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Illustration: Aïda Amer/Axios

The ousted co-founder of a Kleiner Perkins-backed startup claims that the company — which sells mental health services as an employee benefit — bribed and lied to prospective customers, according to a lawsuit filed in San Francisco Superior Court.

Why it matters: The allegations, denied in their entirety by defendant Modern Health and its CEO, dispute the honesty of those providing support to employees of such major companies as Netflix.

The plaintiff is Erica Johnson, a neurobiology researcher and engineer who co-founded Modern Health in 2017 with Alyson Friedensohn, but was later fired.

  • Johnson filed suit against both Modern Health and Friedensohn for breach of contract, wrongful termination, relation, and defamation.
  • She alleges that Friedensohn gave stock to agents of prospective customers as a bribe to get business — and repeatedly asked Modern Health employees to lie to prospective customers about key aspects of the company's business (e.g., the size of its network, services, and regulatory compliance).
  • Her allegations are largely mirrored in a second lawsuit filed against Modern Health and Friedensohn, by a small venture capital firm led by two former executives at LinkedIn (where Johnson's husband also used to work).

Yes, but: The complaint is explosive, but does not include any emails, affidavits, or other supporting evidence. When contacted by Axios, Johnson's attorney declined to provide additional information, and neither Johnson herself nor C3 Ventures responded to our inquiries.

Modern Health and its attorney emphatically deny all the allegations, including the equity kickbacks, as does a current company employee whom Johnson's lawsuit claims was instructed to lie. The company also has re-upped several of its large customers, which may raise doubts over claims that it misrepresented its capabilities.

Modern Health has not yet filed a legal response, although is required to do so by month's end (unless the two sides enter arbitration). In a statement to Axios, Modern Health says:

“It’s unfortunate that a former employee and a couple of her friends would bring such meritless claims, whose only purpose is to try and distract the company from its mission of improving access to critical mental health care resources.”

The big picture: Silicon Valley is known for encouraging startups to “move fast and break things." But, in recent years, companies have come under stricter scrutiny, particularly in highly-regulated industries like healthcare where rule-breaking can have severe consequences for the end-user.

  • Go deeper: Erica Johnson's complaint is below:

Go deeper

16 mins ago - World

Biden to warn Putin U.S. will add troops in Eastern Europe if Russia invades Ukraine

Putin meets Biden in Geneva. Photo: Peter Klaunzer - Pool/Keystone via Getty

President Biden will warn Russian President Vladimir Putin when they speak on Tuesday that if Russia invades Ukraine, the U.S. is prepared to increase its troop presence, capabilities and military exercises on NATO's "eastern flank," a senior administration official told reporters.

Why it matters: The administration believes it's increasingly likely that Putin will order an invasion.

49 mins ago - World

U.S. announces diplomatic boycott of Beijing Winter Olympics

An Olympic-themed sculpture in Beijing on Dec. 1. Photo: Hou Yu/China News Service via Getty Images

The U.S. announced Monday that it will not send officials to the 2022 Beijing Winter Olympics in protest of human rights abuses committed by the Chinese Communist Party.

Why it matters: The diplomatic boycott — which won't prevent American athletes from competing — marks a major escalation between the U.S. and China amid already heightened tensions over the CCP's treatment of Muslim minorities, military threats to Taiwan and economic tariffs.

Stuck jet stream brings blowtorch December in Lower 48, frigid Alaska

Short-term climate outlook for Dec. 13-19, 2021, from the Climate Prediction Center at NOAA. (NOAA/CPC)

The Lower 48 states have seen record-shattering warmth so far this December, with temperatures running as high as 35°F above average for this time of year. The warmth has been so pronounced that during the weekend, brush fires broke out in a snowless, unusually mild Denver metro area.

The big picture: The jet stream, which is a river of air that rides at about 30,000 feet along the temperature contrast between air masses, steering storms as it goes, has been stuck in a position well north of the continental U.S., keeping storms and cold weather at bay.