SecProbe.io

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 Document Ontrak, Inc. 333 S. E. 2nd Avenue, Suite 2000 Miami, FL 33131 (310) 444-4300 June 25, 2025   VIA EDGAR United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Attention: Nicholas O’Leary     Re:    Ontrak, Inc.         Registration Statement on Form S-1/A         Filed June 20, 2025         File No. 333-288099 Ladies and Gentlemen:   Reference is made to our letter, filed as correspondence via EDGAR on June 20, 2025, in which we requested acceleration of the effective date of the above-referenced registration statement to 5:00 p.m., Eastern Time, on June 23, 2025, or as soon thereafter as practicable. The above-referenced registration statement has not yet been declared effective. By this letter, we hereby withdraw the June 20, 2025 request for acceleration of the effective date thereof. Further, by this letter, pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, we respectfully requests that the effective date of the above-referenced registration statement be accelerated so that it will become effective at 5:00 p.m., Eastern Time, on Thursday, June 26, 2025, or as soon thereafter as possible. Please notify John Tishler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (858) 720-8943 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request.                                ONTRAK, INC.           By: /s/ James Park   Name:  James Park   Title:  Chief Financial Officer

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 Document Ontrak, Inc. 333 S. E. 2nd Avenue, Suite 2000 Miami, FL 33131 (310) 444-4300 June 20, 2025   VIA EDGAR United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Attention: Nicholas O’Leary     Re:    Ontrak, Inc.         Registration Statement on Form S-1/A         Filed June 20, 2025         File No. 333-288099 Ladies and Gentlemen:   Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 5:00 p.m., Eastern Time, on Monday, June 23, 2025, or as soon thereafter as possible.  Please notify John Tishler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (858) 720-8943 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request.                              Very truly yours,   ONTRAK, INC.           By: /s/ James Park   Name:  James Park   Title:  Chief Financial Officer

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 Document Sheppard, Mullin, Richter & Hampton LLP 12275 El Camino Real, Suite 100 San Diego, California 92130 858.720.8900 main www.sheppardmullin.com May 22, 2025 U.S. Securities & Exchange Commission Division of Corporation Finance 100 F Street, N.E. Washington, D.C. 20549 Attn: Nicholas O’Leary Re: Ontrak, Inc.   Draft Registration Statement on Form S-1   Submitted May 1, 2025 CIK No. 0001136174 Dear Mr. O’Leary: By telephone call on May 15, 2025, the staff of the U.S. Securities and Exchange Commission provided Ontrak, Inc. (the “ Company ”), with oral comments (the “ Comments ”) to the Company’s Draft Registration Statement on Form S-1 described above (the “ Registration Statement ”). The Company intends to address the Comments by revising disclosure on the cover page of the Registration Statement as set forth in Exhibit A hereto. Such revised disclosure, along with corresponding revisions to related disclosure elsewhere in the Registration Statement, would be included in a Pre-Effective Amendment No. 1 to the Registration Statement. Please do not hesitate to contact me at (858) 720-8943 or JTishler@sheppardmullin.com with any comments or questions regarding the revised disclosure or any other matter related to the Registration Statement. Thank you for your assistance. Regards, /s/ John D. Tishler Sheppard, Mullin, Richter & Hampton LLP Exhibit A This is a reasonable best efforts public offering of up to shares (the “shares”) of our common stock, par value $0.001 per share ("common stock") together with up to Series A warrants to purchase up to shares of common stock (the "Series A Warrants warrants ") and up to Series B warrants to purchase up to shares of common stock (the "Series B Warrants warrants ," together with the Series A Warrants warrants , the "warrants") at an assumed combined public offering price of $ per share and one Series A Warrant warrant and one Series B Warrant warrant . Each share of common stock is being offered together with one Series A Warrant warrant to purchase one share of common stock and one Series B Warrant warrant to purchase one share of common stock. The shares of common stock and warrants will be separately issued. This prospectus also relates to the shares of common stock that are issuable from time to time upon exercise of each of the Series A Warrants and Series B Warrants. If the Pricing Conditions (as defined below) are met, the warrants will be exercisable upon issuance. If the Pricing Conditions are not met, the right of a holder to exercise the warrants will be conditioned on obtaining stockholder approval as required by The Nasdaq Stock Market (“Nasdaq”) listing rules to permit exercise of the warrants (“Stockholder Approval”), and if obtained, the warrants will be exercisable beginning on the effective date of Stockholder Approval. If Stockholder Approval is required and we are unable to obtain it, the warrants will not be exercisable and therefore they will have no value. We cannot assure you that we will be able to obtain Stockholder Approval, if required. The term "Pricing Conditions" means that the combined offering price per share of common stock and accompanying warrants is such that stockholder approval to permit the exercise of the warrants is not required under Nasdaq listing rules because: (i) the offering meets the definition of a “public offering” as defined in Nasdaq interpretive materials issued under Nasdaq Rule 5635(d), which definition considers factors including the type of offering, the manner in which the offering is marketed, the extent of the offering’s distribution, the offering price including the extent of any discount to the market price of the securities offered and the extent to which the issuer controls the offering and its distribution; (ii) the offering price equals or exceeds the sum of (a) the applicable "Minimum Price" per share under Nasdaq Rule 5635(d) plus (b) $0.125 per whole share of common stock underlying the warrants or such other amount as is determined in accordance with Nasdaq listing rules; or (iii) the offering price does not equal or exceed the sum of (a) the applicable "Minimum Price" per share under Nasdaq Rule 5635(d) plus (b) $0.125 per whole share of common stock underlying the warrants or such other amount as is determined in accordance with Nasdaq listing rules, but the number of shares of common stock issued or potentially issuable in the offering, including the shares of common stock issuable upon exercise of the warrants , is less than 20% of the number of shares of common stock outstanding prior to the closing of the offering. The Series A Warrants and the Series B Warrants will be exercisable beginning on the effective date of such stockholder approval as may be required by the applicable rules and regulations of the Nasdaq Capital Market (or any successor entity) to permit the exercise of the warrants (“Stockholder Approval"). The Series A Warrants warrants will expire years from (i) the date of Stockholder Approval and , if Stockholder Approval is required, or (ii) the date of issuance, if the Pricing Conditions are met. The Series A warrants will have an initial exercise price of $ and the per share. The Series B Warrants warrants will expire two and a half years from (a) the date of Stockholder Approval and , if Stockholder Approval is required, or (b) from the date of issuance, if the Pricing Conditions are met. The Series B warrants will have an initial exercise price of $ . In the event that we are unable to obtain the required Stockholder Exhibit A-1 Approval the Series A Warrants and the Series B Warrants will not be exercisable and therefore have no value. per share. Upon the If Stockholder Approval is required, upon Stockholder Approval and provided the lowest VWAP (as defined in the Series B Warrant warrant ) of the common stock during the period commencing five consecutive trading days immediately preceding the date of Stockholder Approval date and ending five consecutive trading days immediately after the Stockholder Approval such date (the “Stockholder Approval Event Market Price”) (provided if the date of Stockholder Approval date is effective after close of trading on the primary Trading Market, then commencing on the next trading day, which period shall be the “Stockholder Approval Adjustment Period”) is less than the exercise price then in effect, then at the close of trading on the primary Trading Market (as defined in the Series B Warrant warrant ) on the last day of the Stockholder Approval Adjustment Period, the exercise price for the Series B Warrants warrants then in effect on such fifth (5th) trading day shall be reduced to the Stockholder Approval Event Market Price; provided that the adjusted exercise price shall not be less than $ (the “Floor Price”) based on the assumed public offering price of $ per share of common stock. Simultaneously with any adjustment to the exercise price, the number of shares of common stock that may be purchased upon exercise of the Series B Warrant warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate exercise price payable hereunder for the adjusted number of shares of common stock shall be the same as the aggregate exercise price in effect immediately prior to such adjustment and may not be unilaterally reduced by us for any reason other than by exercise of the Series B Warrant warrant by such holder). In addition upon Stockholder Approval , a holder of Series B Warrants warrants may, at any time and in its sole discretion, following Stockholder Approval, if required, or following the date of issuance, if the Pricing Conditions are met, exercise its Series B Warrants warrants in whole or in part by means of a one-time only “zero exercise price” option in which the holder is entitled to receive a number of shares of common stock that shall equal the product of (x) the aggregate number of Warrant Shares that would be issuable upon exercise of the Series B Warrant warrant in accordance with its terms if such exercise were by means of a cash exercise rather than a cashless exercise and (y) . As a result of this feature, we do not expect to receive any cash proceeds from the exercise of the Series B Warrants warrants because it is highly unlikely that a Series B Warrant warrant holder will elect to pay an exercise price in cash to receive one share of common stock when they could elect the zero exercise price option in these circumstances to receive more shares of common stock than they would receive if they did pay an exercise price in cash. As an example, given the above provisions, holders of the Series B Warrants warrants will be issued a maximum of shares of common stock upon the exercise of the Series B Warrants warrants . Each Series B Warrant warrant includes one underlying share of common stock that may be obtained by exercising the Series B Warrant warrant at an assumed exercise price of $ based on the assumed public offering price of $ per share of common stock; however if the holder elects the zero exercise price option, the number of shares of common stock could increase to up to shares of common stock underlying each Series B Warrant warrant if the exercise price decreases to and equals the Floor Price at the time of such election. As such, holders of the Series B Warrants warrants may elect to be issued up to shares of common stock upon the exercise of the Series B Warrants warrants assuming the $ Floor Price. The assumed exercise price of the Series B Warrant warrant is calculated as 180% of the public offering price and the assumed Floor Price is calculated as 20% of the public offering price. We are also offering pre-funded warrants to those purchasers, whose purchase of shares of common stock in this offering would result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding Exhibit A-2 common stock following the consummation of this offering in lieu of the shares of our common stock that would result in ownership in excess of 4.99% (or, at the election of the purchaser, 9.99%). Each pre-funded warrant will be exercisable for one share of common stock at an exercise price of $0.0001 per share. Each pre-funded warrant is being offered together with the same Series A Warrant warrant and Series B Warrant warrant , each to purchase one share of common stock described above being offered with each share of common stock. The purchase price of each pre-funded warrant will equal the combined public offering price per share of common stock and warrants being sold in this offering, less the $0.0001 per share exercise price of each such pre-funded warrant. Each pre-funded warrant will be exercisable upon issuance and will expire when exercised in full. The pre-funded warrants and warrants will be separately issued. For each pre-funded warrant that we sell, the number of shares of common stock that we are selling will be decreased on a one-for-one basis. This prospectus also covers all the shares of common stock issuable from time to time upon the exercise of the pre-funded warrants , Series A Warrants and Series B Warrants included alongside the and the warrants accompanying the shares of common stock and pre-funded warrants offered hereby. There is no established public trading market for the pre-funded warrants or warrants, and we do not expect a market to develop. We do not intend to apply for listing of the pre-funded warrants or warrants on any securities exchange or other nationally recognized trading system. Without an active trading market, the liquidity of the pre-funded warrants and warrants will be limited. Exhibit A-3

October 25, 2024
Brandon LaVerne
Chief Executive Officer
Ontrak, Inc.
333 S. E. 2 nd Avenue, Suite 2000
Miami, FL 33131
Re:Ontrak, Inc.
Registration Statement on Form S-1
Filed October 18, 2024
File No. 333-282722
Dear Brandon LaVerne:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration. We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Nicholas O'Leary at 202-551-4451 with any questions.
Sincerely,
Division of Corporation Finance
Office of Industrial Applications and
Services
cc:John Tishler, Esq.

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

October 25, 2024

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Nicholas O’Leary

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed October 18, 2024

        File No. 333-282722

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 9:00 a.m., Eastern Time, on October 29, 2024, or as soon thereafter as possible.

Please notify John Tishler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at 858-720-8943 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request and/or contact him with any questions.

                             Regards,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

April 29, 2024

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Jessica Ansart

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed April 22, 2024

        File No. 333-278848

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 4:00 p.m., Eastern Time, on April 30, 2024, or as soon thereafter as possible.

Please notify Edwin Astudillo of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (619) 318-9987 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request and/or contact him with any questions.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

United States securities and exchange commission logo
April 29, 2024
Brandon LaVerne
Chief Executive Officer
Ontrak, Inc.
333 S. E. 2 nd Avenue, Suite 2000
Miami, FL 33131
Re:Ontrak, Inc.
Registration Statement on Form S-1
Filed April 22, 2024
File No. 333-278848
Dear Brandon LaVerne:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration. We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Jessica Ansart at 202-551-4511 with any questions.
Sincerely,
Division of Corporation Finance
Office of Industrial Applications and
Services
cc:       John Tishler

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

November 8, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Reference is made to our letter, filed as correspondence via EDGAR on November 6, 2023, in which we requested for acceleration of the effective date of the above-referenced registration statement to 5:00 p.m., Eastern Time, on Wednesday, November 8, 2023, or as soon thereafter as practicable. At this time, we are no longer requesting that such registration statement be declared effective at that time and we hereby formally withdraw our request for acceleration of the effective date thereof.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

November 8, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 5:00 p.m., Eastern Time, on Thursday, November 9, 2023, or as soon thereafter as possible.

Please notify Jeffrey Fessler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (212) 634-3067 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

November 6, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Reference is made to our letter, filed as correspondence via EDGAR on November 2, 2023, in which we requested for acceleration of the effective date of the above-referenced registration statement to 5:00 p.m., Eastern Time, on Monday, November 6, 2023, or as soon thereafter as practicable. At this time, we are no longer requesting that such registration statement be declared effective and we hereby formally withdraw our request for acceleration of the effective date thereof.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

November 6, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 5:00 p.m., Eastern Time, on Wednesday, November 8, 2023, or as soon thereafter as possible.

Please notify Jeffrey Fessler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (212) 634-3067 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

November 2, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 5:00 p.m., Eastern Time, on Monday, November 6, 2023, or as soon thereafter as possible.

Please notify Jeffrey Fessler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (212) 634-3067 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

October 10, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Reference is made to our letter, filed as correspondence via EDGAR on October 6, 2023, in which we requested for acceleration of the effective date of the above-referenced registration statement to 5:00 p.m., Eastern Time, on Tuesday, October 10, 2023, or as soon thereafter as practicable. At this time, we are no longer requesting that such registration statement be declared effective and we hereby formally withdraw our request for acceleration of the effective date thereof.

  ONTRAK, INC.

  By: /s/ James J. Park

  Name: James J. Park

  Title: Chief Financial Officer

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Ontrak, Inc.

333 S. E. 2nd Avenue, Suite 2000

Miami, FL 33131

(310) 444-4300

October 6, 2023

VIA EDGAR

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention: Abby Adams

 Jane Park

    Re:    Ontrak, Inc.

        Registration Statement on Form S-1

        Filed June 29, 2023

        File No. 333-273029

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations under the Securities Act of 1933, as amended, Ontrak, Inc. (the “Company”) respectfully requests that the effective date of the registration statement referred to above (the “Registration Statement”) be accelerated so that it will become effective at 5:00 p.m., Eastern Time, on Tuesday, October 10, 2023, or as soon thereafter as possible.

Please notify Jeffrey Fessler of Sheppard Mullin Richter & Hampton LLP, counsel to the Company, at (212) 634-3067 as soon as possible as to the time the Registration Statement has been declared effective pursuant to this acceleration request.

                             Very truly yours,

  ONTRAK, INC.

  By: /s/ Brandon H. LaVerne

  Name: Brandon H. LaVerne

  Title: Interim Chief Executive Officer and Chief Operating Officer

United States securities and exchange commission logo
July 6, 2023
Brandon LaVerne
Interim Chief Executive Officer
Ontrak, Inc.
2200 Paseo Verde Parkway, Suite 280
Henderson, NV 89052
Re:Ontrak, Inc.
Registration Statement on Form S-1
Filed June 29, 2023
File No. 333-273029
Dear Brandon LaVerne:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Abby Adams at (202) 551-6902 with any questions.
Sincerely,
Division of Corporation Finance
Office of Industrial Applications and
Services
cc:       Jeffrey Fessler, Esq.

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September 14, 2021

Division of Corporation Finance

Office of Life Sciences

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Re: Ontrak, Inc.

Registration Statement on Form S-3

File No. 333-259329

Ladies and Gentlemen:

Ontrak, Inc. hereby requests that the effective date and time of the above referenced Registration Statement be accelerated to 5:00 pm on September 16, 2021 or as soon thereafter as practicable, pursuant to Rule 461 of the Securities Act of 1933, as amended.

Very truly yours,

ONTRAK, INC.

