DOJ and FTC Propose $7 Million Settlement with Telehealth Company Cerebral for Data Sharing and Deceptive Practices

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) have proposed that telehealth company Cerebral pay a total of $7 million due to alleged violations of the FTC Act, including sharing patient data and engaging in deceptive business practices.

Cerebral has been ordered to pay $5 million in consumer redress and a $10 million civil penalty, which was reduced to $2 million based on the company’s limited ability to pay, according to a DOJ press release on Monday.

Pending approval by the U.S. District Court for the Southern District of Florida, the order mandates that Cerebral cease misusing and improperly disclosing patient information, misrepresenting its data privacy and security practices, and misrepresenting its cancellation practices.

In February 2023, a bipartisan group of senators sent letters to three telehealth firms, including Cerebral, highlighting the companies' alleged tracking and sharing of patients’ personally identifiable health information with advertisers.

The DOJ and FTC alleged that Cerebral violated the FTC Act, Opioid Act, and the Restore Online Shoppers’ Confidence Act (ROSCA) through its misuse of patients’ sensitive personal health information, failure to keep that information private and secure, and employing "deceptive, burdensome, and convoluted cancellation practices."

In May 2022, the company’s former CEO, Kyle Robertson, allegedly continued to violate the FTC Act and ROSCA after founding a new business called Zealthy, which was later renamed Gronk, and its affiliate Bruno Health P.A.

In a concurrent action, the DOJ filed an amended complaint against Zealthy, Gronk, Bruno Health, and associated executives for alleged violations of the FTC Act and ROSCA.

In April, Cerebral announced a settlement with the FTC requiring it to “implement enhanced consumer protection, privacy, and compliance measures” to better protect its clients' personal information.

The DOJ stated that it will continue to seek civil penalties, injunctive relief, and monetary relief against Robertson, Bruno Health, Zealthy, and other executives.

A Cerebral spokesperson said in an emailed statement that the company was “transparent and fully cooperative throughout the FTC’s investigation and remains committed to providing excellent care for our valued patients while upholding the highest standards of customer service, data protection, and privacy.”

The company had no comment regarding the charges against Robertson. Zealthy did not immediately respond to a request for comment.

By fLEXI tEAM