California Attorney General Rob Bonta has reached a $4.5 million settlement with Bay Area-based telehealth company Carbon Health Technologies and its co-founder and former CEO Eren Bali over allegations of violating California’s prohibition on the corporate practice of medicine and engaging in unlawful billing and advertising practices, according to a June 26 news release.
The California DOJ found that Carbon Health used a “friendly professional corporation” model in which its management services organization effectively controlled physician-owned clinics, including the power to replace physician-owners, in violation of California law.
The investigation also found that Carbon Health misled patients about insurance coverage, including misrepresenting in-network status and engaged in improper billing practices such as hidden automatic credit card charges and double-billing.
Under the settlement, Carbon Health must restructure its corporate model to ensure physicians have independent control over medical decisions, stop misleading advertising about insurance coverage and fix its billing practices. Carbon Health will pay $4.4 million in penalties and Mr. Bali will pay $100,000.
The settlement is subject to court approval and comes as Carbon Health is undergoing Chapter 11 bankruptcy restructuring.
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