By: /s/ Brandon H. LaVerne_______________

Name: Brandon H. LaVerne

Title: Chief Financial Officer

United States securities and exchange commission logo
September 13, 2021
Jonathan Mayhew
Chief Executive Officer
Ontrak, Inc.
2120 Colorado Avenue, #230
Santa Monica, CA 90404
Re:Ontrak, Inc.
Registration Statement on Form S-3
Filed September 3, 2021
File No. 333-259329
Dear Mr. Mayhew:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Lauren Hamill at 303-844-1008 with any questions.
Sincerely,
Division of Corporation Finance
Office of Life Sciences
cc:       Lili Taheri

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October 2, 2020

Division of Corporation Finance

Office of Life Sciences

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Re: Ontrak, Inc.

Registration Statement on Form S-3

File No. 333-248770

Ladies and Gentlemen:

Ontrak, Inc. hereby requests that the effective date and time of the above referenced Registration Statement be accelerated to 5:00 pm on October 6, 2020 or as soon thereafter as practicable, pursuant to Rule 461 of the Securities Act of 1933, as amended.

Very truly yours,

ONTRAK, INC.

By: /s/ Brandon H. LaVerne_______________

Name: Brandon H. LaVerne

Title: Chief Financial Officer

United States securities and exchange commission logo
September 28, 2020
Brandon H. LaVerne
Chief Financial Officer
Ontrak, Inc.
2120 Colorado Avenue, #230
Santa Monica, California 90404
Re:Ontrak, Inc.
Registration Statement on Form S-3
Filed September 11, 2020
File No. 333-248770
Dear Mr. LaVerne:
            We have limited our review of your registration statement to the issue we have addressed
in our comment.  Please respond to this letter by amending your registration statement and
providing the requested information.  If you do not believe our comment applies 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 registration statement and the information you
provide in response to our comment, we may have additional comments.
Registration Statement on Form S-3 filed September 11, 2020
Cover Page
1.Please note that Securities Act Rule 416 does not apply to shares issuable upon conversion
of securities where the conversion is determined by fluctuating market prices.  Revise the
offer to register a reasonable good-faith estimate of the maximum amount of shares
necessary to cover conversions of the preferred stock.  For guidance, please refer to
Compliance and Disclosure Interpretations, Securities Act Rules, Question 213.02.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Refer to Rules 460 and 461 regarding requests for acceleration.  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.

 FirstName LastNameBrandon H. LaVerne
 Comapany NameOntrak, Inc.
 September 28, 2020 Page 2
 FirstName LastName
Brandon H. LaVerne
Ontrak, Inc.
September 28, 2020
Page 2
            Please contact Abby Adams at (202) 551-6902 or Joe McCann at (202) 551-6262 with
any other questions.
Sincerely,
Division of Corporation Finance
Office of Life Sciences
cc:       Mitchell Nussbaum, Esq.

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September 29, 2020

Division of Corporation Finance

Office of Life Sciences

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Re: Ontrak, Inc.

Registration Statement on Form S-3

Filed September 11, 2020

File No. 333-248770

Ladies and Gentlemen:

Ontrak, Inc. (the “Company“) hereby provides responses to comments issued in a letter dated September 28, 2020 (the “Staff’s Letter”) regarding the Company’s above-referenced registration statement filed pursuant to the Securities Act of 1933, as amended.

In order to facilitate your review, the numbered paragraph set forth below responds to the Staff’s comment and corresponds to the numbered paragraph in the Staff’s Letter.

Registration Statement on Form S-3 filed September 11, 2020

Cover Page

1.Please note that Securities Act Rule 416 does not apply to shares issuable upon conversion of securities where the conversion is determined by fluctuating market prices. Revise the offer to register a reasonable good-faith estimate of the maximum amount of shares necessary to cover conversions of the preferred stock. For guidance, please refer to Compliance and Disclosure Interpretations, Securities Act Rules, Question 213.02.

RESPONSE:  The Company acknowledges the Staff’s comment and is filing pre-effective Amendment No. 1 to the registration statement containing a good-faith estimate of the maximum number of shares necessary to cover potential exchanges of preferred stock for common stock. The Company intends to file a further registration statement to the extent required to register additional shares of common stock should the estimate be insufficient to cover any such exchanges, as noted in Compliance and Disclosure Interpretations, Securities Act Rules, Question 213.02.

Please contact me at (310) 422-7748 to discuss any additional information you may need in order to conclude on this issue.

Division of Corporation Finance

September 29, 2020

Thank you for your consideration of this matter.

Sincerely,

/s/ Brandon H. LaVerne

Brandon H. LaVerne

Chief Financial Officer

 2

United States securities and exchange commission logo
August 18, 2020
Brandon LaVerne
Chief Financial Officer
Ontrak, Inc.
2120 Colorado Ave., Suite 230
Santa Monica, CA 90404
Re:Ontrak, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2019
Filed March 16, 2020
File No. 001-31932
Dear Mr. LaVerne:
            We have completed our review of your filings.  We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.
Sincerely,
Division of Corporation Finance
Office of Life Sciences

CORRESP
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Document

August 6, 2020

Division of Corporation Finance

Office of Life Sciences

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Re: Ontrak, Inc.

Form 10-K for the Fiscal Year Ended December 31, 2019

Filed March 16, 2020

File No. 001-31932

Ladies and Gentlemen:

Ontrak, Inc. (the “Company“) hereby provides responses to comments issued in a letter dated July 23, 2020 (the “Staff’s Letter”) regarding the Company’s above-referenced report filed pursuant to the Securities Exchange Act of 1934, as amended.

In order to facilitate your review, the numbered paragraph set forth below responds to the Staff’s comment and corresponds to the numbered paragraph in the Staff’s Letter.

Form 10-K for the Fiscal Year Ended December 31, 2019

Exhibits

1.We note that your officers' Section 906 certifications furnished in Exhibits 32.1 and 32.2 pursuant to Rule 13a-14(b) of the Exchange Act refer to the year ended December 31, 2018 rather than for the year ended December 31, 2019. Please file a full amendment to your Form 10-K which includes corrected and currently dated Section 906 certifications.

RESPONSE:  Concurrently with the filing of this letter, we are filing a full amendment on Form 10-K/A containing corrected and currently dated Section 906 certifications.

Please contact me at (310) 422-7748 to discuss any additional information you may need in order to conclude on this issue.

Thank you for your consideration of this matter.

Sincerely,

/s/ Brandon H. LaVerne

Brandon H. LaVerne

Chief Financial Officer

United States securities and exchange commission logo
July 23, 2020
Brandon LaVerne
Chief Financial Officer
Ontrak, Inc.
2120 Colorado Ave., Suite 230
Santa Monica, CA 90404
Re:Ontrak, Inc.
Form 10-K for the Fiscal Year Ended December 31, 2019
Filed March 16, 2020
File No. 001-31932
Dear Mr. LaVerne:
            We have limited our review of your filing to the financial statements and related
disclosures and have the following comment.  In our comment, we may ask you to provide us
with information so we may better understand your disclosure.
            Please respond to this comment within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this comment, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2019
Exhibits
1.We note that your officers' Section 906 certifications furnished in Exhibits 32.1 and 32.2
pursuant to Rule 13a-14(b) of the Exchange Act refer to the year ended December 31,
2018 rather than for the year ended December 31, 2019.  Please file a full amendment to
your Form 10-K which includes corrected and currently dated Section 906 certifications.
            In closing, we remind you that the company and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or
absence of action by the staff.

 FirstName LastNameBrandon LaVerne
 Comapany NameOntrak, Inc.
 July 23, 2020 Page 2
 FirstName LastName
Brandon LaVerne
Ontrak, Inc.
July 23, 2020
Page 2
            You may contact Gary Newberry at (202) 551-3761 or Tara Harkins, Senior
Accountant, at (202) 551-3639 with any questions.
Sincerely,
Division of Corporation Finance
Office of Life Sciences

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Catasys, Inc.

11601 Wilshire Boulevard, Suite 1100,

Los Angeles, California 90025

March 29, 2019

			Mr. Ronald E. Alper

			Securities and Exchange Commission

			100 F. Street, N.E.

			Washington, D.C. 20549

			Re:

			Catasys, Inc.

			Registration Statement on Form S-3

			Filed March 22, 2019

			File No. 333-230475

Dear Mr. Alper:

The Company hereby requests that the effective date and time of the above referenced Registration Statement be accelerated to 5:00pm on April 1, 2019 or as soon thereafter as practicable, pursuant to Rule 461 of the Securities Act of 1933, as amended.

			Very truly yours

			CATASYS, INC.

			By:

			/s/ Christopher Shirley

			Name:    Christopher Shirley

			Title:       Chief Financial Officer

March 29, 2019
Terren S. Peizer
Chief Executive Officer
Catasys, Inc.
11601 Wilshire Boulevard, Suite 1100
Los Angeles, California 90025
Re:Catasys, Inc.
Registration Statement on Form S-3
Filed March 22, 2019
File No. 333-230475
Dear Mr. Peizer:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration.  We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Ronald (Ron) E. Alper at 202-551-3329 with any questions.
Sincerely,
Division of Corporation Finance
Office of Beverages, Apparel and
Mining
cc:       Lili Taheri

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Catasys, Inc.

11601 Wilshire Boulevard, Suite 1100

Los Angeles, California 90025

April 20, 2017

Via EDGAR

Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549

Attention: John Reynolds, Assistant Director, Office of Beverages, Apparel, and Mining

Re:          Catasys, Inc.

Registration Statement on Form S-1

File No. 333-216007

Acceleration Request

Dear Mr. Reynolds:

With respect to the above-referenced Registration Statement on Form S-1 (the “Registration Statement”), and pursuant to Rule 461 of Regulation C promulgated under the Securities Act of 1933, as amended, the undersigned hereby respectfully requests, on behalf of Catasys, Inc. (the “Company”), that the Securities and Exchange Commission (the “Commission”) accelerate the effective date of the Registration Statement to Monday, April 24, 2017, at 5:00 p.m. Eastern Time, or as soon as practicable thereafter.

In connection with the foregoing request, the Company acknowledges the following:

●

should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the 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 the disclosure in the filing; and

●

the Company may not assert staff comments and 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.

The cooperation of the staff in meeting the timetable described above is very much appreciated.

Please call Priya K. Agrawal of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Company, at (212) 692-6708 with any comments or questions regarding the Registration Statement.

Very truly yours,

Catasys, Inc.

/s/ Terrey S. Peizer

By:

Terren S. Peizer

Its:
Chief Executive Officer

cc:           David Link, Securities and Exchange Commission

Jonathan Burr, Securities and Exchange Commission

Kenneth R. Koch, Esq., Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

April 20, 2017

Securities and Exchange Commission

100 F. Street, NE

Washington, D.C. 20549

Re:      Catasys, Inc. (the “Company”)

Registration Statement on Form S-1

File No. 333-216007

VIA EDGAR

Ladies and Gentlemen:

Pursuant to Rule 461 of the General Rules and Regulations of the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”), Joseph Gunnar & Co., LLC, as representative of several underwriters, hereby joins in the Company’s request for acceleration of the effective date of the above-referenced Registration Statement so that it will become effective at 5:00 p.m., Washington D.C. time, on Monday, April 24, 2017, or as soon thereafter as practicable.

The following is supplemental information supplied under Rule 418(a)(7) and Rule 460 under the Securities Act:

Pursuant to Rule 460 under the Securities Act, please be advised that during the period from March 20, 2017 to the date of this letter, we, acting as representative to the several underwriters, wish to advise you that we distributed as many copies, as well as “E-red” copies of the Preliminary Prospectuses, dated March 31, 2017 as appears to be reasonable to secure adequate distribution of the Preliminary Prospectuses.

The undersigned confirms that it has complied with and will continue to comply with, and it has been informed or will be informed by participating dealers that they have complied with or will comply with, Rule 15c2-8 promulgated under the Securities Exchange Act of 1934, as amended, in connection with the above-referenced issue.

[Signature Page Follows]

Joseph Gunnar & Co., LLC

By:

/s/ Eric Lord

Name: Eric Lord

Title: Head of Investment Banking/Underwriting

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Catasys, Inc.

11601 Wilshire Boulevard, Suite 1100

Los Angeles, CA 90025

(310) 444-4300

April 19, 2017

VIA EDGAR

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention:

Mr. John Reynolds

Assistant Director

Office of Beverages, Apparel, and Mining

Re:
Catasys, Inc.

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

Filed March 31, 2017

File No. 333-216007

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), and in connection with the Company’s Registration Statement on Form S-1 (333-216007) (the “Registration Statement”), as discussed during a conversation between Messrs. Jonathan Burr and David Link of the Securities and Exchange Commission and Cliff M. Silverman of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (“Mintz”) on April 19, 2017, the last reported sale price for the Company’s common stock of $1.61 per share that is listed on the cover page of the Registration Statement (the “Cover Price”) differs from the last reported sale price for the Company’s common stock of $9.66 that is listed on page 25 of the Registration Statement because the Cover Price was not adjusted to reflect the 1:6 reverse stock split of the Company’s common stock that will be effected in connection with this offering.

If you have any questions or require any additional information, please do not hesitate to contact the undersigned at the number indicated above or Cliff M. Silverman, Esq. of Mintz at (212) 692-6723.

Yours truly,

CATASYS, INC.

Per:

/s/ Terren S. Peizer

Terren S. Peizer

Chief Executive Officer

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Catasys, Inc.

11601 Wilshire Boulevard, Suite 1100

Los Angeles, CA 90025

(310) 444-4300

April 17, 2017

VIA EDGAR

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention:              Mr. John Reynolds

Assistant Director

Office of Beverages, Apparel, and Mining

Re:          Catasys, Inc.

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

Filed March 31, 2017

File No. 333-216007

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), set forth below are the responses to the comments contained in your letter of April 6, 2017 addressed to Mr. Terren S. Peizer, the Company’s Chief Executive Officer, regarding the Company’s Amendment No. 2 to Registration Statement on Form S-1 (333-216007) (the “Registration Statement”). For the convenience of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), the text of the comments is reproduced in its entirety in boldface immediately preceding the Company’s responses in ordinary typeface.

1.

We note your statement in your response dated March 20, 2017 that “we have mailed to the stockholders the information statement required by Regulation 14C under the Securities Exchange Act of 1934, as amended, when and as applicable.” Please revise your disclosure to include your response in this section. Please advise us when the company sent the information statements required by Regulation 14C and briefly indicate the matters covered by these information statements.

Response:

On June 4, 2012, the Company mailed to its stockholders an information statement (the “2012 Filing”) as required by Regulation 14C under the Securities Exchange Act of 1934, as Amended (“Regulation 14C”) to inform such stockholders that stockholders holding voting rights equivalent to 71.1% of the outstanding shares of common stock, par value $0.0001 per share (the “Common Stock”), had executed written consents in lieu of a special meeting approving the following items:

●

Authorization of the Board of Directors (the “Board” or the “Board of Directors”) to effect a reverse stock split of the Company’s common stock, par value $0.0001 per share at an exchange ratio of one-for-ten (the “Reverse Split”) and to file an amendment to the Company’s Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to effect the Reverse Split, so that every ten outstanding shares of Common Stock before the Reverse Split shall represent one share of Common Stock after the Reverse Split;

●

Authorization of the Board of Directors to file an amendment to the Company’s Certificate of Incorporation to decrease the Company’s authorized Common Stock from 2,000,000,000 shares to 500,000,000 shares; and

●

An amendment to the Company’s 2010 Stock Incentive Plan (the “2010 Plan”) providing for the increase in the number of shares of Common Stock available for issuance pursuant to the 2010 Plan from 5,775,000 to 18,250,000.

Since that time, and until the recent approval by the Company’s stockholders of a pending reverse stock split and the adoption of the Company’s 2017 Stock Incentive Plan, as disclosed in the definitive information statement dated March 20, 2017 that was filed pursuant to Regulation 14C (the “2017 Filing”), no action has been taken by the Company’s stockholders requiring disclosure pursuant to Regulation 14C, and accordingly, no other information statement has been filed.

As discussed during a conversation between Messrs. Jonathan Burr and Kenneth R. Koch, Esq. of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (“Mintz”) on April 6, 2017, in light of the fact that the Company has not been required to file any information statements between the 2012 Filing and the 2017 Filing, there is no additional disclosure needed to respond to the Staff’s comment.

2.

Please revise to address the risks associated with not filing a Schedule 14C and not complying with the requirements [of] Section 14 of the Securities Exchange Act of 1934 and the rules promulgated thereunder.

Response:

As discussed with Mr. Burr, in light of the answer to Comment 1, we believe that Comment 2 is not applicable and that no such risk factor is required.

If you have any questions or require any additional information, please do not hesitate to contact the undersigned at the number indicated above or Kenneth R. Koch, Esq. of Mintz at (212) 692-6768.

Yours truly,

CATASYS, INC.

By:

/s/ Terren S. Peizer

Terren S. Peizer

Chief Executive Officer

Mail Stop 3561
April 6 , 2017

Via E -mail
Terren S. Peizer
Chief Executive Officer
Catasys, Inc.
11601 Wilshire Boulevard, Suite 1100
Los Angeles, CA  90025

Re: Catasys, Inc.
  Amendment  No. 2  to Registration Statement on Form S-1
Filed  March 31 , 2017
  File No.  333-216007

Dear Mr. Peizer :

We have limited our review of your  amended registration statement  to those issues we
have addressed in our comment s.  In our comment s, we may ask you  to provide us with
information so we may better understand your disclosure.

