Justice Department accuses telehealth Zealthy of fraud, says remedy may bankrupt it
The feds say they don’t think Zealthy has the liquidity to pay what it owes customers.
The Department of Justice is seeking an immediate asset freeze and receivership against telehealth startup Zealthy and its CEO, Kyle Robertson, to halt what it calls a “runaway campaign of lawbreaking.”
The DOJ says Zealthy — a privately held telehealth site that sells compounded GLP-1s, erectile dysfunction medications, and antidepressants — used the names and licenses of doctors who didn’t work there to fill thousands of prescriptions without the physicians’ knowledge or clinical supervision. Prosecutors said “it is plausible that Zealthy’s available liquidity will fall short of its exposure in this litigation.”
“Put bluntly, the consumer redress and FTC rule violation penalty amounts that Plaintiff seeks in this action may bankrupt Zealthy, rendering preservation of assets essential for consumer redress,” prosecutors said in a Monday filing.
Neither Robertson nor Zealthy immediately responded to a request for comment.
The DOJ says Zealthy also misused customer information and charged people without their consent. Customer support representatives were strictly banned from canceling accounts or even mentioning the word “cancel” unless it was brought up by the customer first, according to prosecutors.
Zealthy lost its LegitScript medical merchant certification in January 2025 after it failed to disclose the DOJ lawsuit to the standard bearer, after which major advertising platforms and payment processors dropped it. Prosecutors say the company got around this by creating shell companies to process payments.
Many customers also initiated credit card charge-backs, and the DOJ alleges that Zealthy executives used company credit cards to buy their own subscriptions, artificially diluting their transaction dispute rates to hide the problem from financial institutions.
Perhaps the most egregious allegations are that Zealthy stole doctors’ identities to fulfill prescriptions. In on example, the company allegedly ordered more than 8,000 prescriptions using the name of one doctor after he had stopped working there.
Dr. Steven McDonald, the former medical director of Zealthy, wrote in a declaration that he discovered his name was being used to prescribe medications only when a former colleague told him the office received “stacks” of insurance letters for Zealthy patients he had never treated.
The DOJ’s lawsuit was initially filed in April 2024, accusing Robertson’s previous venture, Cerebral, of making it too hard to cancel a subscription and of severe privacy breaches. Cerebral was one of several telehealth startups that began prescribing Adderall online during the pandemic, taking advantage of relaxed telehealth prescribing rules intended to help patients access prescriptions during the COVID-19 pandemic.
Robertson was ousted from Cerebral in 2022 and the company eventually paid a $2.9 million fine for unauthorized distribution of Adderall and other controlled substances. The litigation against Robertson continued and eventually extended to his new venture, Zealthy.
“Robertson’s lawbreaking is only becoming more brazen, and dangerous,” prosecutors wrote in an April 10 amended complaint.
