Health Care & Reproductive Rights

Coalition sues over federal rule that reinstates provisions blocked by a federal court and adds new harmful changes

OAKLAND — California Attorney General Rob Bonta today co-led a coalition of 21 attorneys general and the Governor of Pennsylvania in filing a lawsuit in the U.S. District Court for the Northern District of California to challenge a federal rule that once again illegally undermines the Affordable Care Act (ACA) and would make health insurance more expensive and harder to obtain for millions of Americans. The lawsuit seeks to block provisions of the U.S. Department of Health and Human Services’ (HHS) and Centers for Medicare & Medicaid Services’ (CMS) 2027 Notice of Benefit and Payment Parameters, a federal rule that sets standards for health plans offered in 2027 and was opposed by the coalition in a March 2026 comment letter. Among other harmful changes, the rule expands eligibility for catastrophic health insurance plans that are ineligible for premium tax credits, offer only limited coverage, and can leave consumers facing significantly higher out-of-pocket costs than standard ACA plans. The rule also allows catastrophic and bronze plans to exceed ACA limits on maximum annual out-of-pocket costs, increasing the financial burden on consumers, and attempts to reinstate several provisions that a federal court recently found to be unlawful. The coalition argues these and other provisions unlawfully undermine the ACA’s goal of expanding access to affordable healthcare by increasing costs, reducing enrollment, and shifting financial burdens onto consumers, states, and healthcare providers.

“The Affordable Care Act was designed to make healthcare more affordable and accessible. But once again, this Administration is moving in the wrong direction by adopting harmful provisions that push consumers into bare-bones plans and strip away critical protections,” said Attorney General Bonta. “We are returning to court to challenge these unlawful changes. At a time when families are already facing rising costs, they cannot afford to pay more for coverage that gives them less.” 

Congress enacted the ACA to expand access to affordable health insurance, and more than 23 million Americans currently receive coverage through its marketplaces. California has approximately two million ACA plan enrollees, the third highest of any state. Today’s lawsuit follows the coalition’s challenge to the Trump Administration’s similar 2025 ACA Marketplace rule. Earlier this week, the U.S. District Court for the District of Massachusetts held a hearing on the parties’ cross-motions for summary judgment in that case, with a final decision expected at a later date. In related litigation, a federal court last month vacated several provisions of the Administration’s 2025 rule — including provisions at issue in this case — after finding that they violated the Administrative Procedure Act. The Administration’s new rule setting standards for 2027 health plans, which is the subject of this lawsuit, brings back many of the same provisions and adds new changes that further undermine the ACA. HHS estimates the new rule will cause two million people to lose coverage in 2027 alone and a total of five million by 2030.

In today’s lawsuit, the coalition argues that the new rule:

• Reimposes provisions that a federal court has already vacated — including additional income verification requirements and penalties for consumers who do not complete tax-credit paperwork — without addressing the court’s legal concerns.
• Unlawfully expands eligibility for catastrophic health plans beyond the limits established by Congress in the ACA.
• Unlawfully allows catastrophic and bronze plans to exceed ACA limits on maximum annual out-of-pocket costs.
• Will increase costs, reduce enrollment, and shift financial burdens onto consumers, healthcare providers, and states.
• Was adopted without adequate explanation or a meaningful response to the coalition’s comments, making it arbitrary and capricious under the Administrative Procedure Act.

In filing today’s lawsuit, Attorney General Bonta co-led the coalition alongside New Jersey Attorney General Jennifer Davenport. They were joined by the attorneys general of Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin, as well as Pennsylvania Governor Josh Shapiro.

Evidence exposed how abortion pill reversal claims are unsupported by scientific evidence

OAKLAND — California Attorney General Rob Bonta today issued the following statement after the conclusion of evidence in the California Department of Justice’s lawsuit against Heartbeat International (HBI), a national anti-abortion group, and RealOptions Obria (RealOptions), a chain of five crisis pregnancy centers in Northern California. The parties presented evidence over six weeks of trial proceedings in Alameda County Superior Court. Filed in September 2023, the California Department of Justice’s lawsuit alleges that HBI and RealOptions use fraudulent and misleading claims to advertise “abortion pill reversal” (APR), an unproven and largely experimental procedure, in violation of California’s False Advertising Law and Unfair Competition Law. 

