SecProbe.io

September 21, 2011
 Via E-mail

Terren S. Peizer, Chief Executive Officer Catasys, Inc. 11150 Santa Monica Blvd.   Suite 1500 Los Angeles, California  90025          RE:  Catasys, Inc.
                Amendment No. 2 to Registration Statement on Form S-1
                Filed September 9, 2011                 File No. 333-173659

Dear Mr. Peizer:
We have limited our review of your amende d registration statement to those issues
we have addressed in our comments.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
 Please respond to this letter by amendi ng your registration statement and providing
the requested information.  Where you do not be lieve our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.
 After reviewing any amendment to your re gistration statement and the information
you provide in response to these comments,  we may have additional comments.

Amendment No. 2 to Registration Statement on Form S-1

 General

1. Prior to requesting acceleration of effectiven ess of the registration statement, please
ensure that we receive a copy of the letter, or a phone call, from FINRA, stating that
FINRA has finished its re view and has no concerns regarding the proposed
underwriting arrangements.
 Prospectus Cover Page

2. Please revise the disclosure on the pros pectus cover page and under Plan of
Distribution to clarify that once the offe ring price has been determined, the common
stock offering price and warra nt exercise price will remain  fixed for the duration of
the offering.

3. We partially reissue comment two of  our letter dated August 10, 2011.  Please
provide disclosure currently omitted in the fi rst and second sets of brackets in the first

Terren S. Peizer
Catasys, Inc. September 21, 2011 Page 2
 paragraph of the prospectus cover page.  In this regard, we note that information
regarding the amount of securities to be  offered may not be omitted in reliance on
Rule 430A.
 Plan of Distribution, page 18

4. We note the statement that the offering price “will be based on the market price of the
Company’s shares of common stock at the time of pricing and may be influenced by
other factors which cannot be identified by the Company at this time.”  Please revise to further clarify the fact ors considered in determin ing the offering price.
Additionally, please address the extent to which your shares trade in an established
trading market.  We note your risk factor  disclosure on page 12 and some trading
days with a low volume or lack of trades.  See Item 201(a)(1)(i) of Regulation S-K.
Your revised disclosure shoul d also address the extent to which the offering price
would reflect unusual trading prices.  In this  regard we note a r ecent trading price of
over $12.00.

5. We note your tabular disclosure of the per unit placement agent’s fees.  Please revise
this table to provide the underwriter’s co mpensation on a total basis also. See Item
508(e) of Regulation S-K.

Exhibits

6. Please file the exhibits required by Item 601(b)(101) of Regulation S-K.

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that th e filing includes the information the Securities Act
of 1933 and all applicable S ecurities Act rules require.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

Notwithstanding our comments, in the event you request accelerati on of the effective
date of the pending registration statement pl ease provide a written statement from the
company acknowledging that:

 should the Commission or the staff, acting purs uant to delegated authority, declare the
filing effective, it does not foreclose th e Commission from taking any action with
respect to the filing;

 the action of the Commission or the staff, acting pursuant to delegated authority, in
declaring the filing effective,  does not relieve the company from its full responsibility
for the adequacy and accuracy of th e disclosure in the filing; and

 the company may not assert staff comments a nd the declaration of effectiveness as a
defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

Terren S. Peizer
Catasys, Inc. September 21, 2011 Page 3
 Please refer to Rules 460 and 461 regard ing requests for acceleration.  We will
consider a written request for acceleration of th e effective date of th e registration statement
as confirmation of the fact that those request ing acceleration are aware of their respective
responsibilities under the Securi ties Act of 1933 and the Securiti es Exchange Act of 1934 as
they relate to the proposed public offering of th e securities specified in  the above registration
statement.  Please allow adequate time for us to review any amendment prior to the requested
effective date of the regist ration statement.
 Please contact Shehzad Niazi at (202) 551- 3121 or Jim Lopez at (202) 551-3536 with
any questions.
Sincerely,
   /s/ James Lopez (for)   John Reynolds,
Assistant Director