party insurance agents or brokers and broker organizations (together, ‘agents’), with a purpose to induce the agents to refer Medicare beneficiaries to Oak Street Health and to recommend Oak Street Health’s services to Medicare beneficiaries. Oak Street Health paid this remuneration through its ‘Client Awareness Program,’ which Oak Street Health had developed to increase its patient membership.”
— Settlement Agreement, Paragraph D.1
- The phrase “with a purpose to induce” is the legal test for an Anti-Kickback violation. The government is stating directly that Oak Street Health’s intent was to purchase referrals, not to educate the public.
- The admission that the program was “developed to increase its patient membership” confirms this was a corporate growth strategy, not a community outreach program. Growth was the motive. Elderly Medicare patients were the mechanism.
“At Oak Street Health’s direction, agents participating in the Client Awareness Program contacted Medicare beneficiaries and delivered marketing messages designed to garner beneficiaries’ interest in Oak Street Health. Agents then sought to refer a beneficiary to an Oak Street Health employee via three-way phone call, otherwise known as a ‘warm transfer,’ and/or an electronic form submission. In exchange, Oak Street Health paid agents typically $200 per eligible referral.”
— Settlement Agreement, Paragraph D.2
- The “warm transfer” mechanism is not a referral in any traditional sense. It is a hand-off technique designed to prevent the patient from hanging up and reconsidering. The agent stays on the line until the patient is connected to a clinic employee, at which point the $200 transaction is complete.
- The marketing messages were delivered “at Oak Street Health’s direction,” meaning Oak Street Health wrote or approved the scripts the brokers used on patients. The brokers were not independent advisors; they were Oak Street Health’s telemarketing force, paid per head.
“Oak Street Health exclusively targeted Medicare beneficiaries, as its template contracts with agents barred payment if the referred or recommended person was ineligible for Medicare.”
— Settlement Agreement, Paragraph D.3
- This single sentence exposes the purpose of the entire program. Oak Street Health was not running a general community health outreach effort. The contracts were written to exclude anyone whose care could not be billed to Medicare. Elderly people on federal health insurance were the only target because they were the only profitable target.
- By barring payments for non-Medicare-eligible referrals in writing, Oak Street Health created a paper record that its own lawyers drafted confirming the demographic targeting was deliberate and contractually enforced.
“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. Each of these payments violated the Anti-Kickback Statute…”
— Settlement Agreement, Paragraph D.4
- Each of the 20,000+ payments is a separate violation of federal law. The government is not describing a single incident or a rogue department. This was an institutionalized, repeated, and documented violation running across 16 months of company operations.
- At $200 per payment and 20,000+ payments, the minimum cost of the kickback program was $4 million. The resulting Medicare billings from patients acquired through this program were the revenue Oak Street Health was actually chasing, and those revenues far exceeded the kickback expenditure.
— Settlement Agreement, Paragraph D.3
“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…”
— Settlement Agreement, Paragraph D.5
- The government’s position is that a claim originating from an illegal kickback is itself a false claim, regardless of whether the medical care provided was real or appropriate. The taint of the illegal referral renders every downstream billing fraudulent under the False Claims Act.
- Oak Street Health “caused” Medicare Advantage Organizations to submit false claims. This means the fraud rippled outward. Third-party insurers, functioning as intermediaries between Oak Street Health and the federal government, were turned into instruments of the fraud without their knowledge.
The Scale of the Operation
Who Gets Hurt When Medicare Gets Defrauded
Public Health
When financial incentives replace medical judgment in healthcare referrals, the entire patient-provider relationship is poisoned from the first contact.
- Thousands of Medicare beneficiaries made healthcare decisions about where to receive primary care based on calls from brokers who were financially compensated per patient transferred. Those patients could not have known their “referral” was a purchased transaction, meaning their informed consent to the care relationship was built on a corrupted foundation.
- The Anti-Kickback Statute exists because paid referrals create a documented risk that patients are steered to providers based on the referrer’s financial interests rather than the patient’s clinical needs. Every patient who entered Oak Street Health through the Client Awareness Program was deprived of a referral process that prioritized their health.
- The scheme specifically targeted elderly individuals on Medicare, a population that is statistically more medically vulnerable and less likely to independently research healthcare providers or identify a cold call as a paid marketing contact. The targeting of this demographic amplifies the public health risk of manipulated healthcare decision-making.
- The False Claims Act findings mean that the government-reimbursed care records generated by these tainted referrals entered the federal healthcare billing system as fraudulent transactions. This corrupts the integrity of Medicare data used to track patient outcomes, detect fraud patterns, and allocate public health resources.
Economic Inequality
Medicare fraud does not just steal money from an abstract federal account. It drains a public insurance fund that exists specifically to guarantee healthcare access to the elderly and disabled, and it does so while the people running the scheme collect executive compensation.
- Oak Street Health paid over $4 million to brokers to generate Medicare referrals, then billed the federal government for the care those patients received. The taxpayer ultimately funded both the care and the fraudulent claims system that delivered the patients. The $60 million settlement is taxpayer money that was spent to recover taxpayer money that was taken.