“Every Californian deserves truthful, accurate information when making deeply personal healthcare decisions,” said Attorney General Bonta. “Our lawsuit alleges that Heartbeat International and RealOptions promoted APR despite knowing that there is no scientific evidence that shows it is effective or safe. After several weeks of testimony, we remain confident in the strength of our case and look forward to the court’s decision. We will continue holding accountable those who undermine reproductive freedom, including by spreading dangerous, baseless claims.”

Medication abortion typically uses a combination of two drugs — mifepristone and misoprostol — taken within 24 to 48 hours of each other to terminate an early pregnancy. HBI and RealOptions falsely claim that if a pregnant person takes high doses of the hormone progesterone after taking the first drug, mifepristone, it will safely and effectively cancel the effects of the mifepristone. Despite the lack of scientific basis and uncertainty about its efficacy and safety, HBI and RealOptions falsely and illegally advertise APR as a valid and successful treatment option and do not adequately warn patients about potential side effects, including the risk of severe bleeding. 

HBI operates the “most expansive network” of “pro-life pregnancy resource centers” and acquired the Abortion Pill Reversal Network, including its website and hotline, which it continues to operate to promote APR. RealOptions, which is incorporated in California, advertises APR as a service available at all of its clinics. 

If you have questions about or are looking for information on or assistance with abortion care, there are a number of trusted programs that can help you in your search, including California Abortion Access, which provides a safe space to access detailed guidance and resources on abortion care. California protects the privacy of those who visit this website, and their information is not saved or tracked.

OAKLAND — California Attorney General Rob Bonta today issued a consumer alert reminding Californians about sham health insurance plans offered by some health care sharing ministries (HCSMs). Historically, HCSMs were composed of members of a particular religious community who contributed money to share catastrophic or unexpected healthcare costs. Due to congressional Republicans’ decision to allow the Affordable Care Act’s (ACA) enhanced premium subsidies to expire on December 31, 2025, health insurance premiums have soared for many Americans, and millions have lost their coverage as a result. Some HCSMs may use this as an opportunity to misleadingly advertise HCSM plans as affordable alternatives to comprehensive ACA-compliant healthcare coverage. But Californians should be aware that HCSMs won’t cover preexisting conditions or guarantee coverage for medical costs or services.

“Health care sharing ministries do not provide the same protections as Covered California plans, and that difference can matter the most in times of medical need,” said Attorney General Bonta. “Without comprehensive health insurance, an unexpected illness or serious accident could leave you responsible for substantial medical bills. Even as congressional Republicans and the Trump Administration continue to undermine the Affordable Care Act, Covered California plans can still provide affordable, quality health insurance options, giving Californians access to the coverage they deserve.” 

Before passage of the ACA, some communities used HCSMs to pool money for members facing a medical crisis. After the passage of the ACA, bad actors capitalized on the fact that HCSMs were exempt from many ACA requirements, including the requirements to cover preexisting conditions, provide 10 essential health benefits (such as maternity care, mental health, and prescription drugs), and limit out-of-pocket costs. These bad actors advertised their HCSM plans as low-cost alternatives to ACA-compliant health insurance — but the HCSM plans were significantly less comprehensive, leaving many consumers underinsured. 

Many entities that claim to be HCSMs are operating in California illegally because they sell insurance without required consumer protections, without a license from the California Department of Insurance, and falsely advertise their plans. The Attorney General’s Office has entered into settlements with the Alliance for Shared Health, Sedera Inc., and The Aliera Companies Inc., including its principals and affiliate, for misleading California consumers into purchasing their products. These settlements require these companies to stop selling health plans in the state. But these are not the only bad actors.

There are several important factors to consider when comparing an HCSM plan with a traditional health insurance plan:

• Read the disclosures and member guidelines carefully. HCSMs often use language closely mimicking traditional health insurance to confuse consumers. For example, like Covered California plans, many HCSMs advertise gold, silver, and bronze “plans.” Because of the confusion, consumers may not realize they have enrolled in an HCSM instead of traditional health insurance until coverage is rejected.
• Understand what’s excluded. HCSMs often have coverage limits or exclusions for preexisting conditions and essential health benefits, including mental healthcare, pregnancy or maternity care, and preventive services. This means that if you have a preexisting or chronic medical condition, you could be responsible for tens of thousands of dollars or more in medical costs because the HCSM may not cover those costs.
• Consider your financial risk. Think about whether you could afford significant medical bills if they were only partially covered or not covered at all. Some HCSMs’ monthly payments may be cheaper than traditional health insurance, but those savings often come at a price. The prices are lower because they may not pay your medical costs even though you have made all your monthly payments.

