By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Law Defense and Compliance Firm

The Justice Department and the Federal Trade Commission (FTC) have filed an amended complaint against telehealth company Cerebral Inc., its founder and former CEO Kyle Robertson, former executive Alex Martelli, and other related telehealth entities for unfair and deceptive practices. This legal action underscores the commitment of federal agencies to hold healthcare companies accountable for mishandling sensitive personal health information and engaging in misleading business practices.

Allegations Against Cerebral Inc. and Executives
The complaint, filed in the U.S. District Court for the Southern District of Florida, outlines numerous violations of the FTC Act, the Opioid Addiction Recovery Fraud Prevention Act of 2018 (the Opioid Act), and the Restore Online Shoppers’ Confidence Act (ROSCA). Cerebral Inc. and its executives are accused of misusing patients’ sensitive health information, failing to keep that information secure, and implementing deceptive and burdensome cancellation practices.

Misuse of Health Information:
Cerebral Inc., under Robertson’s direction, allegedly deployed online tracking technologies on its website that collected and transmitted users’ sensitive health information to third parties for business purposes, such as targeted advertisements. This practice was done without users’ informed consent, directly contradicting the company’s claims that its services were “private” and “confidential.”

Failure to Secure Data:
The complaint further alleges that Cerebral failed to safeguard consumers’ data from unauthorized disclosure. Despite assurances that their services were secure, the company experienced chronic data security breaches, leading to repeated unauthorized disclosures of users’ health information.

Deceptive Business Practices:
Robertson and Martelli are also accused of causing Cerebral employees to impersonate patients online, posting false positive reviews while suppressing authentic negative reviews. Additionally, they allegedly violated ROSCA by not clearly disclosing material terms related to data privacy and security before obtaining patients’ billing information and by making it difficult for patients to cancel their subscriptions, resulting in millions of dollars in unjustified charges.

Legal Actions and Settlements
Cerebral Inc. has agreed to settle the claims against it. The proposed stipulated order, pending court approval, will require Cerebral to cease its improper data practices and pay approximately $5 million in consumer redress. The company will also face a suspended civil penalty judgment of $10 million, reduced to $2 million based on its financial condition. However, the Justice Department continues to pursue legal action against Robertson, Martelli, and other telehealth companies and executives involved, including Zealthy Inc., Gronk Inc., Bruno Health P.A., and their executive German Echeverry. The allegations extend to violations of ROSCA and the FTC Act, including misleading consumers about the terms of telehealth subscriptions and mishandling their sensitive data.

FTC Bureau of Consumer Protection Director Samuel Levine reiterated the agency’s stance against companies taking shortcuts on privacy or security and hindering patients from canceling services they no longer want. By holding executives accountable, the government aims to send a clear message about the importance of compliance with consumer protection laws.

Parrella Health Law
For further information or assistance on issues related to HIPAA/FTC healthcare compliance, please contact Parrella Health Law at 857.328.0382 or email Chris directly at cparrella@parrellahealthlaw.com.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)