New York employees sue insurer over ‘ghost networks’ of mental health doctors

NEW YORK — New York City employees have filed a lawsuit against insurance provider EmblemHealth, alleging the company maintains "ghost networks" of mental health providers that are riddled with errors and misleading information.

The lawsuit, which seeks class-action status, claims these inaccurate directories forced workers to delay or abandon care, or pay high out-of-pocket costs for out-of-network providers. Lead plaintiffs, including an emergency medical technician and a teacher, reported they were unable to find a single available therapist despite contacting dozens of individuals listed in the directory.

The American Psychiatric Association has joined the legal action, alleging that many of its members were included in EmblemHealth’s directories without their consent.

EmblemHealth declined to comment on the pending litigation.

The filing follows similar lawsuits recently brought against other insurance companies in several states over the issue of ghost networks.

The litigation against EmblemHealth is more than a localized New York dispute; it serves as a critical indictment of "ghost networks," a systemic failure plaguing the U.S. healthcare industry. These directories list physicians and mental health professionals as "in-network" despite them being retired, out-of-network, or no longer accepting new patients. This practice creates a veneer of robust coverage and choice, while in reality, it leaves patients stranded without the access they were promised.

What distinguishes this case is its tactical legal maneuvering. Historically, similar challenges have struggled to gain traction because federal statutes often limit the scope of recoverable damages. However, by focusing on insurance plans provided by local governments—which fall outside the preemption of certain federal regulations—plaintiffs are leveraging state consumer protection laws to hold insurers to a higher standard of accountability. If successful, this strategy could establish a landmark precedent, providing a roadmap for more effective litigation across the country.

The involvement of the American Psychiatric Association (APA) further underscores the gravity of the case. Their participation signals that ghost networks are not merely a logistical inconvenience for patients, but a practice that actively undermines the professional integrity and credibility of the medical community.

The prevalence of "ghost networks" within the U.S. health insurance system creates a significant barrier for the Vietnamese-American community. For the first generation, navigating healthcare is already a challenge due to cultural nuances and the lingering stigma surrounding mental health. When a patient finally reaches out for support, only to be met with an inaccurate insurance directory and a series of dead-end phone calls, the resulting frustration often leads them to abandon their search for care entirely. This issue is particularly acute within the nail salon industry. Many small business owners struggle to offer comprehensive insurance to their staff; the more affordable plans they are able to provide are often the ones most plagued by these phantom provider lists, leaving a vital segment of the community's workforce without reliable access to the services they need.