A health insurance plan through Covered California provides the protections of the ACA. Consumers can enroll now and do not need to wait for open enrollment in the fall. Visit coveredca.com to find the plan that works best for you and your family. In addition, Medi-Cal, California’s Medicaid program, provides low-cost or free health coverage to eligible Californians. Many Californians may qualify based on their income or household circumstances, and applying is free. Visit dhcs.ca.gov/medi-cal to find out more. 

Attorney General Bonta continues to oppose federal efforts that drive up the cost of healthcare. In March 2026, Attorney General Bonta co-led a coalition of 19 attorneys general in submitting a comment letter responding to a proposed rule by the U.S. Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) that creates new hurdles that will significantly reduce healthcare enrollment and drive up consumers’ health insurance premiums and out-of-pocket costs. And in July 2025, Attorney General Bonta co-led a multistate coalition in a lawsuit challenging an unlawful final rule promulgated by HHS and CMS that would create significant barriers to obtaining healthcare under the ACA.

If you believe you have been the victim or target of suspicious marketing by a HCSM, please immediately file a complaint at oag.ca.gov/report.

OAKLAND — As part of a coalition of 15 attorneys general, California Attorney General Rob Bonta today announced an early court victory blocking the U.S. Department of Education’s (Department) latest effort to terminate federal funding that helps schools recruit and train mental health professionals and provide essential mental health services to high-need students. The U.S. District Court for the Western District of Washington granted the coalition’s motion for a temporary restraining order, blocking the Department’s unlawful effort to terminate critical mental health grants awarded through the Mental Health Service Professional Demonstration Grant Program and the School-Based Mental Health Services Grant Program. Congress established these programs to address shortages of school-based counselors, psychologists, social workers, and other mental health professionals, particularly in schools in low-income and rural communities. Earlier this month, Attorney General Bonta and the coalition filed a lawsuit challenging the Department’s renewed effort to end funding for these programs after an earlier attempt was struck down. On the same day it filed the lawsuit, the coalition sought a temporary restraining order, which the court granted last night. 

“The Trump Administration once again targeted critical school mental health funding, and once again, we pushed back. The court’s ruling blocks its unlawful attempt to terminate these grants while our case moves forward,” said Attorney General Bonta. “We will continue fighting the Administration’s illegal actions and ensure schools have fair access to essential mental health services.”

The temporary restraining order, issued after notice and a hearing, will remain in effect through August 24, 2026, while the court considers the coalition’s request for a preliminary injunction. In granting the order, the court concluded that the Department’s termination plan likely violates the Administrative Procedure Act because it is arbitrary, capricious, and contrary to law. The court also denied as moot the Department’s request to clarify that a prior permanent injunction did not prevent the Department from terminating the grants.

OAKLAND — California Attorney General Rob Bonta today joined a coalition of 23 attorneys general in filing an amicus brief in support of the manufacturers of mifepristone in Louisiana v. FDA. Since the U.S. Food and Drug Administration (FDA) approved mifepristone in 2000, an estimated 7.5 million people in the United States have used the medication safely. Mifepristone, when used in combination with misoprostol, is the FDA-approved regimen used to terminate a pregnancy through 10 weeks. In today’s amicus brief, the coalition urges the U.S. Court of Appeals for the Fifth Circuit to reject Louisiana’s request to reinstate a medically unnecessary requirement that mifepristone be dispensed in person. Today’s filing comes as the case returns to the Fifth Circuit for a merits determination after the U.S. Supreme Court allowed continued access to mifepristone in May 2026 while the litigation proceeds. 

“For more than two decades, mifepristone has been proven safe and effective,” said Attorney General Bonta. “Science — not politics — should guide medical decisions. California will continue to protect access to reproductive healthcare.” 