Please respond to this letter by amending your registration statement and providing the
requested information .  If you do not believe our comment s apply  to your facts and
circums tances or do not believe an amendment is appropriate, please tell us why in your
response.

After reviewing any amendment to your registration statement and the information you
provide in response to these  comment s, we may have  additional comments.   Unless we note
otherwise, our references to prior comments are to comments in our March  28, 2017 letter .

Summary

Annual Meeting, page 3

1. We note your statement in your response dated March 20, 2017 that “we have mailed to
the stockholders the information  statement required by Regulation 14C under the
Securities Exchange Act of 1934, as amended, when and as applicable.”  Please revise
your disclosure to include your response in this section.  Please advise us when the
company sent the information statement s required by Regulation 14C to its stockholders
and briefly indicate the matters covered by these information statements.

Terren S. Peizer
Catasys, Inc.
April 6 , 2017
Page 2

 Risk Factors

We have not held regular annual meetings in the past …, page 11

2. Please revise to address the  risks associated with not filing a Schedule 14C and not
complying with the requirements Section 14 of the Securities Exchange Act of 1934 and
the rules promulgated thereunder.

Please contact Jonathan Burr  at (202) 551 -5833 or David Link  at (202) 551 -3356 with
any questio ns.

Sincerely,

 /s/ David Link for

 John Reynolds
Assistant Director
Office of Beverages, Apparel, and
Mining

cc: Kenneth R. Koch, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

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Catasys, Inc.

11601 Wilshire Boulevard, Suite 1100

Los Angeles, CA 90025

(310) 444-4300

March 31, 2017

VIA EDGAR

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention:

Mr. John Reynolds

Assistant Director

Office of Beverages, Apparel, and Mining

Re:

Catasys, Inc.

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

Filed March 20, 2017

File No. 333-216007

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), set forth below is the response to the comment contained in your letter of March 28, 2017 addressed to Mr. Terren S. Peizer, the Company’s Chief Executive Officer, regarding the Company’s Registration Statement on Form S-1 (333-216007) (the “Registration Statement”). For the convenience of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), the text of the comment is reproduced in its entirety in boldface immediately preceding the Company’s response in ordinary typeface.

1.

We note your revised disclosure and response to comment 1. Please revise your prospectus summary to highlight that a shareholder meeting has not been held historically and that you plan to hold a meeting in 2018. In this regard, please add a risk factor addressing the risks to investors as a result of historically not holding shareholder meeting.

Response:

We have revised the Registration Statement in response to the Staff’s comment.

If you have any questions or require any additional information, please do not hesitate to contact the undersigned at the number indicated above or Kenneth R. Koch, Esq. of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. at (212) 692-6768.

Yours truly,

CATASYS, INC.

Per:

/s/ Terren S. Peizer

Terren S. Peizer

Chief Executive Officer

Mail Stop 3561
March 28 , 2017

Via E -mail
Terren S. Peizer
Chief Executive Officer
Catasys, Inc.
11601 Wilshire Boulevard, Suite 1100
Los Angeles, CA  90025

Re: Catasys, Inc.
  Amendment No. 1 to Registration Statement on Form S-1
Filed  March 20, 2017
  File No.  333-216007

Dear Mr. Peizer :

We have limited our review of your  amended registration statement  to those issues we
have addressed in our comment .  In our comment , we may ask you to provide us with
information so we may better understand your disclosure.

Please respond to this letter by amending your registration statement and providing the
requested information .  If you do not believe our comment applies  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 registration statement and the information you
provide in response to this comment , we may have  additional comments.   Unless we note
otherwise, our references to prior comments are to comments in our February 28, 2017 letter .

General

1. We note your revised disclosure and response to comment 1.  Please revise your
prospectus summary to highlight that a shareholder meeting has not been held historically
and that you plan to hold a meeting in 2018.  In this regard, please add a risk factor
addressing the risks to investors as a result of historically not holding shareholder
meetings.

Terren S. Peizer
Catasys, Inc.
March 28 , 2017
Page 2

 Please contact Jonathan Burr  at (202) 551 -5833 or David Link  at (202) 551 -3356 with
any other questions.

Sincerely,

 /s/ David  Link for

 John Reynolds
Assistant Director
Office of Beverages, Apparel, and
Mining

cc: Kenneth R. Koch, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

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Catasys, Inc.

11601 Wilshire Boulevard, Suite 1100

Los Angeles, CA 90025

(310) 444-4300

March 20, 2017

VIA EDGAR

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention:

Mr. John Reynolds

Assistant Director

Office of Beverages, Apparel, and Mining

Re:
Catasys, Inc.

Registration Statement on Form S-1

Filed February 10, 2017

File No. 333-216007

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), set forth below are the responses to the comments contained in your letter of February 28, 2017 addressed to Mr. Terren S. Peizer, the Company’s Chief Executive Officer, regarding the Company’s Registration Statement on Form S-1 (333-216007) (the “Registration Statement”). For the convenience of the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”), the text of the comments is reproduced in its entirety in boldface immediately preceding the Company’s responses in ordinary typeface.

General

1.

We note that you have not filed a proxy or information statement regarding an annual meeting for a significant period of time. We also note that there appears to be significant unaffiliated ownership of your common stock and your common shares are traded on the OTCQB, but you do not appear to have historically held annual meetings of shareholders despite the provisions of your governing documents and your disclosure about the expiration of the director’s terms on page 49 of the Form S-1. Please advise us whether you are relying on a provision of state law for not holding annual meetings and, if so, which provision. To the extent that you have failed to comply with state law, your governing documents or the proxy rules, please include adequate disclosure about the failure to comply, any consequences of such failure and the steps you intend to take, if any, to remedy such defects. Also specifically provide updated disclosure of the estimated timing of future annual meetings.

Response:

The Company’s Certificate of Incorporation does not contain any provision requiring the Company to hold an annual meeting. Section 2.1 of the Company’s By-Laws provides that an annual meeting shall be held each year on a date and at a time designated by the Company’s Board of Directors.

Section 211(b) of the Delaware General Corporation Law (the “DGCL”) provides for an annual meeting of stockholders to be held for the election of directors. Section 211(c) of the DGCL provides that if there is a failure to hold the annual meeting for a period of 13 months after the latest to occur of the organization of the corporation, its last annual meeting or last action by written consent to elect directors in lieu of an annual meeting, the Delaware Court of Chancery may order a meeting to be held upon the application of any stockholder or director. Section 211(c) of the DGCL also provides that the failure to hold an annual meeting shall not affect otherwise valid corporate acts or result in a forfeiture or dissolution of the corporation. To the Company’s knowledge, no stockholder or director has requested the Company’s management to hold such an annual meeting and no stockholder or director has applied to the Delaware Court of Chancery seeking an order directing the Company to hold a meeting.

We have not held regular annual meetings in the past because a substantial majority of our stock is owned by a small number of stockholders, making it easy to obtain written consent in lieu of a meeting when necessary, and we have mailed to the stockholders the information statement required by Regulation 14C under the Securities Exchange Act of 1934, as amended, when and as applicable. In light of our historical liquidity constraints, handling matters by written consent has allowed the Company to save on the financial and administrative resources required to prepare for and hold such annual meetings. Absent an order by the Delaware Court of Chancery obtained pursuant to Section 211(c) of the DGCL, we believe that no material consequence has resulted from the Company’s failure to hold regular annual meetings.

We have revised the Registration Statement to include disclosure concerning our failure to conduct regular annual meetings, as well as our intention to hold regular annual meetings in the future and the estimated timing thereof. Additionally, we have applied to list our common stock on The Nasdaq Capital Market and expect that our common stock will be listed on The Nasdaq Capital Market prior to the completion of the offering contemplated by the Registration Statement. Pursuant to Nasdaq’s corporate governance requirements, the Company will be obligated to hold regular annual meetings in the future.

2.

Please revise your disclosure to provide the names of the lead or managing underwriters in your next amendment and to provide a brief description of the nature of the underwriting arrangements. Please note that we will defer further review of any amendment to your registration statement that does not include the names of the lead or managing underwriters. Please refer to item 501(b)(8) of Regulation S-K.

Response:

We have revised the Registration Statement in response to the Staff’s comment.

Closing Comments

In connection with the foregoing responses of the Company to your comments, the Company acknowledges that:

●

the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

●

Staff comments or changes to disclosure in response to Staff comments do not foreclose the Company from taking any action with respect to the filing; and

●

the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any questions or require any additional information, please do not hesitate to contact the undersigned at the number indicated above or Kenneth R. Koch, Esq. of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. at (212) 692-6768.

Yours truly,

CATASYS, INC.

Per:     /s/ Terren S. Peizer

           Terrey S. Peizer

           Chief Executive Officer

Mail Stop 3561
February 28, 2017

Via E -mail
Terren S. Peizer
Chief Executive Officer
Catasys, Inc.
601 Wilshire Boulevard, Suite 1100
Los Angeles, CA  90025

Re: Catasys, Inc.
  Registration Statement on Form S-1
Filed  February 10, 2017
  File No.  333-216007

Dear Mr. Peizer :

We have limited our review of your 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 amending your registration statement and providing the
requested information .  If you do not believe our com ments 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 registration statement and the information you
provide in response to these  comments, w e may have  additional comments.

General

1. We note that you have not filed a proxy or information statement regarding an annual
meeting for a significant period of time. We also note that there appears to be significant
unaffiliated ownership of your comm on stock and your common shares are traded on the
OTCQB, but you do not appear to have historically held annual meetings of shareholders
despite the provisions of your governing documents and your disclosure about the expiration
of the director’s terms on page 49 of the Form S -1. Please advise us whether you are relying
on a provision of state law for not holding annual meetings and, if so, which provision. To
the extent that you have failed to comply with state law, your governing documents or the
proxy ru les, please include adequate disclosure about the failure to comply, any
consequences of such failure and the steps you intend to take, if any, to remedy such defects.
Also specifically provide updated disclosure of the estimated timing of future annual
meetings.

Terren S. Peizer
Catasys, Inc.
February 28, 2017
Page 2

2. Please revise your disclosure to provide the names of the lead or managing underwriters
in your next amendment and to provide a brief description of the nature of the
underwriting arrangements. Please note that we will defer further review of any
amendment to your registration statement that does not include the names of the lead or
managing underwriters. Please refer to item 501(b)(8) of Regulation S -K.

We remind you that the company and its management are responsible for the accuracy
and adequ acy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.

Refer to Rules 460 and 461 regarding requests for  acceleration .  Please allow adequate
time for us to review any amendment prior to the requested effective date of the registration
statement.

Please contact Jonathan Burr  at (202) 551 -5833 or David Link  at (202) 551 -3356 with
any questions.

Sincerely,

 /s/ David Link for

 John Reynolds
Assistant Director
Office of Beverages, Apparel, and
Mining

cc: Kenneth R. Koch, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

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CATASYS, INC.

11150 Santa Monica Boulevard, Suite 1500

Los Angeles, California 90025

November 29, 2011

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C.  20549

Attention: John Reynolds, Esq.

RE:
Catasys, Inc.

Amendment No. 5 to the Registration Statement on

Form S-1 (Registration No. 333-173659)

Acceleration Request

Dear Mr. Reynolds:

Pursuant to Rule 461 of the Rules and Regulations promulgated under the Securities Act of 1933, as amended, Catasys, Inc. (the “Company”) hereby respectfully requests that the effectiveness of the above-captioned Amendment No. 5 to the Registration Statement on Form S-1 be accelerated to Thursday, December 1, 2011, at 9:30 a.m. Eastern Time, or as soon as practicable thereafter.

The Company acknowledges that:

●

should the Securities and Exchange Commission (the “Commission”) or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the 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 the disclosure in the filing; and

●

the Company may not assert staff comments and 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.

The cooperation of the staff in meeting the timetable described above is very much appreciated.

Any questions regarding this request should be addressed to Priya Agrawal, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., at (212) 692-6708.

Very truly yours,

Catasys, Inc.

    /s/ Terren S. Peizer

By: Terren S. Peizer

Its:  Chief Executive Officer

cc:           Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Priya Agrawal, Esq.

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As of November 2, 2011, we are in contact with organizations representing 12.3 million covered lives.  We consider the process to have moved to a second stage when we are asked to perform data analysis for the prospect organization.  We are currently in the data analysis phase or further with organizations representing 4.4 million covered lives.  As noted in more detail below, the fact that we have moved into the second phase or beyond with a prospect organization provides no assurance that we will ultimately enter into a contract with such prospect.  Even if contracts are entered into with such organizations, there is no assurance that a substantial number, or even a
significant number, of their covered lives would enroll in our programs  The sales cycle with respect to the execution of such contracts is a fairly long one and organizations may decide to not move forward at any time and we may remove an organization from the pipeline if we feel that we are not making continued significant progress towards a contract or that our limited sales resources are better employed on other prospects.  Even if we advance to what we may consider to be the final stages, including contract negotiations, things may happen to prevent the execution of such contracts.

We currently have contracts with organizations covering approximately 520,000 lives.  We estimate that in order for us to break even on a cash flow basis, we will need to have contracts with organizations covering approximately 1,500,000 lives.  Based on projected enrollment rates this would be expected to result in having approximately 1,500 enrollees at full projected enrollment which is expected no less than a year after enrollment commences.  This assumption is based on our generating our current standard pricing of $8,500 in annual fees per enrollee in the form of monthly fees or combination of fees and share of savings, which is consistent with current contracted
arrangements.  Our assumptions on costs are based largely on our historical costs to date.  However, due to the limited amount of history that we have had with enrollees (less than a full year) it is uncertain whether our experience to date will necessarily be predictive of the actual costs in the future.  Accordingly, any reduction in fees, the inability to generate incentive fees based on reducing members’ overall costs, or increase in the cost of services could adversely impact these break-even projections.  In addition, should our overhead unrelated to the cost of servicing enrollees increase, our break-even point would also be adversely impacted.  For example, an increase in our marketing and promotional budget in an effort to accelerate the contract enrollment process or higher than expected costs to build our provider networks and such similar
expenses could adversely impact the break-even projections.  There is no assurance that we will ever generate enough fees to generate a positive cash flow.  See “Risks related to our business” for more information.

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As of November 2, 2011, the Company is in contract with organizations representing 12.3 million covered lives and has had advanced discussions with organizations representing 4.4 million covered lives.  Even if contracts are entered into with such organizations, there is no assurance that a substantial number, or even a significant number, of their covered lives would enroll in our programs.  In addition, the fact that we have made contact with organizations or even moved into a second phase with them provides no assurance that we will execute contracts with such organizations.  The sales cycle with respect to the execution of such contracts is a fairly long one and organizations may decide to not move forward at any time and we may remove an organization from the pipeline if we determine they are not progressing quickly enough.  Even if we advance to what we may consider to be the final stages, things may happen to prevent the execution of such contracts.

We estimate that in order for us to break even on a cash flow basis, we will need to have contracts with organizations covering approximately 1,500,000 lives.  Based on projected enrollment rates this would be expected to result in having approximately 1,500 enrollees at full projected enrollment which is expected no less than a year after enrollment commences.  This assumption is based on our generating our current standard pricing of $8,500 in annual fees per enrollee in the form of monthly fees or combination of fees and share of savings, which is consistent with current contracted arrangements.  Our assumptions on costs are based largely on our historical costs to date.  However, due to the limited amount of history that we have had with enrollees (less than a full year) it is uncertain whether our experience to date will necessarily be predictive of the actual costs in the future.  Accordingly, any reduction in fees, the inability to generate incentive fees based on reducing members’ overall costs, or increase in the cost of services could adversely impact these break-even projections.  In addition, should our overhead unrelated to the cost of servicing enrollees increase, our break-even point would also be adversely impacted.  For example, an increase in our marketing and promotional budget in an effort to accelerate the contract enrollment process or higher than expected costs to build our provider networks and such similar expenses could adversely impact the break-even projections.  There is no assurance that we will ever generate enough fees to generate a positive cash flow.  See “Risks related to our business” for more information.

November 1, 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. 4 to Registration Statement on Form S-1
                Filed October 11, 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. 4 to Registration Statement on Form S-1

1. We note your letter dated October 21, 2011 and your response to comment three of
our letter dated October 19, 2011.  Please amend your registration statement to
specifically discuss the information in your  slides regarding a pproximate breakeven
coverage and sales pipeline, with a thorough discussion of the underlying
assumptions and the basis for such assumptions. We may have further comment.

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.

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

Terren S. Peizer
Catasys, Inc. November 1, 2011 Page 2
 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

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Kenneth R. Koch | 212 692 6768 | krkoch@mintz.com

Chrysler Center

666 Third Avenue

New York, NY  10017

212-935-3000

212-983-3115 fax

www.mintz.com

October 21, 2011

John Reynolds, Assistant Director

Division of Corporate Finance

U.S. Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

Re:

Catasys, Inc.

