Cerebral’s top two executives say their embattled digital health company is doing good work in mental health, despite ongoing litigation and a Department of Justice investigation.
Cerebral CEO Kyle Robertson and its newly christened president, Dr. David Mou, said in interviews with Digital Health Business & Technology that people are seeking mental health services through their business because traditional access is scarce.
They don’t believe lawsuits, mounting criticism from industry peers and observers, and the DOJ investigation should take away from their work.
“Do I feel picked on? Yeah, I do,” Mou said. “I feel like we’re really trying to do good work here. There are a lot of things we get really right, there are some things we are working on and we’re going to get it right, and we’re open to feedback, we want to get better at it.”
Robertson noted 60% of the company’s patients haven’t accessed mental healthcare before Cerebral.
“A lot of these people would not be getting this care otherwise,” he said. “They would be suffering in silence.”
The digital mental health company, based in San Francisco, is under investigation by the federal government for possible violations of The Controlled Substances Act. The company said it received a grand jury subpoena from the U.S. Attorney’s Office for the Eastern District of New York on May 4.
Cerebral said it would comply with the investigation and it has not been accused of violating the law. In an interview before Cerebral confirmed the investigation, Mou said he was not concerned about what a potential investigation would find about its prescription policies. He said the company has gone “well beyond brick-and-mortar” or other mental health clinics in terms of compliance.
The DOJ did not respond to an inquiry regarding the investigation.
Business Insider reported on May 4 that the U.S. Drug Enforcement Agency was investigating Cerebral and speaking with former employees over about the way it has prescribed controlled substances for attention deficit hyperactivity disorder (ADHD).
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Prescribing practices under a microscope
On top of the DOJ investigation, the company faces three lawsuits from former employees. Its ADHD medication policy sparked a lawsuit from Matt Truebe, former Cerebral vice president of product and engineering, who alleged the company aimed to increase customer retention by prescribing ADHD stimulants to 100% of its patients. The lawsuit also alleged that Cerebral had 2,000 duplicate shipping addresses, which suggested patients were setting up multiple accounts to obtain additional medication from prescribers.
Mou said the company has a safety process that removes any duplicate accounts, using an automated identification system that has pictures of patients, verified shipping addresses and a warning system that detects duplicates. Cerebral also employs a team of workers who scan the system manually, he said.
Mou denied the company used ADHD prescriptions to improve customer retention. He said the company’s clinical safety and quality departments aren’t informed of its business model and zero incentives exist for writing a certain percentage of prescriptions. Reports sent to clinicians do not include prescription data but look at treatment plans to analyze what’s working.
On April 27, The Wall Street Journal reported that national pharmacy chains were probing the prescription practices at Cerebral and another company, Done Health. The story alleged CVS Health, Walmart and Walgreens blocked and delayed some Cerebral and Done Health prescriptions due to Adderall over-prescribing concerns. Another pharmacy, online venture-backed TruePill, said it paused Adderall and other controlled substances prescription fulfillment.
On May 4, Cerebral said it would stop writing prescriptions of Adderall and Ritalin to new patients. Mou said it was a difficult decision for him as a clinician because he considers those first-line treatments.
“There's been an influx of feedback from the market that is negatively affecting our ability to support all of our patients,” Mou said. “We had to make a tough decision here to ensure that the most of our patients do continue to receive high quality care. I have to say, I'm saddened by the decision.”
Robertson said the company has other treatments for ADHD and non-controlled medications that it can use.
Mou said a minority of Cerebral’s patients are prescribed controlled substances and the company closely follows state and federal guidelines for prescribing controlled substances.
Teladoc Health, a Cerebral competitor, criticized companies that prescribe controlled substances via telehealth. While not mentioning any company by name, Teladoc CEO Jason Gorevic said in earnings call on April 27 that companies prescribing controlled substances via telehealth were “exploiting” the COVID-19 public health emergency.
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Independent contractors vs. salaried employees
Another lawsuit targeted Cerebral’s medical group and how it classifies clinicians as employees. A former Cerebral clinician, Kaycie Crossley, alleges in a proposed class action lawsuit that the company wrongly hires clinicians as independent contractors to avoid paying overtime, reimburse for business expenses and provide meal breaks.
