New York settlement targets Carelon’s ghost networks and addiction care denials
Carelon Behavioral Health will pay more than $10 million to resolve New York claims that inaccurate provider directories and improper substance-use treatment denials kept patients from care. The settlement lands in a corner of health insurance where access failures are often invisible until a patient has already spent days calling disconnected offices, chasing referrals, and paying cash for services that should have been covered.
The attorney general’s office said the agreements address a behavioral health network serving about 4 million New Yorkers through plans that include EmblemHealth and the Empire Plan, which covers state and local government employees. At the center of the case are two recurring access failures: so-called ghost networks, in which directories list clinicians who are unreachable, out of network, or not accepting new patients, and denials of substance-use treatment that forced patients to pay out of pocket.
Restitution, penalties and operational changes
Under the settlement terms, Carelon will pay at least $10.35 million. The sum includes $2.35 million in penalties and fees and more than $8 million in restitution to patients. Reimbursement will go to people who paid out of network for mental health services because provider directories were inaccurate, as well as those who overpaid for addiction care that should have been covered.
The company also must overhaul its provider directories and the way it reviews substance-use coverage. In practical terms, that means the insurer’s behavioral health gatekeeping functions will face scrutiny not only for the final coverage decision, but also for the upstream information patients depend on when they try to find a clinician in the first place. When directory data are stale or misleading, access does not fail at a single point — it breaks at the beginning of the care journey, before a claim is even filed.
The company did not admit or deny wrongdoing in the settlements. Tina Gaines, a spokesperson for Elevance Health, said Carelon remains committed to helping people find and access high-quality mental health and substance-use disorder care, and said accurate provider information is an important part of that effort.
A behavioral health access problem with real bedside consequences
Ghost networks are not a bookkeeping problem. They delay treatment for anxiety, depression, psychosis, and addiction, all conditions in which time can determine whether a patient stabilizes or deteriorates. A person searching for a psychiatrist may cycle through outdated phone numbers, closed offices, and clinicians who no longer take the plan, then give up or pay cash because the system appears to offer care that does not exist.
One example from the investigation makes the failure mode plain. A member searching for a psychiatrist for a spouse called eight providers without success, then contacted Carelon. The company supplied a list of 25 additional clinicians, none of whom were available. Carelon later reached out to 38 more clinicians without securing an appointment. Even after those unsuccessful attempts, the member’s complaint was rejected because the names of the providers called were not reported within 10 days.
That sequence reveals how administrative rules can compound clinical delay. Patients in behavioral health crises rarely have the luxury of repeated documentation, prolonged phone trees, or rigid complaint deadlines. For someone trying to access care for a substance-use disorder, every missed referral can deepen withdrawal risk, relapse risk, or the likelihood of an emergency department visit.
Prior findings showed a broader directory failure
The new settlement follows a 2023 attorney general investigation that found 86% of mental health providers listed in insurers’ directories were ghosts — meaning they were out of network, not accepting new patients, or unreachable. Carelon’s directory errors were part of that larger pattern, and roughly 82% of EmblemHealth’s surveyed behavioral health providers listed by Carelon were not accepting in-network patients.
Investigators also found that Carelon internally recognized it had a ghost network but did not share those concerns with EmblemHealth. In behavioral health, that kind of silence has clinical consequences. A directory is not just a consumer tool; it is an access contract. When the data are false, patients may delay care, abandon treatment searches, or substitute more expensive out-of-network visits for services that should have been accessible inside the network.
New York Attorney General Letitia James framed the issue in direct terms: when someone is ready to seek help for a mental health condition or addiction, every day matters. She said Carelon left New Yorkers calling provider after provider who could not see them and made it harder for people to obtain treatment to which they were entitled.
Legal pressure on ghost networks is intensifying
The settlement does not stand alone. New York state employees sued Carelon in April 2025, alleging that its mental health provider directory was inaccurate. Carelon sought dismissal, but a federal judge ruled in April that most of the claims can move forward.
That parallel litigation matters because it suggests the directory issue is not confined to one administrative review or one state enforcement action. It raises the possibility that similar network accuracy problems may be scrutinized across plans and employer arrangements, especially where patients are steered into a narrow list of behavioral health clinicians and the listed clinicians cannot actually provide care.
For insurers and behavioral health vendors, the case also sharpens the distinction between network design and network reality. A directory can look adequate on paper while failing at the bedside, where the patient is the one making repeated calls, documenting failed contacts, and deciding whether to stay on treatment. If coverage approval and provider availability do not match, the system forces patients into the gap.
The settlement closes one investigation, but it leaves the core question unresolved for patients: how quickly can insurer-maintained directories be made accurate enough that a person seeking mental health or addiction treatment can find a clinician before the crisis worsens?