Amendment No. 4 to Registration Statement on Form S-1

Filed on October 11, 2011

File No. 333-173659

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), we are hereby responding to the comments given by letter (the “Comment Letter”) dated October 19, 2011 by the Securities and Exchange Commission (the “Commission”).  We are filing these responses in connection with Amendment No. 4 (“Amendment No. 4”) to the Company’s Registration Statement on Form S-1, filed October 11, 2011 (the “Registration Statement”). The responses are numbered to correspond to the comments set forth in the Comment Letter, which, for convenience, we have incorporated into this response letter, and are based upon information provided to Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C. by the Company.

Amendment No. 4 to Registration Statement on Form S-1

1.

We have reviewed the letter submitted to us on October 13, 2011 and note your reference to “factual information about the Company that has been released in the Company’s ordinary course of business” in response to comment one of our letter dated October 3, 2011.  It is unclear whether you are attempting to rely on Rule 168 under the Securities Act of 1933.  Please advise.  If you are relying on Rule 168, please provide us with a detailed analysis supporting such reliance.

Response:

In the Company’s response to comment one of your letter dated October 3, 2011, it was not attempting to rely on Rule 168 of the Securities Act.  It is the Company’s understanding that, during the “waiting period” between when a registration statement is filed and when it goes effective, oral communications and real-time communications to a live audience, such as the Company’s presentation at the Rodman & Renshaw, LLC conference on September 13, 2011 (the “Company Presentation”), are permitted and do not violate “gun-jumping” restrictions.  The Company understands that written communications are generally not permissible and
may require the filing of free writing prospectuses, and that in any event the Company would remain subject to other applicable laws and regulations.  The Company further notes that it has made an investor presentation similar to the Company Presentation each year at the Rodman & Renshaw, LLC annual conference for the last five years.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Boston | Washington | New York | Stamford | Los Angeles | Palo Alto | San Diego | London

2.

In this regard, please also advise us of the timing, manner and content of your disclosures made in the “ordinary course of business.” We are unable to locate such past disclosure.

Response:

The Company has consistently maintained an investor presentation on its website over the past several years, and the updated Company Presentation has specifically been publicly available on the Company’s website at www.catasyshealth.com since July 2011.

3.

We note your statements that the information in the presentation is “consistent” with the information in the registration statement.  Please advise us of the location of such information in the registration statement.  For example, we note (a) slides eight and 24 of the presentation titled “A Health Plan Solution to the High Cost of Substance Abuse” where you discuss your approximate break-even coverage and sales pipeline; (b) your statement on slide 12 that you have no direct competition;” and (c) your statement on slide 24 that you are “moving to profitability in 2012.”

Response:

The Company submits that the information in the Company Presentation is consistent with the Registration Statement as described below.

With respect to slides eight and 24 of the presentation where the Company discusses its approximate break-even coverage and sales pipeline, the break-even coverage could be approximated from the business model in the presentation of $8.50 of projected revenue from each covered life and cash expenditures from ongoing operations of approximately $450,000 per month (under “Cash Flow” on page 40 of the Registration Statement).  The sales pipeline is presented as an illustrative point as to where the Company expects growth to come from and the potential opportunity for its business, consistent with the statements in the Registration
Statement that its strategy is to achieve profitability through expanding the number of contracts it has with health insurance payors.  The Company has stated in its past public filings with the Commission that it expects to sign additional agreements, and in fact signed another agreement in September as is indicated in the Registration Statement.

With respect to slide 12 titled “no direct competition,” the Company notes that this title only refers to “direct” competition, and that in the context of the other text and bullets on such slide is consistent with the disclosure in the Registration Statement, and the Company further refers the Commission to the following relevant disclosure in the Registration Statement:

(a)           Page 22 of the Registration Statement: “We believe OnTrak is the only program of its kind dedicated exclusively to substance dependence. The OnTrak substance dependence program was developed by addiction experts with years of clinical experience in the substance dependence field. This experience has helped to form key areas of expertise that sets Catasys apart from other solutions, including member engagement, working directly with the member treatment team and a more fully integrated treatment offering.”

(b)           Page 26 of the Registration Statement: “Our OnTrak product offering focuses primarily on substance dependence and is marketed to health plans, employers and unions. While we believe our products and services are unique, we operate in highly competitive markets. We compete with other healthcare management service organizations, including managed behavioral health organizations (MBHOs) that manage behavioral health benefits, perform utilization reviews, provide case management and pay their network of providers for behavioral health services delivered. Most of our competitors
are significantly larger and have greater financial, marketing and other resources than us. In addition, customers that are managed care companies may seek to provide similar specialty healthcare services directly to their members, rather than by contracting with us for such services.  Behavioral health conditions, including substance dependence, are typically managed for insurance companies by internal divisions or third-parties (MBHOs) frequently under capitated arrangements.  Under such arrangements, MBHOs are paid a fixed monthly fee and must pay providers for provided services, which gives such entities an incentive to decrease cost and utilization of services by members.  We compete to differentiate our integrated program for high utilizing substance dependence members from the population of utilization management programs that MBHOs offer.  We
believe that our ability to offer customers a comprehensive and integrated substance dependence solution, including the utilization of innovative medical and psychosocial treatments, and our unique technology platform will enable us to compete effectively.  However, there can be no assurance that we will not encounter more effective competition in the future, which would limit our ability to maintain or increase our business.”

With respect to slide 24 titled “moving to profitability in 2012,” the title must be read in the context of the slide.  The Company’s believes that there is a path to profitability through the pipeline, which is the issue that the slide is addressing.  The Company states throughout the Registration Statement, and in particular in the section titled “Our Business,” that its strategy is to enter into additional agreements for its services and addresses the agreements that it has entered into to date.

4.

We note the statement that the authors of the articles were not “compensated” or “affiliated” with the company.  Please confirm, if true, that you did not provide the relevant information to them.

Response:

The Company confirms that the relevant information was not provided to the authors of the articles.  The September 29, 2011 article appears to have been derived from the September 22, 2011 article, which also covered a number of other companies that presented at the Rodman & Renshaw, LLC in September 2011, and included a number of negative comments about the Company such as “Catasys has found it incredibly difficult to get off the starting block with previous versions of their medical treatment approach” and “the stock was a dog for long-time shareholders,” and where the overall sense of the article was that the
Company has failed to deliver before and investors would need to wait and see if it delivers this time.

The Company acknowledges the Staff’s references regarding requests for acceleration of the Registration Statement, including Rules 460 and 461.  The Company will include the requested acknowledgments and will provide the Staff with adequate time after the filing of any amendment for further review before submitting a request for acceleration.

In conclusion, on behalf of the Company, we wish to remind the Staff of the exigent financial circumstances of the Company which have been previously disclosed.  We appreciate the time and effort of the staff thus far and respectfully request your continued prompt attention to this filing.  We stand ready to discuss any concerns the Staff may have. Please call the undersigned at (212) 692-6768 or Priya Agrawal at (212) 692-6708 with any comments or questions and please send a copy of any written comments to the undersigned at the following address:

Kenneth R. Koch, Esq.

Mintz, Levin, Cohn, Ferris,

Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Phone: (212) 692-6768

Fax: (212) 983-3115

Very truly yours,

     /s/     Kenneth R. Koch

October 19, 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. 4 to Registration Statement on Form S-1
                Filed October 11, 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. 4 to Registration Statement on Form S-1

1. We have reviewed the letter submitted to us on October 13, 2011 and note your
reference to “factual information about the Company that has been released in the
Company’s ordinary course of business” in  response to comment one of our letter
dated October 3, 2011.  It is unclear whethe r you are attempting to  rely on Rule 168
under the Securities Act of 1933.  Please advise.  If you are relying on Rule 168,
please provide us with a detailed an alysis supporting such reliance.

2. In this regard, please also advise us of the timing, manner and content of your
disclosures made in the “ordinary course of  business.”  We are unable to locate such
past disclosure.

3. We note your statements that the informati on in the presentation is “consistent” with
the information in the registration statement.  Please advise us of the location of such
information in the registration statement.  For example, we note (a) slides eight and
24 of the presentation titled “A Health Plan  Solution to the High Cost of Substance
Abuse” where you discuss your approximate br eak-even coverage and sales pipeline;

Terren S. Peizer
Catasys, Inc. October 19, 2011 Page 2
 (b) your statement on slide 12 that you have no direct competition;” and (c) your
statement on slide 24 that you are “movi ng to profitability in 2012.”

4. We note the statement that th e authors of the articles were not “compensated” or
“affiliated” with the company.  Please confir m, if true, that you did not provide the
relevant information to them.

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 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

CORRESP
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October 7, 2011

John Reynolds, Assistant Director

Division of Corporate Finance

U.S. Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

Re:

Catasys, Inc.

Amendment No. 3 to Registration Statement on Form S-1

Filed on September 23, 2011

File No. 333-173659

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), we are hereby responding to the comments given by letter (the “Comment Letter”) dated October 3, 2011 by the Securities and Exchange Commission (the “Commission”).  We are filing these responses in connection with Amendment No. 4 (“Amendment No. 4”) to the Company’s Registration Statement on Form S-1, filed October 7, 2011 (the “Registration Statement”). The responses are numbered to correspond to the comments set forth in the Comment Letter, which, for convenience, we have incorporated into this response letter, and are based upon information provided to Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C. by the Company.

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 participation in a conference hosted by the underwriter in this offering. For example, we note, in addition to the presentation slides, statements regarding “reach[ing] profitability in 2012” in a MarketWatch article dated September 29, 2011 (http://www.marketwatch.com/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 Section 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.

Response:

The Company respectfully submits that the statements attributed to the Company’s officers that are cited in the Commission’s comment did not constitute offers under Section 2(a)(3) of the Securities Act of 1933, as amended (the “Securities Act”).  Section 2(a)(3) defines an “offer to sell” as including “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.”  The Company believes that the statements made during its presentation at the Rodman & Renshaw, LLC conference on September 13, 2011 are consistent with the
information regarding the Company that is included in the prospectus in the Registration Statement, and therefore did not condition the market, and did not constitute offers under Section 2(a)(3) of the Securities Act or a violation of Section 5 of the Securities Act.  The presentation included factual information about the Company that has been released in the Company’s ordinary course of business and is included in the Registration Statement.  No solicitations of offers to buy were made by or on behalf of the Company.  The articles that are cited in the Commission’s comment include calculations made by the authors of such articles, who were not affiliated or compensated in any way with or by the Company; such calculations are not offers under Section 2(a)(3).   The Company also notes that neither its stock price nor its trading
volume changed significantly following the presentation or the publication of the articles cited by the Commission, and further that the trading volume on the days on which the articles appeared were among the lowest in the month of September at 200 shares and 800 shares, respectively, representing less than $500 of trading volume in the aggregate, and that the aggregate trading volumes for the three business days including and after the date the articles appeared were 2,300 and  4,900, respectively, representing less than $1,000 and less than $1,600 in aggregate volume.  The Company also notes that such volume is significantly below the average daily trading volume of 9,797 shares.  The nominal trading volume is further evidence that offers were not made and the market not conditioned by such information.

The Offering, page 3

2.

We note that you continue to include several blanks in this section despite having provided such information elsewhere in the prospectus.  Please revise 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.

Response:

The Company has filed Amendment No. 4 to provide the disclosure requested.

The Company acknowledges the Staff’s references regarding requests for acceleration of the Registration Statement, including Rules 460 and 461.  The Company will include the requested acknowledgments and will provide the Staff with adequate time after the filing of any amendment for further review before submitting a request for acceleration.

In conclusion, on behalf of the Company, we wish to remind the Staff of the exigent financial circumstances of the Company which have been previously disclosed.  We appreciate the time and effort of the staff thus far and respectfully request your continued prompt attention to this filing.  We stand ready to discuss any concerns the Staff may have. Please call the undersigned at (212) 692-6768 or Priya Agrawal at (212) 692-6708 with any comments or questions and please send a copy of any written comments to the undersigned at the following address:

Kenneth R. Koch, Esq.

Mintz, Levin, Cohn, Ferris,

Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Phone: (212) 692-6768

Fax: (212) 983-3115

Very truly yours,

 /s/     Kenneth R. Koch

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

CORRESP
1
filename1.htm

    catasys_corr-092211.htm

Kenneth R. Koch | 212 692 6768 | krkoch@mintz.com

Chrysler Center

666 Third Avenue

New York, NY  10017

212-935-3000

212-983-3115 fax

www.mintz.com

September 23, 2011

John Reynolds, Assistant Director

Division of Corporate Finance

U.S. Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

Re:

Catasys, Inc.

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

Filed on July 22, 2011

File No. 333-173659

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), we are hereby responding to the comments given by letter (the “Comment Letter”) dated September 21, 2011 by the Securities and Exchange Commission (the “Commission”). The responses are numbered to correspond to the comments set forth in the Comment Letter, which, for convenience, we have incorporated into this response letter, and are based upon information provided to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. by the Company.

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

General

  1.

Prior to requesting acceleration of effectiveness 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 review and has no concerns regarding the proposed underwriting arrangements.

Response:

Prior to requesting acceleration of effectiveness of the registration, we confirm that the staff of the Commission (the “Staff”) will receive a copy of a letter or a phone call from FINRA stating that FINRA has finished its review and has no concerns regarding the proposed underwriting arrangements.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Boston | Washington | New York | Stamford | Los Angeles | Palo Alto | San Diego | London

Prospectus Cover Page

  2.

Please revise the disclosure on the prospectus cover page and under Plan of Distribution to clarify that once the offering price has been determined, the common stock offering price and warrant exercise price will remain fixed for the duration of the offering.

Response:

The Company has revised the disclosure on the prospectus cover page and under “Plan of Distribution” in response to the Commission’s comment to include a sentence that once the offering price has been determined, the common stock offering price and warrant 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 first and second sets of brackets in the first 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.

Response:

The Company has revised the disclosure in the first paragraph of the prospectus cover page to include a maximum number of shares and warrants that will be offered in the offering.

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 factors considered in determining 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 should also address the extent to which the offering price would reflect unusual trading prices. In this regard we note a recent trading price of over
$12.00.

Response:

The Company has revised the disclosure in “Plan of Distribution” to reflect the Commission’s comments. In determining the offering price for the shares of common stock and warrants, and the exercise price of the warrants, the Company will consider a number of factors including, but not limited to, the current market price of our common stock, trading prices of our common stock over a period of time, the illiquidity and volatility of our common stock and current economic and market conditions. The Company does not anticipate that the offering price will reflect unusual trading prices. The Company is unaware of any recent trading
price of over $12.00. The last reported price over $12.00 (on a split adjusted basis) that the Company is aware of occurred in 2010.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Boston | Washington | New York | Stamford | Los Angeles | Palo Alto | San Diego | London

  5.

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

Response:

The Company has revised the disclosure to provide the underwriter’s compensation.

Exhibits

  6.

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

Response:

The Company has filed the exhibits required by Item 601(b)(101) of Regulation S-K.

The Company acknowledges the Staff’s references regarding requests for acceleration of the Registration Statement, including Rules 460 and 461.  The Company will include the requested acknowledgments and will provide the Staff with adequate time after the filing of any amendment for further review before submitting a request for acceleration.

In conclusion, on behalf of the Company, we wish to remind the Staff of the exigent financial circumstances of the Company which have been previously disclosed.  We appreciate the time and effort of the staff thus far and respectfully request your continued prompt attention to this filing.  We stand ready to discuss any concerns the Staff may have. Please call the undersigned at (212) 692-6768 or Sara Felder at (212) 692-6778 with any comments or questions and please send a copy of any written comments to the undersigned at the following address:

Kenneth R. Koch, Esq.

Mintz, Levin, Cohn, Ferris,

Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Phone: (212) 692-6768

Fax: (212) 983-3115

Very truly yours,

/s/     Kenneth R. Koch

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Boston | Washington | New York | Stamford | Los Angeles | Palo Alto | San Diego | London

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

CORRESP
1
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    catsys_corr-090811.htm

 Kenneth R. Koch | 212 692 6768 | krkoch@mintz.com

Chrysler Center

666 Third Avenue

New York, NY  10017

212-935-3000

212-983-3115 fax

www.mintz.com

September 9, 2011

John Reynolds, Assistant Director

Division of Corporate Finance

U.S. Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

Re:

Catasys, Inc.

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

Filed on July 22, 2011

File No. 333-173659

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), we are hereby responding to the comments given by letter (the “Comment Letter”) dated August 10, 2011 by the Securities and Exchange Commission (the “Commission”). The responses are numbered to correspond to the comments set forth in the Comment Letter, which, for convenience, we have incorporated into this response letter, and are based upon information provided to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. by the Company.

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

1.