Medication abortion now accounts for 63% of all abortions in the formal U.S. healthcare system, with approximately one in four abortions provided via telehealth. In the amicus brief, Attorney General Bonta and the coalition argue that: 

• Mifepristone is a safe and effective medication that has been used by millions of people nationwide and is a critical component of reproductive healthcare, with decades of research and clinical experience demonstrating its safety.
• The FDA’s decision to remove the in-person dispensing requirement for mifepristone was amply supported by scientific evidence and helped expand access to medication abortion, particularly for people facing barriers like distance, cost, and limited provider availability.
• Reinstating the in-person dispensing requirement would harm States’ efforts to protect access to reproductive healthcare by creating unnecessary barriers for patients, straining healthcare systems, and limiting access to other essential services provided by reproductive health clinics, such as pre- and postnatal care, family planning, cancer screening, testing and treatment for sexually transmitted infections and HIV.
• Louisiana seeks to improperly elevate the policy preferences of States that have banned or restricted abortion over the preferences of other States that have made the different but equally sovereign determinations to promote access to abortion care.

In filing today’s amicus brief, Attorney General Bonta joins the attorneys general of Arizona, Colorado, Connecticut, Delaware, the District of Columbia, Hawaiʻi, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, and Washington.

OAKLAND — California Attorney General Rob Bonta today led a coalition of 14 attorneys general in submitting a comment letter opposing a proposed rule by the U.S. Department of Health and Human Services (HHS) and Centers for Medicare & Medicaid Services (CMS) that would severely limit an important tool used by state Medicaid programs to increase access to care. State-Directed Payments and supplemental payments under fee-for-service Medicaid (referred to in the letter as Healthcare Affordability Payments) help states support hospitals and other healthcare providers, including those serving rural, urban, and underserved communities, where Medicaid payments often fall short of the cost of providing care. The proposed rule, intended to implement the One Big Beautiful Bill Act, would sharply restrict these payments beyond what Congress authorized and fails to consider the devastating harms to patients and providers that will flow from further Medicaid cuts. In California, Medi-Cal serves as the state’s Medicaid program. 

“Medical emergencies don’t stop when Medicaid payments stop — they just become more expensive and less accessible. As Americans face a crisis of affordability, we should be expanding access to affordable healthcare, not making the cuts Congress enacted even worse,” said Attorney General Bonta. “This proposed rule will have real consequences for hardworking Americans and their families. My fellow attorneys general and I insist that it be withdrawn.”

In the comment letter, Attorney General Bonta and the coalition argue that the proposed rule: 

• Imposes cuts beyond those required by the One Big Beautiful Bill Act to arbitrarily cut Healthcare Affordability Payments for services Congress spared, like mental healthcare and rehabilitation care, as well as extending to reach fee-for-service supplemental payments.
• Undermines Medicaid expansion under the Affordable Care Act (ACA). Medicaid expansion, pioneered by the ACA, is a crucial tool to counter the cost-of-living crisis and language in the proposed rule’s preamble appears intended to coerce states into abandoning Medicaid expansion. To date, 41 states have expanded Medicaid under the ACA.
• Arbitrarily penalizes large, dynamic urban regions. Specifically, CMS’s narrow definition of “geographic region” could unfairly disadvantage large, interconnected urban areas and communities where residents routinely live, work, and receive healthcare across county or municipal boundaries.
• Increases uncompensated care costs for hospitals. Hospitals may have to raise prices on other consumers to compensate for these funding losses, and some may be forced to reduce services, merge, or shutter completely.

Medicaid is a federal program that helps states provide health insurance and long-term care for about 80 million Americans — about one in five people in the United States. In California, more than one-third of the population is enrolled in Medi-Cal, which provides funding for key services like primary care, mental healthcare, children’s hospitals, nursing facility services, outpatient services, and more. The many harmful provisions under the One Big Beautiful Bill Act are already projected to explode the state’s uninsured rate to above 14.7%, but further changes may raise that by expanding costs and related attacks on California’s healthcare safety net. 

Attorney General Bonta continues to stand firmly opposed to any federal attempt to limit access to Medicaid. Last month, he filed a lawsuit over the Trump Administration’s implementation of Medicaid work requirements that put eligible people at risk of losing their health coverage. Previously, he filed a lawsuit against the Trump Administration for illegally sharing Californians’ personal health data with ICE and creating a culture of fear that would lead to fewer people seeking vital emergency care. He also filed a lawsuit challenging the Trump Administration’s final rule that would make it harder for Americans to obtain health coverage under the ACA.