- The scheme disproportionately targeted Medicare-eligible patients, which means the target was by definition people aged 65 and older or individuals qualifying due to disability. These are among the most economically vulnerable healthcare consumers, who rely on Medicare because private insurance is inaccessible or unaffordable.
- The relator, Joseph Stinson, received approximately $9.9 million from the federal share and approximately $11,477 from the state share as his whistleblower cut. While this represents a fair reward for taking on corporate legal machinery, it also reveals how much the government depends on individual insiders rather than regulatory infrastructure to detect this kind of fraud.
- The settlement permits Oak Street Health to avoid admitting liability. The company pays $60 million, files no admission of guilt, and continues operating. For comparison, $4 million in broker payments generated access to a patient population whose Medicare billings vastly exceeded that figure. The settlement represents a cost of doing business rather than a structural deterrent.
- The State of Illinois received only $69,557.76 from a scheme that also ensnared Illinois Medicaid beneficiaries. That figure reflects the relatively small number of Medicaid patients affected, but it also illustrates how state-level public health programs bear real harm while recovery amounts are negligible.
What the Math Reveals About Who Was Expendable
Who Is Still Accountable and What You Can Do
The $60 million settlement closes the civil federal case for the Covered Conduct, but the agreement explicitly reserves criminal liability, individual liability for executives and employees, and consumer protection claims. Those avenues remain open.
Corporate Leadership Accountability
The settlement names Oak Street Health, Inc. and Oak Street Health, LLC as parties. The agreement does not name or release any individual executives, officers, directors, or employees. According to the settlement, liability for individuals is specifically reserved and was not resolved. The following roles at Oak Street Health bear accountability questions that the settlement does not answer:
- The executive or executives who approved and funded the Client Awareness Program between 2020 and 2022.
- The legal or compliance team that reviewed or failed to review the program’s compliance with the Anti-Kickback Statute.
- The contract drafters who wrote the template agreements barring payment for non-Medicare-eligible referrals, creating the paper record of demographic targeting.
- Any board-level officers who approved the $4 million+ broker payment budget as a patient acquisition strategy.
Watchlist: Regulatory Bodies With Active Jurisdiction
- Department of Justice (DOJ), Commercial Litigation Branch: Signed the settlement. Criminal liability is explicitly reserved and not discharged by this agreement.
- Office of Inspector General, Department of Health and Human Services (OIG-HHS): A co-party to this settlement. Retains authority over mandatory exclusion from federal health care programs; the agreement does not foreclose OIG enforcement actions.
- Centers for Medicare and Medicaid Services (CMS): The federal agency whose funds were defrauded. CMS has independent authority to audit billing patterns and impose corrective action plans on providers.
- Office of the Illinois Attorney General, Medicaid Fraud Control Unit: A signatory. State-level criminal and consumer protection claims are reserved.
- Illinois Department of Healthcare and Family Services: The settlement reserves mandatory exclusion rights under Illinois statute. That authority was not waived.
- Federal Trade Commission (FTC): Consumer protection claims based on deceptive practices are explicitly listed among the reserved claims in Paragraph 6(k) of the settlement and were not resolved.
- CVS Health Corporation: Oak Street Health was acquired by CVS Health. As Oak Street Health’s current parent corporation, CVS is released from civil liability for the Covered Conduct under this settlement. However, CVS’s ownership means their compliance infrastructure now governs Oak Street Health’s ongoing operations and bears scrutiny for whether the program’s culture has changed.
What Grassroots Resistance Looks Like Here
- If you are elderly, a caregiver, or a Medicare navigator, document any unsolicited calls claiming to refer you to a primary care provider and report them to 1-800-MEDICARE and your state Attorney General’s consumer protection line. The FTC’s consumer protection claims were reserved in this settlement; documented reports strengthen those potential cases.
- Contact your local Area Agency on Aging (AAA) to ask whether Medicare patient-acquisition schemes have been reported in your region. AAAs are community infrastructure that can aggregate reports at the local level before they reach federal investigators.
- Support and amplify existing whistleblower protection advocacy organizations. Joseph Stinson filed this case in December 2020, and the case took nearly four years to resolve. Qui tam litigation is inaccessible to most workers without better legal support infrastructure and stronger anti-retaliation protections.
- Organize around Medicare for All and publicly administered primary care as structural solutions. For-profit primary care chains that bill Medicare are structurally incentivized to maximize patient enrollment; that incentive is what the Client Awareness Program was built to exploit. Remove the profit motive and the scheme has no financial logic.
- Demand that your Congressional representatives support stronger False Claims Act enforcement funding, mandatory corporate officer liability for healthcare fraud settlements, and public disclosure of compliance monitor reports when companies settle cases of this scale.
The source document for this investigation is attached below.
additional links to find the sources used to write this article:
https://www.justice.gov/archives/opa/media/1369171/dl
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