We note the revised disclosure on page 16 regarding the determination of the offering price.  Please revise the narrative disclosure on the cover page to disclose the offering price for the duration of the offering and tell us whether you are relying on Rule 430A to omit the actual price and related information.

Response: The Company inadvertently included the revised disclosure on page 16 but it will be relying on Rule 430A to omit the actual price and the related information. The Company has revised the disclosure to reflect this.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Boston | Washington | New York | Stamford | Los Angeles | Palo Alto | San Diego | London

2.

Also, please provide disclosure currently omitted in the first, second and fifth sets of brackets in the first paragraph on the prospectus cover page, assuming you are relying on Rule 430A.

Response: The Company revised the disclosure in the second and fifth brackets in the first paragraph of the prospectus cover page and is omitting the information in the first paragraph in reliance on Rule 430A and based on a conversation with Shehzad Niazi at the Commission. Discussions between the Company and the placement agent have concluded that the number of securities (number of shares and number of warrants at a given price, exercise price, etc.) will only be determined at pricing.  Such information will be filled in and filed pursuant to 424(b).

The Company acknowledges the Staff’s references regarding requests for acceleration of the Registration Statement, including Rules 460 and 461.  The Company will include the requested acknowledgments and will provide the Staff with adequate time after the filing of any amendment for further review before submitting a request for acceleration.

In conclusion, on behalf of the Company, we wish to remind the Staff of the exigent financial circumstances of the Company which have been previously disclosed.  We appreciate the time and effort of the staff thus far and respectfully request your continued prompt attention to this filing.  We stand ready to discuss any concerns the Staff may have. Please call the undersigned at (212) 692-6768 or Sara Felder at (212) 692-6778 with any comments or questions and please send a copy of any written comments to the undersigned at the following address:

Kenneth R. Koch, Esq.

Mintz, Levin, Cohn, Ferris,

Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Phone: (212) 692-6768

Fax: (212) 983-3115

Very truly yours,

/s/     Kenneth R. Koch

August 10, 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 N o. 1 to Registration Statement on Form S-1
                Filed July 22, 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. 1 to Registration Statement on Form S-1

1. We note the revised disclosure on page 16 re garding the determination of the offering
price.  Please revise the narrative disclosure on the cover page to disclose the offering
price for the duration of the offering and te ll us whether you are relying on Rule 430A
to omit the actual price and related information.

2. Also, please provide disclosure currently omitte d in the first, second and fifth sets of
brackets in the first paragraph on the prosp ectus cover page, assu ming you are relying
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.

Terren S. Peizer
Catasys, Inc. August 10, 2011 Page 2
 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 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

CORRESP
1
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    catasys_corr-051211.htm

MINTZ LEVIN

Kenneth R. Koch | 212 692 6768 | krkoch@mintz.com

Chrysler Center

666 Third Avenue

New York, NY  10017

212-935-3000

212-983-3115 fax

www.mintz.com

May 13, 2011

John Reynolds, Assistant Director

Division of Corporate Finance

U.S. Securities and Exchange Commission

100 F Street N.E.

Washington, D.C. 20549

Re:

Catasys, Inc.

Registration Statement on Form S-1

Filed on April 21, 2011

File No. 333-173659

Dear Mr. Reynolds:

On behalf of Catasys, Inc. (the “Company”), we are hereby responding to the comments given by letter (the “Comment Letter”) dated May 11, 2011 by the Securities and Exchange Commission (the “Commission”). The responses are numbered to correspond to the comments set forth in the Comment Letter, which, for convenience, we have incorporated into this response letter, and are based upon information provided to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. by the Company.

Form S-1

Plan of Distribution, page 15

1.

You state on page 15 that you “intend to engage one or more underwriters, broker-dealers or selling agents to sell the securities.” Please confirm that you will file a post-effective amendment with revised disclosure and exhibit under Item 601(b)(1) of Regulation S-K in the event you engage a selling agent.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Boston | Washington | New York | Stamford | Los Angeles | Palo Alto | San Diego | London

Response: The Company confirms that it will file a post-effective amendment with revised disclosure and the corresponding exhibit under Item 601(b)(1) of Regulation S-K in the event that it engages a selling agent.

Signatures

2.

Please include the signature of your controller or principal accounting officer as required by Form S-1.

Response: Peter Donato, Chief Financial Officer of the Company, serves as both the Principal Financial Officer and Principal Accounting Officer. Mr. Donato signed the Registration Statement as Principal Financial Officer and Principal Accounting Officer, but the Company inadvertently failed to include the title of Principal Accounting Officer under his name. The Company will file a post-effective amendment prior to any sales under this Registration Statement with his correct titles.

Form 10-K for Fiscal Year Ended December 31, 2010 General

3.

Please amend your Form 10-K to include a Management’s Annual Report on Internal Control over Financial Reporting that contains an effectiveness conclusion, as required by Item 308(a) of Regulation S-K.

Response: Concurrently with the filing of this response letter, the Company has filed Amendment No.1 to Annual Report on Form 10-K/A to include an effectiveness conclusion.

2

The Company acknowledges the Commission's references regarding requests for acceleration of the Registration Statement, including Rules 460 and 461.  The Company will include the requested acknowledgments and will provide the Commission with adequate time after the filing of any amendment for further review before submitting a request for acceleration.

Please call the undersigned at (212) 692-6768 or Sara Felder at (212) 692-6778 with any comments or questions and please send a copy of any written comments to the undersigned at the following address:

Kenneth R. Koch, Esq.

Mintz, Levin, Cohn, Ferris,

Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Phone: (212) 692-6768

Fax: (212) 983-3115

Very truly yours,

     /s/     Kenneth R. Koch

3

May 11, 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.
                Regi stration Statement on Form S-1
                Filed April 21, 2011                 File No. 333-173659

Dear Mr. Peizer:
We have limited our review of your registra tion 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.

Form S-1

 Plan of Distribution, page 15

 1. You state on page 15 that you “intend to e ngage one or more underwriters, broker-dealers
or selling agents to sell the securities.”  Please confirm that you w ill file a post-effective
amendment with revised disclosure and exhi bit under Item 601(b )(1) of Regulation S-K
in the event you engage a selling agent.
 Signatures

 2. Please include the signature of your controller or principal accounting officer as required
by Form S-1.

Terren S. Peizer
Catasys, Inc. May 11, 2011 Page 2

Form 10-K for Fiscal Year Ended December 31, 2010

 General

 3. Please amend your Form 10-K to include a Management’s Annual Report on Internal
Control over Financial Reporting that contains  an effectiveness conclusion, as required
by Item 308(a) of Regulation S-K.
 Closing Comments

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.

Terren S. Peizer
Catasys, Inc. May 11, 2011 Page 3

    Please contact Janice McGuirk, examiner at (202) 551-3395 or Jim Lopez at (202)
551-3536 with any questions.
Sincerely,
   /s/ James Lopez (for)   John Reynolds,
Assistant Director

June 25, 2010

Terren S. Peizer Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Boulevard, Suite 1500 Los Angeles, California 90025
Re: Hythiam, Inc.
  Amendment No. 4 to Registra tion Statement on Form S-1
Filed June 22, 2010
 File No. 333-166289
 Dear Mr. Peizer:
 We have limited our review of your registra tion 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 amending your registration statement and providing the
requested information.  Where you do not believe 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. 4 to Registration Statement on Form S-1

Prospectus Cover Page

1. We note that you have not provided the in formation required by Item 501(b)(3) of
Regulation S-K.  In particular we draw your attention to Instruction 2 to paragraph
501(b)(3).  Please revise or advise.

2. Please note that the warrant exercise price do es not appear to be Rule 430A information.
Please revise or advise.
 Plan of Distribution, page 19

3. Please revise to provide disclosure responsiv e to Item 505 of Regula tion S-K.  Also, your
revised prospectus should clarify where ap propriate the extent to which the common
stock offer price will not be the same as  the current trading price on the OTC BB.

Terren S. Peizer Hythiam, Inc. June 25, 2010 Page 2

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing incl udes the information the Securities Act of 1933 and
all applicable Securities Act rules require.  Since the company and its management are in
possession of all facts relating 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 acceleration of  the effective date
of the pending registration statement please pr ovide 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 the Co mmission 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 the 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 regarding re quests for acceleration.  We will consider a
written request for acceleration of  the effective date of the regi stration statement as confirmation
of the fact that those reques ting acceleration are aware of thei r respective responsibilities under
the Securities Act of 1933 and the Securities Excha nge Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration stat ement.  Please allow
adequate time for us to review any amendment prior to the requested effective date of the registration statement.
 Please contact Shehzad Niazi at (202) 551-3121 or James Lopez, Legal Branch Chief at
(202) 551-3536 with any questions.
Sincerely,
       John Reynolds
Assistant Director
cc: Glenn D. Smith, Esq.  Fax: (310) 229-1882

CORRESP
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    letter.htm

HYTHIAM, INC.

11150 Santa Monica Boulevard, Suite 1500

Los Angeles, California 90025

(310) 444-4300

June 25, 2010

John Reynolds

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

Re:

Hythiam, Inc.

Registration Statement on Form S-1, as amended

File No. 333-166289

Dear Mr. Reynolds:

Pursuant to Rule 461 under the Securities Act of 1933, as amended (the “Securities Act”), Hythiam, Inc. (the “Company”) hereby respectfully requests that the Securities and Exchange Commission (the “Commission”) accelerate the effectiveness of the above-referenced Registration Statement and declare such Registration Statement effective at 1:00 p.m. (Eastern Time) on Monday, June 28, 2010, or as soon thereafter as practicable.

In connection with this request for acceleration, we acknowledge and agree that:

·

should the Commission or the staff of the Commission (the “Staff”), acting pursuant to delegated authority, declare the filing effective, it does not foreclose the 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 the disclosure in the filing; and

·

the Company may not assert the Staff’s comments and 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.

We understand that the Staff will consider this request as confirmation by the Company of its awareness of its responsibilities under the Securities Act and the Securities Exchange Act of 1934, as amended, as they relate to the proposed public offering of the securities specified in the above Registration Statement.  Please contact Glenn D. Smith, Esq. of Kaye Scholer LLP, our outside special securities counsel at (310) 788-1000, if you have any questions or concerns regarding this matter.

Very truly yours,

HYTHIAM, INC.

By:

/s/ TERREN S. PEIZER

Terren S. Peizer

Chief Executive Officer

June 18, 2010
 Terren S. Peizer Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Boulevard, Suite 1500 Los Angeles, California 90025
Re: Hythiam, Inc.
  Amendments No. 3 to Regist ration Statement on Form S-1
Filed June 14, 2010
  File No. 333-166289

Dear Mr. Peizer:
 We have limited our review of your registra tion 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 amending your registration statement and providing the
requested information.  Where you do not believe 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. 3 to Registration Statement on Form S-1

General

1. We note your response letters dated June 8, 2010 and June 17, 2010, and the statement
that “[t]he number of shares, warrants, warrant terms and other price related data will be
completed when the offering is priced.”  We reissue prior comment one.  As you are not eligible to conduct an at-the-m arket offering, it is unclear ho w you intend to rely on Rule
430A to provide pricing information, or how you intend to comply with Item 501(b) of
Regulation S-K.

2. We note your letter dated June 17, 2010 and the statement with respect to prior comment
two regarding the 30 day offering period.  Revise  to disclose the terms of any agreement,
arrangement, or understanding en tered into with Rodman & Renshaw, including the term

Terren S. Peizer Hythiam, Inc.
June 18, 2010 Page 2
of the arrangement and selling efforts.  Also, it is unclear why you do not provide the
information required by Item 508(e) of Regul ation S-K.  Please revise or advise.

3. With respect to prior comment three and your  statement that you propose to revise the
cover page to state that “The placement agen t is deemed to be an underwriter,” please
revise the cover page to provide the information requi red by Item 501(b)(8)(ii) and
(b)(8)(iii) of Regulation S-K.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing incl udes the information the Securities Act of 1933 and
all applicable Securities Act rules require.  Since the company and its management are in
possession of all facts relating 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 acceleration of  the effective date
of the pending registration statement please pr ovide 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 the Co mmission 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 the 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 regarding re quests for acceleration.  We will consider a
written request for acceleration of  the effective date of the regi stration statement as confirmation
of the fact that those reques ting acceleration are aware of thei r respective responsibilities under
the Securities Act of 1933 and the Securities Excha nge Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration stat ement.  Please allow
adequate time for us to review any amendment prior to the requested effective date of the registration statement.
 Please contact Shehzad Niazi at (202) 551-3121 or James Lopez, Legal Branch Chief at
(202) 551-3536 with any questions.

Terren S. Peizer Hythiam, Inc. June 18, 2010 Page 3
Sincerely,
       John Reynolds
Assistant Director
cc: Glenn D. Smith, Esq.  Fax: (310) 229-1882

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Kaye Scholer LLP

1999 Avenue of the Stars, Suite 1700

Los Angeles, California  90067-6048

310 788-1000

310 788-1200 Fax

www.kayescholer.com

June 17, 2010

John Reynolds

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C.  20549

Re:

Hythiam, Inc.

Registration Statement on Form S-1

Filed on April 19, 2010

File No. 333-166289

Dear Mr. Reynolds:

Reference is made to the Registration Statement on Form S-1 (the “Registration Statement”) filed by Hythiam, Inc. (the “Company”) on April 19, 2010.  The Company has authorized us to respond to the comments raised by the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in recent correspondence and telephone conversations.

In response to comment number 1 raised in the letter from the Staff, dated June 17, 2010, pursuant to Rule 430A the Company “may omit information with respect to ... other items dependent upon the offering price....”  Discussions between the Company and the placement agent have concluded that the number of securities (number of shares and number of warrants at a given price, exercise price, etc.) will only be determined at pricing.  Such information will be filled in and filed pursuant to 424(b).  We note that this format and approach was previously used by Access Pharmaceuticals on Form S-1 (File No. 333-162687).  The Company will add to the cover page the principal amount of securities being registered for sale, which the Company believes satisfies the concerns raised by your reference to Regulation S-K, Item 501(b) and Securities Act Rules Compliance and Disclosure Interpretation 227.02.

In response to comment number 2, the Company anticipates, following discussions with the placement agent, that the offering will be concluded within 30 days.  However, to avoid any concerns that the offering will continue beyond 30 days, the Company will check the box for a continuous offering pursuant to Regulation C, Rule 415(a)(ix).

In response to comment number 3, the Company will revise the Plan of Distribution to state the placement agent “is deemed an underwriter.”  The Company also proposes to add to the cover page, where the placement agent is currently identified, the following statement, “The placement agent is deemed to be an underwriter.”

In conclusion, on behalf of the Company, we wish to remind the Staff of the exigent financial circumstances of the Company which have been previously disclosed.  We appreciate the time and effort of the staff thus far and respectfully request your continued prompt attention to this filing.  We stand ready to discuss any concerns the Staff may have.

We hope that this letter is responsive to your comments and resolves all open issues.  If you have questions or require further information, please feel free to call me.

Sincerely,

/s/ GLENN D. SMITH, ESQ.

Glenn D. Smith, Esq.

KAYE SCHOLER LLP

GDS:rb

June 17, 2010

Terren S. Peizer Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Boulevard, Suite 1500 Los Angeles, California 90025
Re: Hythiam, Inc.
  Amendments No. 2 and No. 3 to Registration Statement on Form S-1
Filed June 8, 2010 and June 14, 2010
  File No. 333-166289

Dear Mr. Peizer:
 We have limited our review of your registra tion 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 amending your registration statement and providing the
requested information.  Where you do not believe 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. 3 to Registration Statement on Form S-1

General

1. We note your response letter date d June 8, 2010 and the statemen t that “[t]he number of
shares, warrants, warrant terms and other pri ce related data will be completed when the
offering is priced.” It is unc lear how and when you intend to fill in the blanks for such
information on the cover page.  See Item 501(b) of Regulation S-K.  It  is also unclear if
or how you intend to use Rule 430A to provide  pricing information. In this regard, we
note that you omit, among other information, the principal amount of securities to be
offered.  Please see Securities Act Rules Compliance and Disclosure Interpretation
227.02.

2. Also, we note the statement on the revised pr ospectus cover page that you “are not
required to sell any specific dollar amount or  number of shares of common stock or
warrants, but will use [y]our best efforts to sell all of the shares of common stock and

Terren S. Peizer Hythiam, Inc.
June 17, 2010 Page 2

warrants being offered.”  We also note that  the registration statement cover page no
longer identifies the offering as being conducted using Rule 415.  Please advise us if you
are conducting an offering under Item  415(a)(ix) of Regulation C.

