SecProbe.io

October 3, 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. 3 to Registration Statement on Form S-1
                Filed September 23, 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

1. We note statements attributed to certain of your executive officers in recent press
releases relating to your part icipation in a conference hoste d by the underwriter in this
offering.  For example, we note, in additi on to the presentation slides, statements
regarding “reach[ing] profitability in 2012” in a MarketWatch article dated
September 29, 2011 (http://www.marketwatch.c om/story/catasys-ceo-confirms-firms-
bullish-growth-projections-2011-09-29) and “exponential revenue growth” of “$18+
million in 2012, $38+ million in 2013 and somewhere between $100-$150 million in 2014 based on calculations … discussed in the recent presentation” in a Seeking Alpha article dated September 22, 2011 (http://seekingalpha.com/article/295289-
pending-developments-put-focus-on-3-healthcare -plays).  Please provide an analysis
as to why you believe such statements are not offers under Section 2(a)(3) of the Securities Act of 1933 and inconsistent with Se ction 5.  If you believe they are offers,
please identify and explain any exemptions  you believe apply, e.g., Rule 168 under
the Securities Act of 1933. We may have further comment.

Terren S. Peizer
Catasys, Inc. October 3, 2011 Page 2
 The Offering, page 3

2. We note that you continue to include severa l blanks in this section despite having
provided such information elsewhere in the pr ospectus.  Please re vise the registration
statement to provide disclosure  regarding the amount of securities to be offered and
any other disclosure that cannot be omitted in reliance on Rule 430A.

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.  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 the 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