In sending this letter, Attorney General Bonta leads the attorneys general of Arizona, Colorado, Delaware, Hawai‘i, Illinois, Massachusetts, Michigan, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington.

Multistate coalition challenges Trump Administration’s attempt to circumvent court order by recharacterizing grant discontinuations as terminations

OAKLAND — As part of a coalition of 15 attorneys general, California Attorney General Rob Bonta today filed a lawsuit challenging the U.S. Department of Education's (the Department) latest attempt to terminate federal funding that helps schools recruit and train mental health professionals. Congress established the Mental Health Service Professional Demonstration Grant Program and the School-Based Mental Health Services Grant Program following the school shootings in Parkland, FL and Uvalde, TX to help address shortages of school-based counselors, psychologists, social workers, and other mental health professionals, particularly in high-need schools. After Attorney General Bonta and a coalition of attorneys general successfully blocked the Department’s earlier effort to discontinue these grants, the Department announced a new plan to end the funding under a different regulation, prompting today's lawsuit. In California, the Department's initial action threatened nearly $200 million in funding statewide. 

“The Trump Administration is once again trying to take critical mental health funding away from the schools that need it most,” said Attorney General Bonta. “Congress made clear that students across the country deserve access to these services. That’s why we’re going back to court.”

In July 2025, Attorney General Bonta and 15 other attorneys general filed a lawsuit challenging the Department’s discontinuation of the grants. The Department initially asserted that the grants conflicted with the Trump Administration’s new priorities because they support diversity, equity, and inclusion (DEI). A federal district court ruled in favor of the attorneys general, holding that the Department acted arbitrarily, capriciously, and contrary to law, and in December 2025, permanently enjoined the Department from implementing the grant terminations “through any means.” Though the Department appealed, the Ninth Circuit also twice denied the Department's requests to stay the district court’s orders while the appeal proceeded. Despite admitting that most of the grants should have been continued, the Department decided to only award grantees six months of funding instead of providing funding for the full year, as is standard practice, and to make grantees jump through unnecessary hoops to access funds. 

Even after the adverse court rulings, the Department announced a new attempt to terminate the grants under a different regulation. By calling this a termination rather than a discontinuation, the Administration seeks to circumvent the court’s order, which required them to continue these important mental health grants. Although Attorney General Bonta and the coalition continue to fight this attempt to circumvent the court’s order, they have filed this new lawsuit to prevent these planned terminations and cover any gaps that would threaten this funding. 

In today’s lawsuit, filed in the U.S. District Court for the Western District of Washington, the coalition argues that the Department's latest effort exceeds its legal authority, and threatens funding that schools use to provide mental health services for students. The attorneys general have also moved for a preliminary injunction to prevent the grants from being terminated.

In filing today’s lawsuit, Attorney General Bonta joins the attorneys general of Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Mexico, New York, Oregon, Rhode Island, Washington, and Wisconsin.

OAKLAND — California Attorney General Rob Bonta today announced that the Los Angeles Superior Court approved a settlement with Shelley Steele, Timothy Candace “Tim” Moses, Chase Moses (collectively, the Moses family), and First Call Telemedicine, LLC (First Call), the remaining defendants in a matter involving the alleged sale of sham health coverage to California consumers.

The case began in January 2022, when Attorney General Bonta filed a lawsuit against The Aliera Companies, Inc. (Aliera), Trinity HealthShare (Trinity), and other defendants, including those who are the subject of today’s settlement. The lawsuit alleged that the Moses family created and controlled Trinity, falsely presenting it as a legitimate health care sharing ministry (HCSM), and used Aliera, a for-profit company they also controlled, to market and administer the health plans to consumers. HCSMs are 501(c)(3) nonprofit organizations historically comprised of members of a particular religious community who contribute money to share catastrophic or unexpected healthcare costs. HCSMs are often marketed as lower-cost alternatives to traditional health insurance, but they generally do not pay for all essential health benefits such as prescriptions, preexisting conditions, birth control, or mental healthcare, and do not guarantee payment for medical expenses. According to the complaint, Trinity was not a legitimate HCSM, and Aliera retained a significant portion of members’ contributions rather than using those funds to pay healthcare costs, leaving many consumers with unpaid medical bills. The lawsuit also alleged that, after the collapse of Aliera, Shelley Steele continued selling health plans in California through First Call without the required state authorization and directed millions of dollars from Trinity membership funds to First Call. In 2025, Attorney General Bonta reached a settlement with Aliera, Trinity, and additional defendants. Today’s settlement resolves the matter with the remaining defendants: the Moses family and First Call. 