Plan of Distribution, page 19

3. We note your statement in the third paragraph of this section that the placement agent
“may be deemed an underwriter.”  Please revise  your registration statement to clarify that
the placement agent is an unde rwriter within the meaning of  Section 2(a)(11) of the
Securities Act.   Furthermore, identify such underwriter on the outside front cover page of the prospectus.  See Item 501(b)(8) of Regulation S-K.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing incl udes the information the Securities Act of 1933 and
all applicable Securities Act rules require.  Since the company and its management are in
possession of all facts relating 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 acceleration of  the effective date
of the pending registration statement please pr ovide 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 the Co mmission 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 the 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 regarding re quests for acceleration.  We will consider a
written request for acceleration of  the effective date of the regi stration statement as confirmation
of the fact that those reques ting acceleration are aware of thei r respective responsibilities under
the Securities Act of 1933 and the Securities Excha nge Act of 1934 as they relate to the proposed
public offering of the securities specified in the above registration stat ement.  Please allow
adequate time for us to review any amendment prior to the requested effective date of the registration statement.
 Please contact Shehzad Niazi at (202) 551-3121 or James Lopez, Legal Branch Chief at
(202) 551-3536 with any questions.

Terren S. Peizer Hythiam, Inc. June 17, 2010 Page 3

Sincerely,
       John Reynolds
Assistant Director
cc: Glenn D. Smith, Esq.  Fax: (310) 229-1882

Mail Stop 3561
May 18, 2010
 Terren S. Peizer Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Boulevard, Suite 1500 Los Angeles, California 90025
Re: Hythiam, Inc.
  Amendment No. 1 to Registra tion Statement on Form S-1
Filed May 17, 2010
  File No. 333-166289

Dear Mr. Peizer:

We have reviewed your amended filing and have the following comments.
Where indicated, we think you should revise  your document in response to these
comments.  If you disagree, we will consider your explanation as to why our comment is
inapplicable or a revision is unnecessary.  Pl ease be as detailed as necessary in your
explanation.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.  After reviewing this information, we may
raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

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

General

1. We note your response to comment one of  our letter dated May 13, 2010 and we
reissue the comment.  Despite your amendm ent to remove the debt securities and
units from the offering, you still appear  to be conducting an unallocated shelf
offering of securities for up to $8 million.  It remains unclear under which subpart
of General Instruction I.B. to Form  S-3 you are relying on to conduct this
offering.  In this regard, we note that  your market capitalization and trading

Mr. Terren S. Peizer
Hythiam, Inc.
May 18, 2010 Page 2
market, as disclosed on the cover page of your Form 10-K for the period ended
December 31, 2009, appear to disqualify you from eligibility under General Instruction I.B.1 and Genera l Instruction I.B .6, respectively.  Please explain how
you are qualified to conduct this offering.

As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your amendmen t and responses to our comments.
 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Act of 1933 and that they have  provided all information investors require
for an informed investment decision.  Since the company and its management are in possession of all facts relating to a company’ s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
Notwithstanding our comments, in the even t the company request s acceleration of
the effective date of the pending registration statement, it should furnish a letter, at the time of such request, 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 the 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.
  In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in connection
with our review of your filing or in response to our comments on your filing.
We will consider a written request for acceleration of the effective date of the
registration statement as conf irmation of the fact that t hose requesting acceleration are
aware of their respective re sponsibilities under the S ecurities Act of 1933 and the

Mr. Terren S. Peizer
Hythiam, Inc. May 18, 2010 Page 3

Securities Exchange Act of 1934 as they rela te to the proposed public offering of the
securities specified in the above registration statement.  We will act  on the request and,
pursuant to delegated authority, grant acce leration of the effective date.
We direct your attention to Rules 46 0 and 461 regarding requesting acceleration
of a registration statement.  Please allow ad equate time after the filing of any amendment
for further review before submitting a request for acceleration.  Please provide this request at least two business days in a dvance of the requested effective date.
 Please contact Shehzad Niazi at (202) 551-3121 or James Lopez, Legal Branch
Chief, at (202) 551-3536 with any other questions.

     S i n c e r e l y ,           John Reynolds      A s s i s t a n t  D i r e c t o r

 cc: Glenn D. Smith, Esq.  Fax: (310) 229-1882

Mail Stop 3561
May 13, 2010
 Terren S. Peizer Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Boulevard, Suite 1500 Los Angeles, California 90025
Re: Hythiam, Inc.
  Registration Statement on Form S-1
Filed April 19, 2010
  File No. 333-166289

Dear Mr. Peizer:

We have limited our review of your filing to those issues we have addressed in
our comments.  Where indicated, we think you should revise your document in response
to these comments.  If you disagree, we w ill consider your explanation as to why our
comment is inapplicable or a revision is unneces sary.  Please be as detailed as necessary
in your explanation.  In some of our comme nts, we may ask you to provide us with
information so we may better understand your  disclosure.  After reviewing this
information, we may raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.
  General

1. We note that you appear to be conducti ng an unallocated shelf offering of
securities for up to $8 million.  However,  it is unclear unde r which subpart of
General Instruction I.B. to Form S-3 you are relying on to conduct this offering.
In this regard, we note your market capita lization and trading market, as disclosed
on the cover page of your Form 10-K for the period ended December 31, 2009.  Please explain how you are qualif ied to conduct this offering.

Mr. Terren S. Peizer
Hythiam, Inc.
May 13, 2010 Page 2
As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your amendmen t and responses to our comments.
 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Act of 1933 and that they have  provided all information investors require
for an informed investment decision.  Since the company and its management are in possession of all facts relating to a company’ s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
Notwithstanding our comments, in the even t the company requests acceleration of
the effective date of the pending registration statement, it should furnish a letter, at the time of such request, 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 the 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.
  In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in connection
with our review of your filing or in response to our comments on your filing.
We will consider a written request for acceleration of the effective date of the
registration statement as conf irmation of the fact that t hose requesting acceleration are
aware of their respective re sponsibilities under the S ecurities Act of 1933 and the
Securities Exchange Act of 1934 as they rela te to the proposed public offering of the
securities specified in the above registration statement.  We will act  on the request and,
pursuant to delegated authority, grant acce leration of the effective date.
We direct your attention to Rules 46 0 and 461 regarding requesting acceleration
of a registration statement.  Please allow ad equate time after the filing of any amendment

Mr. Terren S. Peizer
Hythiam, Inc. May 13, 2010 Page 3

for further review before submitting a request for acceleration.  Please provide this request at least two business days in a dvance of the requested effective date.

Please contact Shehzad Niazi at (202) 551-3121 or James Lopez, Legal Branch
Chief, at (202) 551-3536 with any other questions.

     S i n c e r e l y ,
         John Reynolds      A s s i s t a n t  D i r e c t o r

 cc: Glenn D. Smith, Esq.  Fax: (310) 229-1882

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[HYTHIAM, INC. LETTERHEAD]

September 9, 2009

VIA EDGAR

U.S. Securities and Exchange Commission

Office of Beverages, Apparel and Health Care Services

Mail Stop 3561

Washington, DC 20549

Attn:  John Reynolds, Assistant Director

Re:

Hythiam, Inc.

Registration Statement on Form S-3, filed April 3, 2009

File No. 333-158407

Dear Mr. Reynolds:

Hythiam, Inc. (the "Company") hereby requests acceleration of the effective date of the above-referenced registration statement to 4:00 p.m. Eastern time on Friday, September 11, 2009.

In connection with the above request, the Company hereby acknowledges that:  should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the 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 the disclosure in the filing; and the Company may not assert staff comments and 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.

If the staff has any questions or comments regarding the foregoing or requires additional information, please contact the undersigned at (310) 444-4338.

Very truly yours,

/s/ Maurice Hebert

Maurice Hebert

Chief Financial Officer

cc:  John C. Kirkland, Esq.

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[LUCE FORWARD HAMILTON & SCRIPPS LLP LETTERHEAD]

June 24, 2009

BY EDGAR

United States Securities and Exchange Commission

Office of Beverages, Apparel, and Health Care Services

Mail Stop 3561

Washington, D.C. 20549

Attn: John Williams, Assistant Director

    Re:

    Hythiam, Inc.

Registration Statement on Form S-3, filed April 3, 2009

File No. 333-158407

Dear Mr. Williams:

Further to our letter of June 18, 2009, regarding the above-referenced Registration Statement on
Form S-3 filed on behalf of our client Hythiam, Inc., a Delaware corporation (the “Company”), the
Company will, if necessary, comply with the transaction requirement of General instruction I.B.6(c)
of Form S-3, which requires that the Company have at least one class of common equity securities
listed and registered on a national securities exchange.

***

Please feel free to contact me by telephone at 213.892.4907, fax at 213.452.8035, or email at
jkirkland@luce.com should you have any comments or questions regarding the above.

Very truly yours,

/s/ John C. Kirkland

John C. Kirkland

of

LUCE, FORWARD, HAMILTON & SCRIPPS llp

JCK/lu

cc:    Mr. Maurice Hebert

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    [LUCE
FORWARD HAMILTON & SCRIPPS LLP LETTERHEAD]

    June 18,
2009

    BY
EDGAR

    United
States Securities and Exchange Commission

    Office of
Beverages, Apparel, and Health Care Services

    Mail Stop
3561

    Washington,
D.C. 20549

    Attn:  John
Williams, Assistant Director

              Re:

              Hythiam,
      Inc.

              Registration
      Statement on Form S-3, filed April 3,
2009

              File
      No. 333-158407

    Dear Mr.
Williams:

    On behalf
of our client Hythiam, Inc., a Delaware corporation (the "Company"), we are
responding to your letter of April 22, 2009, regarding the above-referenced
Registration Statement on Form S-3.  The Company’s responses to the
staff’s comments are set forth below.  For convenience, each of the
comments has been duplicated below and is set forth immediately prior to the
corresponding response.

    General

    Comment No.
1

    We note
that the staff of the Division of Corporation Finance currently has outstanding
comments relating to the company's Form 10-K for the fiscal year ended December
31, 2008. All comments relating to the staff's open review of the company's
periodic filing will need to be resolved before effectiveness of the
registration statement.

    RESPONSE

    All open
comments have been resolved.

    Comment No.
2

    We note
your disclosure that the aggregate market value of the company's outstanding
common stock held by non-affiliates as of April 2, 2009 was $11,967,314. We also
note that the company is registering $20 million on its unallocated shelf
offering on Form S-3. Please advise us how the company will comply with the
transaction requirement of General instruction I.B.6(a) of Form S-3. We may have
further comment.

    United
States Securities and Exchange Commission

    June 18,
2009

    Page

    RESPONSE

    The
Company understands and acknowledges that the value of securities that may be
sold pursuant to the registration statement within any 12 month period may be
limited, depending upon the future sales price of the Company’s common
stock.

    In the
event that the aggregate market value of the Company's outstanding common stock
held by non-affiliates is less than $75 million as of a date within 60 days
prior to a future sale, the Company will comply with the transaction requirement
of General instruction I.B.6(a), by limiting the value of securities sold within
any 12 month period to no more than one-third of the aggregate market value of
common equity held by non-affiliates.

    ***

    Please
feel free to contact me by telephone at 213.892.4907, fax at 213.452.8035, or
email at jkirkland@luce.com should you have any comments or questions regarding
the above.

    Very
truly yours,

    /s/  John C.
Kirkland

    John C.
Kirkland

    of

    LUCE,
FORWARD, HAMILTON & SCRIPPS LLP

    JCK/lu

    cc:  Mr.
Maurice Hebert

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        [HYTHIAM,
INC. LETTERHEAD]

      June 18,
2009

      BY
EDGAR

      United
States Securities and Exchange Commission

      Office of
Beverages, Apparel, and Health Care Services

      Mail Stop
3561

      Washington,
D.C. 20549

      Attn:  John
Williams, Assistant Director

                  Re:

                  Hythiam,
      Inc.

                  Registration
      Statement on Form S-3, filed April 3,
2009

                  File
      No. 333-158407

      Dear Mr.
Williams:

      With
regard to the above-referenced registration statement filed by Hythiam, Inc., a
Delaware corporation (the "Company"), with the U.S. Securities and Exchange
Commission (the “Commission”), the Company hereby acknowledges
that:

                ●

                should
      the Commission or the staff, acting pursuant to delegated authority,
      declare the filing effective, it does not foreclose the 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 the
      disclosure in the filing;

                ●

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

      Very
truly yours,

      /s/  Maurice
Hebert

      Maurice
Hebert

      Chief
Financial Officer

      cc:  John
C. Kirkland

Mail Stop 3561        May 11, 2009
Terren S. Peizer President and Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Blvd, Suite 1500 Los Angeles, CA 90025
 Re:       Hythiam, Inc.
  Form 10-K for Fiscal Year Ended December 31, 2007
   Filed March 17, 2008    Form 10-K for Fiscal Year Ended December 31, 2008    Filed March 31, 2009    File No. 001-31932
 Dear Mr. Peizer:   We have completed our review of your Forms 10-K and related filings and have
no further comments at this time.

Sincerely,
   Brian K. Bhandari Branch Chief Office of Beverages, Apparel, and Health Care Services

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    April 29,
2009

    VIA EDGAR
TRANSMISSION

                Securities
      and Exchange Commission

                Division
      of Corporation Finance

                450
      Fifth Street, N.W.

                Washington,
      D.C. 20549

                Attn:
      John Reynolds, Assistant
Director

              Re:

              Hythiam,
      Inc.

              Form
      10-K for Fiscal Year Ended December 31, 2008

              Filed
      March 31, 2009

              File
      No. 001-31932

                Ladies
      and Gentlemen:

    Reference
is made to the letter received by Hythiam, Inc. (the “Company”) from Tia
Jenkins, Senior Assistant Chief Accountant of Office of Beverages, Apparel, and
Health Care Services (the “Staff”), dated April 15, 2009 (the “Comment Letter”)
relating to the Staff’s comments on the 2008 Form 10-K. The Company’s responses
to the Staff’s comments contained in the Comment Letter are set forth below. For
the convenience of the Staff, each of the Staff’s comments has been duplicated
below and is set forth in italics immediately prior to the corresponding
response.

    Form 10-K for Fiscal Year
Ended December 31, 2008

    Management’s Discussion and
Analysis of Financial Condition and Results of Operations

    Healthcare Services, page
36

              1.

              We have reviewed your response
      to our prior comment one, noting that you do not plan on using "cash
      operating expenditure" in future filings.  And if you do decide
      to use a non-GAAP measure you will provide a definition of the measure as
      well as all of the requirements of Item 10(e) of Regulation
      S-K.  We note on page 38 of your Form 10-K filed March 31, 2008
      you disclose cash operating expenditures.  Please revise your
      disclosure to include:

              ●

              a
      definition of how you calculate this
measure,

                ●

              a
      presentation, with equal or greater prominence, of the most directly
      comparable financial measure calculated and presented in accordance with
      GAAP, and

                ●

              a
      reconciliation (by schedule or other clearly understandable method), which
      shall be quantitative for historical non-GAAP measures presented, and
      quantitative for forward-looking information, of the differences between
      the non-GAAP financial measure disclosed with the most directly comparable
      financial measure calculated and presented in accordance with
      GAAP.

    RESPONSE:

    Our
reference to the term “cash operating expenditures” on page 38 within MD&A
was inadvertent. The figures being discussed here represent the amount of
operating expenses that we reduced in our 2009 budget compared to Q3 2008. In
the other two instances that we discuss the actions taken to streamline our
operations within MD&A, on pages 44 & 51, we refer to the GAAP term
“operating expenses”. We plan to correct the error on page 38 and replace the
term “cash operating expenditures” with “operating expenses” by amending our
Form 10-K filing.

                2.

                We note that on page 37 you
      disclose that you plan to incur approximately $400,000 for research and
      development expenses in 2009.  This disclosure appears to be
      inconsistent with your
contractual

        1

              commitments
      for clinical studies of $1,257,000 due in less than one year on page
      55.  Please revise or
advise.

    RESPONSE:

    The
disclosure on page 37 relates to the amount of research and development expense
we expect to incur in
2009, while the amount on page 55 represents the amount of research and
development expense that we expect to pay in cash during 2009. As of December
31, 2008, we had $857,000 of accrued, but unpaid research and development
expense which is expected to be paid during 2009 and accounts for the difference
between the two figures.

    Notes to Consolidated
Financial Statements

    Note 1.  Summary
of Significant Accounting Policies

    Description of Business,
F-8

                3.

                We note that you sold your
      interest in CompCare in January 2009 for $1.5 million, there was
      substantial doubt regarding the ability of CompCare to continue as a going
      concern, and management was considering various strategic alternatives
      including the sale of CompCare during the year ended December 31,
      2008.  Tell us how you considered the guidance in paragraph 30
      of SFAS 144 regarding the reporting and disclosure of assets to be
      disposed of by sale.  Please revise or
      advise.

    RESPONSE:

    According
to paragraph 30 of SFAS 144, all six criteria must be met before a disposal
group can be considered as “held for sale”. At December 31, 2008, we had not met
the first criteria, “management, having the authority to approve the action,
commits to a plan to sell the asset (disposal group)”. Authority to sell
CompCare rested with our board of directors and management did not present the
plan and seek approval to sell CompCare to the board of directors until January
2009.

