Cerebral's ex-CEO may be gearing up for a lawsuit, claims investors pushed company to prescribe controlled drugs

Former Cerebral CEO Kyle Robertson sent a letter to the company Friday demanding access to documents to investigate whether the company’s board and leadership broke the law or mismanaged the company, according to media reports.

Robertson, who was forced out in May, wants access to company information to investigate “possible breaches of fiduciary duty, mismanagement and other violations of law,” Insider reported Friday.

The letter, which Insider reviewed, indicates that Robertson is focused on Cerebral’s controlled substances prescription policies and practices.

Robertson said he plans to review the information to “evaluate possible litigation or other corrective measures,” the letter says, according to Insider.

In the letter, Robertson alleges Cerebral’s investors pushed the company into prescribing controlled drugs. The company’s prescribing practices are now being investigated by the Department of Justice (DOJ).

He also accused board directors and top executives of making homophobic remarks.

A Cerebral spokesperson said the claims against the company and its board are “categorically untrue, defamatory and baseless in law and in fact.”

In an emailed statement, the spokesperson said, “The specific claims being made against our executives and board run counter to our culture of championing diversity and inclusion and are the antithesis of what we stand for as a company.”

Cerebral said it will defend itself “vigorously” against the “meritless allegations.”

Robertson's departure from Cerebral back in May, which he reportedly contested, followed weeks of mounting criticism of the startup's prescribing practices. Cerebral then tapped Chief Medical Officer David Mou, M.D., to take over as CEO.

The online mental health startup is being investigated by the DOJ for its prescribing practices as "possible violations" of the Controlled Substances Act. The Controlled Substances Act regulates the distribution of potentially addictive medicines like Adderall and Xanax.

The Federal Trade Commission also is investigating whether the mental health startup engaged in deceptive or unfair practices related to advertising or marketing. Cerebral is being investigated by the Drug Enforcement Administration as well, according to media reports.

Cerebral provides comprehensive, online mental health services for depression, anxiety, PTSD, attention-deficit/hyperactivity disorder (ADHD), bipolar disorder and a range of other conditions. 

The two-year-old startup, which has a valuation of $4.8 billion, launched in January 2020 and grew rapidly, propelled by increased demand for behavioral health care services during the pandemic. The startup banked $300 million in a series C round in December.

After he left Cerebral, Robertson accused the board of making him a scapegoat for the startup’s troubles, including federal investigations and industry pushback, The Wall Street Journal reported.

In his letter, Robertson blamed Cerebral’s “rapid and aggressive expansion” of its prescribing practices for controlled drugs like ADHD medications on mounting pressure from major investors and board members, Insider reported.

Robertson also said Mou, as the former chief medical officer, was responsible for the prescription policies the DOJ is currently investigating and the practices that cost Robertson his position.

Cerebral has been in the media spotlight amid claims that it treated minors. A recent report in the WSJ states that the company had systems in place to verify customer IDs but was not using them to check details such as age, leading to minors being treated without parental consent.

Back in April, a former executive at Cerebral claimed in a labor lawsuit that the company fired him after he complained the company was too quick to prescribe powerful stimulant drugs.

Matthew Truebe, former vice president of product and engineering at Cerebral, claims the company "egregiously put profits and growth before patient safety," including overprescribing medications for ADHD.

In a recent interview, Mou said Cerebral is "tripling down" on clinical quality and safety efforts. He said the company is striving to set the standards for "high-quality mental health care" in the industry.