“Californians deserve honest information when making decisions about their health coverage,” said Attorney General Bonta. “More than 14,000 Californians were allegedly misled into paying for health plans that did not provide the protection they expected, while those behind the scheme profited from their trust. After holding other defendants accountable last year, this settlement finishes the job by securing penalties against the remaining defendants and barring them from doing business in California.” 

Consumers were allegedly led to believe their monthly payments were being used to pay healthcare expenses, but Aliera retained nearly 84% of those funds and routinely rejected requests for payment of medical expenses. Under the settlement:

• Shelley Steele, Tim Moses, and First Call Telemedicine are permanently barred from conducting business in California, directing business toward California residents, serving in leadership positions at companies doing business in California, or owning more than a 25% interest in businesses operating in California.
• Chase Moses is prohibited from conducting business in California for 10 years and is permanently barred from marketing, selling, administering, or otherwise operating any HCSM in California.
• These remaining defendants must pay more than $5.1 million in civil penalties. Portions of those penalties are suspended based on the defendants’ sworn financial disclosures and continued compliance with the judgment and may be reinstated if the defendants are found to have materially misrepresented their financial condition or violate the settlement.

Californians who believe an HCSM used deceptive marketing or misrepresented its services are encouraged to file a complaint at oag.ca.gov/report.

OAKLAND — California Attorney General Rob Bonta yesterday joined a bipartisan coalition of 20 attorneys general in submitting a comment letter to the U.S. Food and Drug Administration (FDA) supporting its proposal to increase the number of students surveyed through the National Youth Tobacco Survey (NYTS). The NYTS is the most comprehensive source of nationally representative tobacco data among students in grades 9-12 and is the only source of data for students in grades 6-8. For more than two decades, the NYTS’s findings have helped attorneys general curb youth tobacco use and respond to emerging nicotine products. The NYTS was previously administered by the Centers for Disease Control and Prevention and is now overseen by the FDA.

“Protecting young people from tobacco and nicotine addiction requires staying ahead of rapidly evolving products and tactics,” said Attorney General Bonta. “I’m supporting the FDA’s proposed expansion of the National Youth Tobacco Survey sample size. This survey is an essential tool for tracking emerging trends and holding bad actors accountable when they target kids with addictive tobacco and nicotine products.”

The comment letter is submitted in response to a May 2026 FDA invitation for public comment on revising the 2027-2029 NYTS by expanding the sample size of grade 6-12 students surveyed nationwide. The FDA notes that sampling a greater number of students will accommodate for the declining response rates of school-based studies. In August 2025, Attorney General Bonta submitted a comment letter supporting the continuation of the 2026-2028 NYTS.

In the letter, the coalition writes that:

• Providing for an adequate sample size ensures that the results of the NYTS remain representative and would allow state and federal tobacco control partners to continue relying upon the NYTS as FDA characterized it — “the gold-standard source of national estimates of youth tobacco use in the United States.”
• The survey’s extensive information on how and why young people use tobacco and nicotine products enables attorneys general to focus their resources on the most effective policies and enforcement measures to address the constantly evolving retail market. Additionally, NYTS data has been crucial in alerting the States to emerging tobacco products and was the first national indicator of the youth e-cigarette epidemic.
• It is essential that attorneys general have continued access to reliable data collected in the rigorous fashion employed by NYTS to inform our efforts as we work to reduce youth tobacco use.

Attorney General Bonta is committed to protecting the public from the negative effects of exposure to tobacco and nicotine products. In June 2026, he sent a letter calling on the Fédération Internationale de l’Automobile and Formula 1 to prohibit sponsorships involving all tobacco and nicotine products. That same month, he welcomed Shopify’s decision to ban the sale of all vaping products, including e-cigarettes, through its e-commerce platform. In April 2026, he sent letters to nine major credit card and payment processing companies urging them to take stronger action to prevent the unlawful sale of tobacco and nicotine products, particularly e-cigarettes, online and at brick-and-mortar stores. 