Nicholas De Blouw, an attorney representing Crossley, said this issue has come up repeatedly with companies operating in the gig economy.
“A lot of the times startups are interested in one thing, ‘How do we shave labor costs to look profitable to investors?’ One way to do that is to classify everyone as a 1099 [independent contractor] employee,” De Blouw said. “Make the worker shoulder the tax burdens. Make the workers front the costs to work for the company like gas and personal cell phone use. What happens is startups are profitable, investors flock to them and workers are the ones who get squeezed.”
De Blouw said the arrangement also means that employees are not provided medical benefits, allowed to file for workman’s compensation if they are injured on the job, or protected from potential patient lawsuits for medical malpractice or other issues.
Two mental telehealth companies, Brightline and Iris Telehealth, told Digital Health Business & Technology that they hire W2, salaried clinicians rather than independent contractors. The difference is that salaried employees are not incentivized to oversee a “churn and burn” model of care, said Brightline CEO Naomi Allen.
Compensation was at the center of another lawsuit, filed by one of the company’s earliest employees, Sarah Croswell, who went to Columbia University with Robertson. She alleges she developed “much of Cerebral’s mental health counseling curriculum and infrastructure that was critical to its success.” She alleges that once Cerebral began to raise capital, Robertson double crossed her and kept her equity stake.
Cerebral declined to comment on pending litigation but said it would vigorously defend itself. It also would not disclose its breakdown of salaried clinicians versus those who are independent contractors. A December report in Forbes said the company switched around 200 of its clinicians from salaried employees to hourly workers in August 2021, reneging on an earlier agreement with those people.
Robertson said that the company tracks the quality its clinicians deliver over time related to clinical outcomes. As an example, he said Cerebral clinicians use the patient health questionnaire to measure depression and the generalized anxiety disorder scale to measure anxiety. “We're constantly looking at clinical outcomes data and how we can optimize it to provide our clinicians with better support over time,” he said.
The company has hired 4,000 clinicians in just over two years and most enjoy working there, Mou said. “A large majority of our clinicians are referred in by other clinicians,” he said. “Name another healthcare organization that can hire 4,000 people in a constrained supply market.”
Social media and guardrails
Cerebral’s social media practices were put under a microscope in January when TikTok and Instagram removed ads for promoting “negative body images” and containing “misleading health claims.” In the advertisements, which had a woman surrounded by junk food, the company claimed obesity is “five times more prevalent” among adults with ADHD.
Cerebral said on May 4 it was having a new clinical review committee assess all its paid social advertisements. Robertson said the company has always had a review process to ensure the company was promoting the right messages in its advertising. However, at the American Telemedicine Association conference on May 1, Mou said that because the company grew so quickly, some marketing was outsourced and material was no longer being reviewed by clinicians.
“We have made mistakes. I've said this before, we will admit it when we make mistakes. The marketing strategy was correctly called out. And immediately we put together a team to look at that,” Mou said to Digital Health Business and Technology.
Mou and Robertson touted the company’s work to improve mental healthcare access, attention to quality outcomes and reported statistics on improving patient mental health. Both say they continue to be focused on the mission of the company.
Skeptics say the fast growth of the company, which amassed a $5 billion valuation in two years, shows the need for industrywide guardrails, both from companies themselves and federal regulators, to protect patient needs, particularly as telehealth emerges as a viable option for mental health.
Michael Abrams, managing partner of the global healthcare consultancy firm Numerof & Associates, said the industry is still learning how to separate monetary considerations from clinical practice within the scope of emerging technologies like telehealth.
“Telehealth comes with so many new potential issues,” Numerof said. “This is just one dimension of it. I think telehealth needs oversight that’s specific to the area.”
Lawsuits:
Cerebral Inc. vs. Matthew Truebe
Cerebral Inc. vs. Sarah Crosswell
Proposed class action: Cerebral Medical Group vs. Kaycie Crossley