    Fair Value Measurements,
F-16

                4.

                We note that you have utilized
      an income-based approach to estimate the fair market value of your ARS and
      that the Level III inputs were the most sensitive to determining the
      overall fair value.  You state that the estimated price was
      derived as the present value of the expected cash flows over and estimated
      period of illiquidity, using a risk-adjusted discount
      rate.  Please tell us what period of illiquidity you utilized,
      and what risk adjusted discount rate you used.  If the period of
      illiquidity is greater than 12 months, provide us with qualitative
      information that supports a period greater than 12 months considering your
      auditors have placed substantial doubt on your ability to continue as a
      going concern.  Tell us if the discount rate was adjusted for
      credit risk and liquidity risk of the enterprise and/or the
      securities.  Please disclose whether the fair value was computed
      assuming it is more-likely-than-not that you have to sell these securities
      prior to June 30,
2010.

    Given
your reference to the use of a third-party valuation firm to assist in
determining the fair market value of your ARS, please explain the extent of your
reliance on the third party.

    RESPONSE:

    A term of
5 years was assumed in estimating model prices for the ARS. Model prices were
calculated by the third-party valuation firm using term assumptions of 3-6
years, which it found reasonable to assume, based on its experience and
communications with market participants. Management preferred to assume a term
that was in the upper half of this range, due to uncertainty about the time at
which the principal would be available to investors, and it independently
selected the valuation estimates calculated under the 5-year term assumptions
for use in valuing the ARS portfolio. Additionally, we noted the 5-year term
assumption is consistent with the life of comparable forms of capital
instruments that other student loan issuers with similar credit quality have
issued.

        2

    The term
assumptions, as well as assumptions and inputs to the pricing model, were based
on market-specific data and not on company-specific conditions. The company’s
financial condition is considered irrelevant since it has no impact on the
assumptions market participants would use to value such securities.
Additionally, a longer term assumption produces a lower, more conservative
valuation, which management believes is appropriate given the uncertainties
about the ARS market.

    The
discount rates assumed by the third-party valuation firm in calculating the
model prices ranged from 6.81% to 7.18%, depending on the specific security that
was valued, and reflect the combination of a base rate and an
index-representative spread over the base rate and a security-specific discount
adjustment to account for credit risk and liquidity risk. The discount rates
also reflect an additional 150 basis point adjustment to account for the lack of
ARS marketability. The 150 basis point adjustment was assumed by the third-party
valuation firm, based on their experience and communications with market
participants. The increase in the required rate of return decreases the model
prices of the securities.

    As
mentioned above, the model prices were calculated based on market-specific data
and not on company-specific conditions, so the estimate of how long we can hold
the ARS until we have to sell them was not factored into the estimation
process.

    The third
party valuation firm, Duff & Phelps, was retained to calculate model prices
for three of the eight securities comprising our ARS portfolio using various
term assumptions ranging between 3-6 years. The three securities chosen for
valuation by management were representative of the securities comprising the
portfolio, considering the extent of underlying collateral guaranteed by the
federal government, credit quality and contractual terms. Management decided to
utilize the pricing estimates based on the 5-year term assumption for the three
selected securities and then used the values to extrapolate pricing for the
remaining five securities, based on the extent of underlying collateral
guaranteed by the federal government, credit quality and contractual
terms.

                5.

                We note your table that
      summarizes the fair value measurements using Level III
      inputs.  Your table does not appear consistent with your
      disclosure (i.e. your table discloses a realized gain of $11.5 million and
      an unrealized loss of $1.4 million).  Please
      revise.

    RESPONSE:

    The table
contains inadvertent errors that need to be corrected, by reporting the $11.5
million in “Transfers into Level III” and the $1.4 million in “Net realized
losses”.  We plan to make these corrections with an amended Form 10-K
filing.

    Goodwill, page
F-17

                6.

                We have reviewed your response
      to our prior comment three, noting your statement that the two fair value
      estimates are not directly comparable since they were determined using
      different valuation approaches under different contexts.  Note
      that paragraph 21 of SFAS 142 states that the implied fair value of
      goodwill should be determined in the same manner as the amount of goodwill
      recognized in a business combination.  Therefore, the fair value
      estimate of your reporting unit as of September 30, 2008 needs to be
      determined in a comparable manner with the January 2007 post-acquisition
      fair value estimate.  Please
  advise.

    RESPONSE:

    The
concept of implied fair value of goodwill comes into consideration only as part
of Step 2 of the goodwill impairment test. Step 2 was not necessary to perform
at September 30, 2008 since Step 1 results indicated that the goodwill was
recoverable.

    Additionally,
we do not believe paragraph 21 of SFAS 142 requires us to calculate the fair
value of the healthcare services reporting unit in the same manner that we did
at the acquisition date. The guidance

        3

    only
requires that we allocate whatever fair value that is calculated at the goodwill
impairment test date and determine the implied fair value of the
goodwill in the same manner as we would if we had acquired the reporting unit on
that date.

                7.

                In addition, it appears that
      you changed your methodology for estimating the fair value of a reporting
      unit.  You state that the fair value of the reporting units at
      June 30, 2008 and September 30, 2008 were determined primarily using the
      market approach.  However, you also state that the fair value as
      of December 31, 2008 is based on the income approach.  Please
      tell us and disclose whether you are being consistent in the valuation
      methods used to estimate fair value or if you changed methods, explain how
      the new method provides a better estimate of fair value as well as discuss
      the catalyst for the
change.

    RESPONSE:

    The
company has used the market price of its publicly-traded common stock (and thus
the market capitalization) as an efficient way to approximate the fair value of
the reporting unit for purposes of completing Step 1 of the goodwill impairment
test at each quarter end (including June 30, September 30, and December 31,
2008). Since the market capitalization includes the value of CompCare, we made
an adjustment to exclude the estimated fair value of the behavioral health
managed care reporting unit, which was estimated using quoted market prices of
CompCare’s common stock. We believe that using market capitalization is an
appropriate approach for confirming that Step 1 of the impairment test has been
passed.

    At
December 31, 2008, we failed Step 1 and Step 2 of the goodwill impairment test
was necessary to measure the amount of the impairment loss on goodwill. We
decided to perform a more detailed valuation of the reporting unit, based on the
income approach, as part of the Step 2 test to insure that the measurement was
accurate. This is consistent with the approach that we used to measure the value
of the reporting unit when we initially recorded the goodwill.

    Had we
used the income approach to perform Step 1 of the goodwill impairment test, the
results would not have been any different for any of the reporting periods since
use of this method prior to December 31, 2008 would have produced estimated
values well in excess of the carrying value of the reporting unit. That is, we
would have passed the Step 1 tests for all prior reporting periods, except the
December 31, 2008 reporting date.

                8.

                We note that you recorded $9.8
      million of goodwill as an impairment charge during the fourth
      quarter.  You state that the healthcare services reporting unit
      had been impaired mainly resulting from the decline in the value of the
      reporting unit that arose from the downward re-pricing of risk that
      occurred broadly in the equity markets.  However, you also state
      that the estimated fair value of the healthcare services reporting unit
      was based on an income approach.  Please revise or explain how a
      decline in the equity markets affected the discounted cash flows used to
      compute fair value of your healthcare services reporting
      unit.

    RESPONSE:

    As
discussed in the response to Item 7 above, we used the market price of our
publicly-traded common stock (and thus the market capitalization) to approximate
the fair value of the reporting unit for purposes of completing Step 1 of the
goodwill impairment test at December 31, 2008. The recent decline in the equity
markets resulted in a sharp decline in the values of our reporting unit under
that method and caused us to fail Step 1of the goodwill impairment test,
requiring us to perform Step 2 of the impairment test. We used the income
approach to perform a more detailed valuation of the reporting unit for purposes
of completing Step 2 of the goodwill impairment test to ensure that accurately
determined the amount of goodwill impairment.

        4

    Note
5.  Intangible Assets, F-25

                9.

                We note that you report
      intangible assets subject to amortization of $3,800,000 as of December 31,
      2008, which you have concluded, have not been impaired based on SFAS 144
      testing and the estimated useful
      lives reflect the current remaining economic useful lives of these
      assets.  Please explain how you have determined

Mail Stop 3561
April 22, 2009
 John C. Kirkland Luce Forward Hamilton & Scripps LLP 601 S. Figueroa Street, 39th Floor Los Angeles, CA 90017
Re: Hythiam, Inc.
  Registration Statement on Form S-3
Filed April 3, 2009
  File No. 333-158407

Dear Mr. Kirkland:

We have limited our review of your filing to those issues we have addressed in
our comments.  Where indicated, we think you should revise your document in response
to these comments.  If you disagree, we w ill consider your explanation as to why our
comment is inapplicable or a revision is unneces sary.  Please be as detailed as necessary
in your explanation.  In some of our comme nts, we may ask you to provide us with
information so we may better understand your  disclosure.  After reviewing this
information, we may raise additional comments.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our  comments or any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.
 General

  1. We note that the staff of the Division of Corporation Finance currently has
outstanding comments relating to the comp any’s Form 10-K for the fiscal year
ended December 31, 2008.  All comments re lating to the staff’s open review of
the company’s periodic filing will need to be resolved before effectiveness of the
registration statement.

John C. Kirkland
Hythiam, Inc. April 22, 2009 Page 2   2. We note your disclosure that the aggr egate market value of the company’s
outstanding common stock held by non- affiliates as of April 2, 2009 was
$11,967,314.  We also note that the company is registering $20 million on its unallocated shelf offering on Form S-3.  Please advise us how the company will
comply with the transaction requirement of  General Instruction I.B.6(a) of Form
S-3.  We may have further comment.

* * * * *

As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us w ith marked copies of the amendment to
expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested information.  Detailed cover
letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your amendmen t and responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Act of 1933 and that they have  provided all information investors require
for an informed investment decision.  Since the company and its management are in
possession of all facts relating to a company’ s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
Notwithstanding our comments, in the even t the company requests acceleration of
the effective date of the pending registration statement, it should furnish a letter, at the
time of such request , acknowledging that:

• should the Commission or the staff, acti ng pursuant to delegated authority,
declare the filing effective, it does no t foreclose the Commission from taking
any action with respect to the filing;

• the action of the Commission or the st aff, 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 the disclosure in the
filing; and

• the company may not assert staff comments and the declaration of
effectiveness as a defense in any pr oceeding initiated by the Commission or
any person under the federal securities laws of the United States.
  In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in connection
with our review of your filing or in response to our comments on your filing.

John C. Kirkland
Hythiam, Inc. April 22, 2009 Page 3
We will consider a written request for acceleration of the effective date of the
registration statement as conf irmation of the fact that t hose requesting acceleration are
aware of their respective re sponsibilities under the S ecurities Act of 1933 and the
Securities Exchange Act of 1934 as they rela te to the proposed public offering of the
securities specified in the above registration statement.  We will act  on the request and,
pursuant to delegated authority, grant acce leration of the effective date.
We direct your attention to Rules 46 0 and 461 regarding requesting acceleration
of a registration statement.  Please allow ad equate time after the filing of any amendment
for further review before submitting a request for acceleration.  Please provide this request at least two business days in a dvance of the requested effective date.
 Please contact Damon Colbert at (202 ) 551-3581 or David Link at (202) 551-3356
with any questions.

     S i n c e r e l y ,          John Reynolds
Assistant Director

Mail Stop 3561        April 15, 2009
Terren S. Peizer President and Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Blvd, Suite 1500 Los Angeles, CA 90025
 Re:       Hythiam, Inc.
  Form 10-K for Fiscal Year Ended December 31, 2008
   Filed March 31, 2009    File No. 001-31932

Dear Mr. Peizer:
 We have reviewed your filings  and have the following comments.  Where
indicated, we think you should revise your document in response to these comments.  If you disagree, we will consider your explanation as to why our comment is inapplicable or revision is unnecessary.  Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.
   Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Form 10-K for the Year-Ended December 31, 2008

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

Healthcare Services, page 36

1. We have reviewed your response to our prior comment one, noting that you do
not plan on using “cash operating expenditure” in future filings, and if you do
decide to use a non-GAAP measure you will provide a definition of the measure as well as all of the requirements of Item 10(e) of Regulation S-K.  We note on

Terren S. Peizer
Hythiam, Inc.
April 14, 2009 Page 2
page 38 of your Form 10-K filed March 31, 2008 you disclose cash operating expenditures.  Please revise your disclosure to include:
• a definition of how you calculate this measure,
• a presentation, with equal or greater prominence, of the most directly comparable financial measure calculated and presented in accordance with GAAP, and
• a reconciliation (by schedule or other clearly understandable method), which shall be quantitative for historical non-GAAP measures presented, and quantitative for forward-looking information, of the differences between the non-GAAP financial measure disclosed with the most directly comparable financial measure calculated and presented in accordance with GAAP.
 2. We note that on page 37 you disclose that you plan to incur approximately
$400,000 for research and development expenses in 2009.  This disclosure appears to be inconsistent with your contractual commitments for clinical studies of $1,257,000 due in less than one year on page 55.  Please revise or advise.
 Notes to Consolidated Financial Statements

 Note 1.  Summary of Significant Accounting Policies

 Description of Business, F-8

 3. We note that you sold your interest in CompCare in January 2009 for $1.5
million, there was substantial doubt regarding the ability of CompCare to continue as a going concern, and management was considering various strategic alternatives including the sale of CompCare during the year ended December 31, 2008.  Tell us how you considered the guidance in paragraph 30 of SFAS 144 regarding the reporting and disclosure of assets to be disposed of by sale.  Please revise or advise.

Fair Value Measurements, F-16

4. We note that you have utilized an income-based approach to estimate the fair
market value of your ARS and that the Level III inputs were the most sensitive to
determining the overall fair value.  You state that the estimated price was derived as the present value of the expected cash flows over and estimated period of illiquidity, using a risk-adjusted discount rate.  Please tell us what period of illiquidity you utilized, and what risk adjusted discount rate you used.  If the period of illiquidity is greater than 12 months, provide us with qualitative information that supports a period greater than 12 months considering your auditors have placed substantial doubt on your ability to continue as a going

Terren S. Peizer
Hythiam, Inc.
April 14, 2009 Page 3
concern.  Tell us if the discount rate was adjusted for credit risk and liquidity risk of the enterprise and or the securities.  Please disclose whether the fair value was computed assuming it is more-likely-than-not that you have to sell these securities prior to June 30, 2010.  Given your reference to the use of a third-party valuation firm to assist in determining the fair market value of your ARS, please explain the extent of your reliance on the third party.
 5. We note your table that summarizes the fair value measurements using Level III
inputs.  Your table does not appear consistent with your disclosure (i.e. your table discloses a realized gain of $11.5 million and an unrealized loss of $1.4 million).  Please revise.

Goodwill, page F-17

6. We have reviewed your response to our prior comment three noting your
statement that the two fair value estimates are not directly comparable since they were determined using different valuation approaches under different contexts.  Note that paragraph 21 of SFAS 142 states that the implied fair value of goodwill should be determined in the same manner as the amount of goodwill recognized in a business combination.  Therefore, the fair value estimate of your reporting unit as of September 30, 2008 needs to be determined in a comparable manner with the January 2007 post-acquisition fair value estimate.  Please advise.
 7. In addition, it appears that you changed your methodology for estimating the fair
value of a reporting unit.  You state that the fair value of the reporting units at June 30, 2008 and September 30, 2008 were determined primarily using the market approach.  However, you also state that the fair value as of December 31, 2008 is based on the income approach.  Please tell us and disclose whether you are being consistent in the valuation methods used to estimate fair value or if you changed methods, explain how the new method provides a better estimate of fair value as well as discuss the catalyst for the change.
8. We note that you recorded $9.8 million of goodwill as an impairment charge
during the fourth quarter.  You state that the healthcare services reporting unit had been impaired mainly resulting from the decline in the value of the reporting unit that arose from the downward re-pricing of risk that occurred broadly in the equity markets.  However, you also state that the estimated fair value of the healthcare services reporting unit was based on an income approach.  Please revise or explain how a decline in the equity markets affected the discounted cash flows used to compute fair value of your healthcare services reporting unit.

Terren S. Peizer
Hythiam, Inc. April 14, 2009 Page 4
 Note 5.  Intangible Assets, F-25

 9. We note that you report intangible assets subject to amortization of $3,800,000 as
of December 31, 2008, which you have concluded, have not been impaired based on SFAS 144 testing and the estimated useful lives reflect the current remaining economic useful lives of these assets.  Please explain how you have determined the undiscounted cash flows of your intellectual property exceed the carrying value of the assets, considering (i) your auditors have placed substantial doubt on your ability to continue as a going concern, (ii) your Healthcare Services segment has not generated cash flows from operations for the last three fiscal years, and (iii) your Healthcare Services segment has not generated operating income for the last three fiscal years.