In sending this comment letter, Attorney General Bonta joins the attorneys general of Alaska, Connecticut, Delaware, the District of Columbia, Hawaii, Illinois, Louisiana, Maine, Maryland, Massachusetts, Minnesota, New York, North Carolina, Oregon, Pennsylvania, Puerto Rico, Rhode Island, Vermont, and Washington.

Subject to court approval, the settlement requires restructuring of unlawful corporate ownership and protects patients 

OAKLAND — California Attorney General Rob Bonta today announced a settlement with Carbon Health Technologies, Inc., its affiliated medical groups, and its co-founder and former CEO, Eren Bali, (Carbon Health), resolving allegations that the company violated California's prohibition on the corporate practice of medicine, engaged in false advertising, used unlawful consumer contracts, and improperly billed patients and insurance providers. Founded in the Bay Area in 2015, Carbon Health operates over 80 clinics across eight states, including 54 in California. As alleged in the complaint filed alongside the settlement, an investigation by the California Department of Justice (DOJ) found that Carbon Health used a structure in which a corporate entity not licensed to provide medical care effectively owned and controlled all aspects of the medical practice, in violation of California’s prohibition on the corporate practice of medicine. The settlement requires Carbon Health to end this structure and ensure that physicians control medical decisions. It also permanently enjoins Carbon Health from having policies that, as uncovered by the DOJ investigation, subjected patients to billing errors, overcharges, and other improper billing practices. As added accountability for the conduct at issue, the settlement imposes $4.4 million in penalties on Carbon Health and $100,000 on Mr. Bali. 

“In California, medical decisions must be made by licensed healthcare professionals whose duty is to prioritize patient care, not by companies focused on profits,” said Attorney General Bonta. “This settlement holds Carbon Health accountable for violating California's longstanding protections against the corporate practice of medicine and for engaging in unlawful business practices. It also sets a significant precedent by showing that healthcare businesses can be restructured to protect patients, preserve physicians’ independent medical judgment, and comply with California’s laws.” 

Carbon Health used a “friendly professional corporation” model in which Carbon Health Technologies, a management services organization (MSO), controlled the clinics’ business operations through contracts. Those contracts unlawfully gave Carbon Health Technologies the power to replace the physician-owner of the clinics with a physician of its choosing, while preventing the physician-owner from replacing the MSO without risking losing ownership of the medical practice. As a result, the MSO effectively ran these captive clinics, divided physician loyalties, subordinated patient wellbeing to its financial interests, and allowed Mr. Bali and the MSO’s unlicensed officers to direct staffing, advertising, and insurance negotiations. 

DOJ’s investigation also found that Carbon Health misled patients about insurance coverage, including misrepresenting which plans it accepted and sometimes telling patients they were in-network when they were not, leading to unexpected out-of-network bills. Further, the investigation identified billing problems, such as a hidden automatic charging term for credit cards, overcharges, charging patients twice for the same service, and delaying refunds when errors were discovered. 

Under the settlement, Carbon Health has agreed to comprehensive injunctive relief requiring significant changes to its corporate structure and business practices. Among other things, the settlement requires Carbon Health to:

• Revise its corporate structure: Carbon Health must change its organizational structure so that a non-medical management company can no longer control or have ownership interests in physician-owned medical practices. Physicians must have independent control over medical decisions and how the practices operate.
• Stop misleading advertising: Carbon Health must end advertising and communications that falsely or misleadingly represent insurance coverage or whether services are in-network.
• Update patient contracts: The company must revise its consent forms and contracts to remove unclear or unlawful terms that affected how and when patients were billed.
• Fix billing practices: Carbon Health must correct how it bills patients and insurers to reduce errors, prevent overcharges, and ensure patients are not improperly charged.

Carbon Health filed for Chapter 11 bankruptcy restructuring in the U.S. Bankruptcy Court for the Southern District of Texas while the Attorney General’s investigation was ongoing. Carbon Health and the California Attorney General’s Office are now filing the settlement, which is subject to court approval, in the Los Angeles County Superior Court.

The settlement is part of Attorney General Bonta's broader efforts to protect patients from unlawful corporate influence over medical decision-making. In April 2026, Attorney General Bonta filed an amicus brief defending California's prohibition on the corporate practice of medicine, and in May 2026, Attorney General Bonta secured a settlement with Aspen Dental for violations of the corporate practice of dentistry.