A federal judge has allowed most claims to proceed in a major class action lawsuit against Carelon Behavioral Health, the behavioral health arm of Elevance Health. The case accuses Carelon of maintaining a deceptive and inaccurate directory of in-network mental health providers for New York state employees. Moreover, this ruling marks a significant legal milestone in the growing national fight against ghost networks in healthcare.
What Is the Carelon Ghost Network Case?
A ghost network refers to a provider directory that lists healthcare professionals as available and in-network when they are not. Patients rely on these directories to find affordable mental health care. However, when the listed providers turn out to be unreachable, not accepting new patients, or entirely out-of-network, patients face unexpected costs and dangerous delays in care.
Carelon Behavioral Health administers the Empire Plan Mental Health and Substance Use Program under the New York State Health Insurance Program (NYSHIP). The contract covers mental health and substance use disorder benefits for New York state employees and retirees. Valued at more than $2.7 billion and effective through 2028, this is one of the largest behavioral health contracts in the country.
Who Filed the Lawsuit and Why
Three Plaintiffs, Over a Million Affected
Three NYSHIP plan members filed the lawsuit in April 2025 in the U.S. District Court for the Southern District of New York. They filed on behalf of a proposed class consisting of New York state and municipal employees enrolled in the plan at any point from 2019 onward through the date of class certification.
The plaintiffs allege that Carelon knowingly published an inaccurate and misleading provider directory. Additionally, they claim the company did so deliberately — to attract customers and create the appearance of compliance with state and federal network adequacy rules. Law firms Pollock Cohen LLP and Walden Macht Haran & Williams LLP represent the plaintiffs.
What the Secret Shopper Study Revealed
Widespread Inaccuracies in Provider Listings
The plaintiffs did not rely on individual experiences alone. Instead, they conducted systematic secret shopper studies. Attorneys called large numbers of providers listed as in-network in Carelon’s directory. The results were striking.
More than 80% of listed providers were either out-of-network or not seeing new patients. Overall, the plaintiffs allege that more than half of all directory entries had serious problems. These included:
- Providers who do not exist
- Non-working or inaccurate phone numbers
- Providers unavailable to new patients
- Listings for providers not actually in-network
- Duplicate entries in the directory
- Providers who do not offer relevant mental health services
One plaintiff found a listed in-network provider, received treatment, and was charged $1,017. Only $537 received coverage — because the provider had left Carelon’s network a month before the visit.
Key Claims That Move Forward in Court
The court dismissed some claims but allowed the most significant ones to proceed. Specifically, the surviving claims include:
- Deceptive business practices
- False advertising
- Fraud
- Unjust enrichment
Furthermore, the court found that the plaintiffs adequately alleged Carelon told members its directory was reliable while concealing how widespread the inaccuracies actually were. This finding is critical — it suggests the court views the alleged deception as intentional, not merely negligent.
The Bigger Picture: A Pattern of Ghost Networks
Elevance Health’s Repeated Legal Challenges
This lawsuit does not stand alone. It is part of a broader pattern of ghost network litigation targeting Elevance Health and its subsidiaries.
In October 2024, federal employees with Anthem Blue Cross Blue Shield coverage filed a similar lawsuit in the same court, alleging ghost networks in mental health provider directories. However, a judge dismissed that case in March 2026 — ruling that federal law governed the dispute since the plan covered federal employees, thereby blocking the state-law claims.
Subsequently, a third class action lawsuit emerged, alleging Carelon, Elevance, and Anthem intentionally published a directory where over 70% of listed doctors do not exist, lack accurate contact information, or are not truly in-network. Attorneys for the plaintiffs believe the wave of ghost network lawsuits is just beginning. Awareness of the problem is growing, and more patients are willing to come forward.
What This Means for Mental Health Access
Mental health coverage faces heightened scrutiny nationwide. Insurers and regulators alike struggle to address the country’s growing behavioral health needs. Ghost networks make this crisis worse. They mislead patients into believing they have access to care they cannot actually obtain.
The No Surprises Act, the Mental Health Parity and Addiction Equity Act, state consumer protection laws, and insurance regulations all require accurate provider directories. Consequently, the lawsuit argues Carelon violated multiple layers of legal obligation — statutory, contractual, and ethical.
Attorney Steve Cohen put it plainly: maintaining ghost networks is “an abomination” that denies people the mental health care they and their families need and deserve.
Conclusion: Accountability in Behavioral Health
The Carelon ghost network case highlights a serious and systemic failure in how insurers communicate their provider networks to members. As the lawsuit moves forward, it puts pressure on Carelon, Elevance Health, and insurers across the country to maintain accurate, reliable, and transparent provider directories. Above all, the ruling signals that courts take ghost network fraud seriously — and that affected patients have viable legal paths to accountability.
