The Oak Street Health lawsuit story is really two cases with the same $60 million price tag. In September 2024, the Medicare-focused primary care chain, now owned by CVS Health, agreed to pay $60 million to the U.S. Department of Justice to resolve allegations that it paid illegal kickbacks to insurance agents who steered seniors into its clinics. A separate securities class action brought by investors, who said Oak Street hid those marketing practices while its stock was publicly traded, settled for another $60 million and received final court approval in December 2024. Oak Street denied wrongdoing in both matters.
The DOJ Kickback Settlement
The Justice Department announced the $60 million False Claims Act settlement on September 18, 2024.1HHS OIG. Oak Street Health Agrees to Pay $60M to Resolve Alleged False Claims Act Liability At issue was an internal Oak Street initiative called the Client Awareness Program. Under that program, the government alleged, Oak Street paid third-party marketing agents roughly $200 for each Medicare-eligible senior they referred to an Oak Street clinic. Agents would contact seniors, pitch Oak Street, and then hand interested people off to Oak Street staff through electronic submissions or three-way phone calls.2Healthcare Dive. Oak Street Health Kickback Scheme Settlement
Between September 2020 and January 2022, the DOJ said, Oak Street made more than 20,000 such payments totaling over $4 million. The government’s theory was that the per-referral money gave agents a financial reason to steer seniors to Oak Street regardless of fit, which violated the federal Anti-Kickback Statute. Every Medicare or Medicaid claim Oak Street later submitted for those patients then became a false claim under the False Claims Act.3Phillips & Cohen. Oak Street Health Agrees to Pay
The case began as a qui tam action, meaning a private whistleblower filed suit on behalf of the government. That whistleblower, Joseph Stinson, received $9.9 million as his share of the recovery.4Whistleblowers Blog. False Claims Act Whistleblower Awarded $9.9 Million His complaint also raised allegations about Oak Street offering free transportation to patients as an enrollment inducement, though the settlement itself focused on the agent-payment program.2Healthcare Dive. Oak Street Health Kickback Scheme Settlement
Oak Street did not admit liability. A CVS Health spokesperson said the company denied wrongdoing, agreed to pay to avoid protracted litigation, and had discontinued the Client Awareness Program more than two years before the settlement was announced.2Healthcare Dive. Oak Street Health Kickback Scheme Settlement
The Investor Securities Class Action
Investors filed their own lawsuit on January 10, 2022. The case, Allison v. Oak Street Health, Inc., No. 22-cv-0149, went to the U.S. District Court for the Northern District of Illinois and was assigned to Judge Matthew F. Kennelly.5PACER Monitor. Allison v. Oak Street Health, Inc. et al The complaint named the company along with CEO Michael Pykosz and CFO Timothy Cook.6Saxena White. Allison v. Oak Street Health Complaint
Investors alleged that from August 6, 2020, through November 8, 2021, Oak Street made false and misleading statements by failing to disclose its relationships with third-party marketing agents and its free-transportation practices, both of which they said carried real False Claims Act exposure.7Rosen Legal. Oak Street Health Inc. Those omissions, the plaintiffs said, kept Oak Street’s stock price artificially high.
The class period started on the date of Oak Street’s IPO and ended on November 8, 2021, when the company disclosed that it had received a civil investigative demand from the DOJ a week earlier.8Robbins LLP. Oak Street Health Inc. The next trading day, the stock fell more than 20%, dropping $9.75 to close at $37.14 per share.9Glancy Law. Oak Street Health Inc.
On February 10, 2023, Judge Kennelly largely denied the defendants’ motions to dismiss, letting most claims proceed to discovery. A narrow subset of claims tied to one secondary public offering, and a specific Section 12(a)(2) claim, were dismissed.5PACER Monitor. Allison v. Oak Street Health, Inc. et al The parties reached a $60 million settlement on May 16, 2024, based on a mediator’s proposal.10Labaton Keller Sucharow. Allison v. Oak Street Health Inc. Lead plaintiffs included the Boston Retirement System and two Central Pennsylvania Teamsters pension funds, with Labaton Keller Sucharow serving as co-lead counsel.
What Investors Get, and When
Judge Kennelly held the final approval hearing on December 12, 2024, and approved the $60 million settlement, the plan of allocation, and class counsel’s fees and expenses.11Oak Street Health Securities Settlement. Oak Street Health Securities Settlement
The claims filing deadline was November 21, 2024, so new claims can no longer be submitted. The first distribution of settlement funds to eligible shareholders occurred on November 6, 2025, and further distributions are being made on a rolling basis.11Oak Street Health Securities Settlement. Oak Street Health Securities Settlement Shareholders who filed timely claims should watch for payment through the settlement administrator; those who missed the deadline are not eligible to participate.
Why the Case Drew Federal Attention
The DOJ settlement did not sit as an isolated event. On December 11, 2024, less than three months after Oak Street’s deal was announced, the HHS Office of Inspector General issued a Special Fraud Alert titled “Suspect Payments in Marketing Arrangements Related to Medicare Advantage and Providers.”12HHS OIG. OIG Special Fraud Alerts The alert cited the Oak Street settlement, along with a 2022 settlement involving MCS Advantage, as examples of arrangements the OIG considers high-risk.13Ropes & Gray. OIG Issues Special Fraud Alert on Medicare Advantage Marketing Arrangements
The OIG flagged two categories of suspect arrangements under the Anti-Kickback Statute: payments from Medicare Advantage plans to providers in exchange for steering patients into a particular plan, and payments from providers to insurance agents or brokers to funnel enrollees into the provider’s practice. Compensation tied to the number, demographics, or health status of referred patients was singled out as especially likely to draw enforcement scrutiny.13Ropes & Gray. OIG Issues Special Fraud Alert on Medicare Advantage Marketing Arrangements Special Fraud Alerts are rare, and the timing put the industry on notice that Oak Street’s case reflected a wider enforcement priority.
Why CVS Is on the Hook
Oak Street Health runs more than 230 primary care centers across 27 states, serving roughly 350,000 mostly Medicare-eligible patients under a value-based care model in which the company receives a fixed monthly payment per patient rather than billing per service.14CVS Health. Oak Street Health White Paper
CVS Health completed its acquisition of Oak Street on May 2, 2023, paying $39 per share in cash for an enterprise value of about $10.6 billion.15CVS Health. CVS Health Completes Acquisition of Oak Street Health The conduct behind both the DOJ settlement and the investor case predated the acquisition, but as parent company, CVS carried the cost of resolving them.