Investigations

GRABAR LAW OFFICE INVESTIGATES POTENTIAL CLAIMS AGAINST OFFICERS AND DIRECTORS OF OAK STREET HEALTH, INC. (NYSE: OSH)

On November 1, 2021 the Oak Street Health received a civil investigative demand (“CID”) from the United States Department of Justice (“DOJ”). According to the CID, the DOJ was investigating whether the Company violated the False Claims Act. The CID also requested documents and information related to the Oak Street’s relationships with “third-party marketing agents” and Oak Street’s “provision of free transportation to federal health care beneficiaries.”

Oak Street revealed the CID on November 8, 2021 and the share price fell $9.75, or more than 20%.

In the wake of the disclosure, a federal class action complaint was filed which alleged that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Oak Street maintained relationships with third-party marketing agents likely to provoke law enforcement scrutiny; (2) that Oak Street was providing free transportation to federal health care beneficiaries in a manner that would provoke law enforcement scrutiny; (3) that these activities may be violations of the False Claims Act; (4) that, as such, Oak Street was at heightened risk of investigation by the DOJ and/or other federal law enforcement agencies; (5) that, as a result, Oak Street was subject to adverse impacts related to defense and settlement costs and diversion of management resources; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

Specifically, around the time of the IPO, when Oak Street needed to demonstrate growth to justify its valuation and increase its stock price, the Company began paying third-party insurance agents at least $200 as kickbacks for each patient the agents referred to Oak Street. Moreover, Oak Street was, both leading up to and after the IPO, repeatedly marketing and providing free transportation to prospective patients as a kickback to induce them to join Oak Street, including to induce them to switch from their existing primary care doctor.

Current long-term Oak Street shareholders can seek corporate reforms, the return of funds back to company coffers, and potentially a court approved incentive award if appropriate.

If you would like to learn more about this matter at no cost to you, please contact us at jgrabar@grabarlaw.com or call 267-507-6085.

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