 As appropriate, please amend your filing and respond to these comments within
10 business days or tell us when you will provide us with a response.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested information.  Detailed cover letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
You may contact William J. Kearns, St aff Accountant, at (202) 551-3727 or
Nasreen Mohammad, Assistant Chief Accountant, at (202) 551-3773 if you have any questions.
Sincerely,    Tia Jenkins Senior Assistant Chief Accountant Office of Beverages, Apparel, and Health Care Services

CORRESP
1
filename1.htm

    letterbody.htm

    March 27,
2009

    VIA EDGAR
TRANSMISSION

                Securities
      and Exchange Commission

                Division
      of Corporation Finance

                450
      Fifth Street, N.W.

                Washington,
      D.C. 20549

                Attn:
      John Reynolds, Assistant
Director

                Re:

                Supplemental
      Response

                Form
      10-K for Fiscal Year Ended December 31, 2007 (“2007 Form
      10-K”)

                Filed
      March 17, 2008

                Forms
      10-Q for Quarter Ended September 30, 2008 (September 30, 2008
      10-Q)

                File
      No. 001-31932

                Ladies
      and Gentlemen:

    Reference
is made to the letter received by Hythiam, Inc. (the “Company”) from
Mr. Reynolds, Assistant Director of the Securities and Exchange Commission
(the “Staff”), dated February 20, 2009 (the “Comment Letter”) relating to the
Staff’s comments on the 2007 Form 10-K and September 30, 2008 10-Q. The
Company’s responses to the Staff’s comments contained in the Comment Letter are
set forth below. For the convenience of the Staff, each of the Staff’s comments
has been duplicated below and is set forth in italics immediately prior to the
corresponding response.

    Form 10-K for Fiscal Year
Ended December 31, 2007

    Management’s Discussion and
Analysis of Financial Condition and Results of Operations, page
36

    Liquidity and Capital
Resources, page 49

              1.

              We have reviewed your response
      to our prior comment one, noting that you do not believe cash operating
      expenditures is a non-GAAP measure. We understand that this disclosure is
      useful to investors however cash operating expenditures is not a defined
      GAAP term. Please include the definition of how you calculate this
      measure. If you continue to believe that this measure provides useful
      information to investors regarding your financial condition and results of
      operations, according to Item 10(e) of Regulation S-K, please
      provide:

                ●

              A
      presentation, with equal or greater prominence, of the most directly
      comparable financial measure calculated and presented in accordance with
      GAAP, and

              ●

              A
      reconciliation (by schedule or other clearly understandable method), which
      shall be quantitative for historical non-GAAP measures presented, and
      quantitative for forward-looking information, of the differences between
      the non-GAAP financial measure disclosed with the most directly comparable
      financial measure calculated and presented in accordance with
      GAAP.

    RESPONSE: Going forward, we
don’t intend to use the ‘cash operating expenditure’ term in our public filings.
However, if we decide to use any non-GAAP measure that we consider to be useful
to investors, we will provide a definition of how we calculate the measure,
present the most directly comparable GAAP financial measure with equal or
greater prominence and provide a reconciliation between the measure and the most
directly comparable GAAP measure.

        1

    Form 10-Q for the Period
Ended September 30, 2008

    Notes to Condensed
Consolidated Financial Statements

    Note 2.  Summary
of Significant Accounting Policies

    Goodwill and Other
Intangible Assets, page 16

              2.

              We have reviewed your response
      to our prior comment seven noting your response did not fully address our
      comment, thus we are partially reissuing our comment. Per your disclosure
      on page 35 of your Form 10-Q for the quarter ended June 30, 2008, we note
      that there was substantial doubt about CompCare’s ability to continue as a
      going concern and CompCare’s board of directors were evaluating strategic
      alternatives including the sale of CompCare. As the value of your
      healthcare services segment’s value is dependent on the synergies created
      by using CompCare’s infrastructure to facilitate the use of PROMETA,
      please tell us how this decision did not trigger an impairment test. Refer
      to paragraph 28 of SFAS 142 for further
  guidance.

    RESPONSE: Because of the
continuing operating losses and negative cash flows in both healthcare services
and behavioral health managed care services reporting units, we evaluated
goodwill in healthcare services for impairment in each reporting period during
2008, including the quarter ended June 30, 2008; however, we inadvertently
omitted that disclosure in our June 30, 2008 10-Q.

    Pursuant
to step 1 of the SFAS 142 impairment test, the fair value of the healthcare
services reporting unit was estimated at $128.9 million at June 30, 2008 and
exceeded its carrying value of $30.1 million and step two of the SFAS 142
impairment test for goodwill was not necessary. We estimated the fair value
using the market approach, based primarily on the quoted market prices of the
company’s common stock with an adjustment to exclude the estimated fair value of
the behavioral health managed care reporting unit, which was estimated using
quoted market prices of CompCare’s common stock.

    In the
fourth quarter of 2008, the decline in fair value of the healthcare services
reporting unit caused a failure of step 1 of the SFAS 142 impairment test and it
was necessary to conduct step 2 of the impairment test. The decline in the value
of the reporting unit arose from the downward re-pricing of risk that occurred
broadly in the equity markets and affected the reporting unit in the quarter. As
part of step 2 of the impairment test, we concluded that the goodwill in
healthcare services had been impaired since we estimated the implied fair value
of the goodwill in this reporting unit to be $0.  Accordingly, we
wrote-off the $9.8 million carrying value and recorded as an impairment charge
in our Consolidated Statement of Operations for the year ended December 31,
2008. The implied fair value of the goodwill was determined after allocating the
estimated fair value of the reporting unit (estimated using the income approach)
to all the assets and liabilities of that unit in accordance with paragraph 21
of SFAS 142.

              3.

              In connection with the comment
      above, we note that you used the market and income approach to estimate
      the fair value of the healthcare services reporting unit. We note that the
      value of your healthcare services segment amounted to $67 million at
      September 30, 2008 while the post-acquisition fair value was $65.5
      million. Considering the healthcare services reporting unit generated net
      losses before income taxes of approximately $41 million in the year ended
      December 31, 2007 and $9 million, $10.2 million, and $6.4 million for the
      three months ended March 31, 2008, June 30, 2008, and September 30, 2008.
      Please provide us with a reasonably detailed summary of the analysis and
      identify and explain the basis for all significant assumptions. Please
      discuss the inputs used in the valuation models (observable,
      unobservable), the priority of those inputs in the fair value hierarchy of
      SFAS 157 (e.g. level 1, level 2, or level 3), and provide additional
      detail regarding how you weighted each of the valuation models and why the
      weight given was deemed to be appropriate (versus another
      percentage).

    RESPONSE: The two fair value
estimates noted above are not directly comparable with each other since they
were determined using different valuation approaches under different contexts.
The $67 million in fair value that we estimated at September 30, 2008 was done
in conjunction with step 1 of

        2

    the SFAS
142 goodwill impairment test and was based primarily on the quoted market prices
of the company’s common stock with an adjustment to exclude the estimated fair
value of the behavioral health managed care reporting unit, which was estimated
using quoted market prices of CompCare’s common stock. The $65.5 million in fair
value that we estimated at the time of the CompCare acquisition in January 2007
was done in conjunction with our purchase accounting process to support the
assignment of goodwill to the healthcare services reporting unit and the fair
value was estimated based on projected future cash flows, discounted at a rate
equal to our estimated cost of capital.

    Marketable Securities, page
14

              4.

              We have reviewed your response
      to our prior comment eight noting that because the ARS are owned by
      Hythiam (not CompCare) that you believe you have the intent and ability to
      hold these securities until June 30, 2010. Please tell us how you have the
      ability to hold these securities until June 30, 2010, considering (i) your
      cash on hand as of September 30, 2008 was $13.7 million, (ii) your
      healthcare services segments losses before income taxes, (iii) your
      negative cash flows from operations, and (iv) the loss of major customers
      for which you planned to use the behavioral health managed care segment
      infrastructure to facilitate the use of PROMETA in their treatment
      programs.

    RESPONSE: Our belief at
September 30, 2008 that we had the ability to hold the ARS until their market
value recovers was based on our expectation of improved cash flows from our
financial projections, which we estimated would enable us to maintain sufficient
cash and cash equivalents on hand to avoid liquidating the ARS before they
recovered in value. The most significant assumptions in our analyses and
projections included:

                ●

              Improved
      cash flow from our healthcare services operations over the next 18 months
      from:

              -

              New
      contracts in our managed care operations that were expected to be signed
      by the end of the fourth quarter of 2008 and generate an estimated $5
      million in annual revenue in 2009. The new contracts were projected to
      improve our net cash flows and results of operations by $2 million on an
      annual basis beginning January
2009.

              -

              A
      planned reduction in annual operating expenses totaling $10 million,
      compared to the third quarter 2008 run-rate. The planned reduction is part
      of our continued effort to streamline operations to increase our focus on
      managed care opportunities and is expected to reduce our annual operating
      expenses to $17 million in 2009.

              -

              Our
      plan to reduce cash operating expenses to $5.3 million during the fourth
      quarter of 2008, resulting in an improved expected net cash burn of
      approximately $3 million for the
quarter;

                ●

              Our
      ability to borrow an estimated $7.8 million, pursuant to the UBS margin
      loan facility that is collateralized by the ARS
  portfolio.

                ●

              Our
      expectation that the ARS portfolio would recover in value sometime during
      the first or second quarter of 2010, based on consultation with industry
      experts and the actions of several large banks to buy back large volumes
      of ARS in the market.

    With
respect to CompCare’s recent loss of major customers, we considered the actions
taken by CompCare’s management to mitigate these losses, such as reducing
operating expenses, planning to pursue rate increases from contracts in loss
positions, planning to obtain new contracts and pursuing strategic alternatives,
as sufficient to offset doubts about CompCare’s ability to continue as a going
concern and continue providing us with access to an infrastructure for our
planned managed care product offerings. Additionally,
we have identified cost effective alternatives to provide us with access to the
same level of infrastructure support in the case that CompCare is not able to
continue its operations.

        3

    When
performing our impairment assessment at December 31, 2008, we were no longer
able to conclude that we had the ability to hold the ARS until their market
value recovers, in light of current business circumstances, which included lower
than expected revenues from our licensees due to the weaker economy and
significant delays in signing the expected new contracts in our managed care
operations resulting from unforeseen circumstances that were out of our control.
The signing of such contracts is still anticipated, but is not expected to occur
until the second quarter of 2009. We were able to complete the actions necessary
to achieve the $10 million cost reductions discussed above in the fourth quarter
of 2008, as planned; however, the amount of projected future cash flows from our
healthcare services operations declined significantly relative to the estimates
at September 30, 2008 as a result of the factors mentioned above. Accordingly,
we determined that the loss in fair value of our ARS was “other-than-temporary”
and we recorded an impairment charge of approximately $1.4 million at December
31, 2008.

    Note 5. Debt Outstanding,
page 21

              5.

              We have reviewed your
      responses to our prior comments nine. Your responses did not fully address
      our comments; as a result we will partially reissue our comments. Based on
      the amended terms of your senior secured note, please tell us how you
      determined the present value of cash flows related to the amended debt
      compared to the original debt resulted in a $1.8 million gain. In your
      response, please identify and explain your basis for all significant
      assumptions used.

    RESPONSE: The fair value of
the amended senior secured note was determined by using the ‘step’ method
outlined in APB 14. The fair value was estimated to be $3.2 million, computed as
the difference between the $1.8 million incremental fair value of the amended
warrant and the $5 million proceeds received from issuing the note and warrants.
The difference between the fair value of the amended debt ($3.2 million) and the
carrying value of the original debt ($5 million) amounted to $1.8 million and
was recognized as a debt extinguishment gain. However, the $1.8 million
incremental fair value of the amended warrant was accounted for as a debt
extinguishment loss since the modification was accounted for in the same manner
as a debt extinguishment, in accordance with EITF 96-19. The gain and loss
offset and amounted to a zero net gain or loss on extinguishment. It’s
reasonable to expect that there would be no net extinguishment gain or loss on
the transaction when considering the old debt was due and payable at the time of
the transaction (not at some point in the future) and the company had the
wherewithal to repay it. The company essentially repaid debt that was
immediately due and borrowed new money from the same lender. There would have
been no reason for the lender to take value less than the face amount of the old
debt (causing a net gain) or for the company to pay value more than the face
amount (causing a net loss).

              6.

              We have reviewed your response
      to our prior comment ten, noting that you concluded the reclassification
      of warrants from additional-paid-in-capital to liability was not material
      to your previous financial statements. Tell us your consideration of the
      effects of prior year misstatements when quantifying misstatements in
      current year financial statements, see SAB Topic 1N. Considering your
      stock price decreased approximately 73% from the date of issuance of the
      original warrants to December 31, 2007, please tell us what qualitative
      and quantitative factors you examined in determining

CORRESP
1
filename1.htm

    letter.htm

    March 20,
2009

    VIA
EDGAR

    John
Reynolds, Assistant Director

    U.S.
Securities and Exchange Commission

    Mail Stop
3561

    Washington,
DC 20549

              Re:

              Hythiam,
      Inc.

              Supplemental
      Response

              Form
      10-K for Fiscal Year Ended December 31, 2007

              Filed
      May 1, 2008

              Form
      10-Q for Quarter Ended September 30, 2008

              Filed
      November 10, 2008

              File
      No. 001-31932

    Dear Mr.
Reynolds:

    Reference
is made to the letter received by Hythiam, Inc. from Mr. Reynolds, Assistant
Director of the Securities and Exchange Commission (the “Staff”), dated February
20, 2009, relating to the Staff’s comments on our Form 10-K for Fiscal Year
Ended December 31, 2007, and Form 10-Q for Quarter Ended September 30,
2008.  As discussed with Nasreen Mohammad, Assistant Chief Accountant,
Hythiam, Inc. (the "Registrant") hereby requests an additional 15 business days
to respond to such comments in order to provide sufficient time to review such
responses with our independent accountants and outside counsel, in light of our
workload associated with year-end reporting activities. We will provide a
response on or before March 27, 2009.

    If the
Staff has any questions or comments regarding the foregoing or requires
additional information, please contact the undersigned at (310)
444-4338.

    Very
truly yours,

    /s/ Maurice
Hebert

    Maurice
Hebert

    Chief
Financial Officer

    cc:  John
C. Kirkland, Esq.

CORRESP
1
filename1.htm

    letter.htm

    March 4,
2009

    VIA
EDGAR

    John
Reynolds, Assistant Director

    U.S.
Securities and Exchange Commission

    Mail Stop
3561

    Washington,
DC 20549

                    Re:

                    Hythiam,
      Inc.

                    Supplemental
      Response

                    Form
      10-K for Fiscal Year Ended December 31, 2007

                    Filed
      May 1, 2008

                    Form
      10-Q for Quarter Ended September 30, 2008

                    Filed
      November 10, 2008

                    File
      No. 001-31932

    Dear Mr.
Reynolds:

    Reference
is made to the letter received by Hythiam, Inc. from Mr. Reynolds, Assistant
Director of the Securities and Exchange Commission (the “Staff”), dated February
20, 2009, relating to the Staff’s comments on our Form 10-K for Fiscal Year
Ended December 31, 2007, and Form 10-Q for Quarter Ended September 30,
2008.  As discussed with Nasreen Mohammad, Assistant Chief Accountant,
Hythiam, Inc. (the "Registrant") hereby requests an additional 10 business days
to respond to such comments in order to provide sufficient time to review such
responses with our independent accountants and outside counsel, in light of our
workload associated with year-end reporting activities. We will provide a
response on or before March 20, 2009.

    If the
Staff has any questions or comments regarding the foregoing or requires
additional information, please contact the undersigned at (310)
444-4338.

    Very
truly yours,

                /s/ Maurice
Hebert

                Maurice
Hebert

                Chief
Financial Officer

    cc:  John
C. Kirkland, Esq.

Mail Stop 3561         February 20, 2009
Terren S. Peizer President and Chief Executive Officer Hythiam, Inc. 11150 Santa Monica Blvd, Suite 1500 Los Angeles, CA 90025
 Re:       Supplemental Response
   Form 10-K for Fiscal Year Ended December 31, 2007
   Filed May 1, 2008
   Form 10-Q for Quarter Ended September 30, 2008    Filed November 10, 2008    File No. 001-31932

Dear Mr. Peizer:
 We have reviewed your filings  and have the following comments.  Where
indicated, we think you should revise your document in response to these comments.  If you disagree, we will consider your explanation as to why our comment is inapplicable or revision is unnecessary.  Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with supplemental information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.
   Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Terren S. Peizer
Hythiam, Inc.
February 20, 2009 Page 2  Supplemental Response

 Form 10-K for Fiscal Year Ended December 31, 2007

 Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

 Liquidity and Capital Resources, page 49

 1. We have reviewed your response to our prior comment one, noting that you do
not believe cash operating expenditures is a non-GAAP measure.  We understand that this disclosure is useful to investors however cash operating expenditures is not a defined GAAP term.  Please include the definition of how you calculate this measure.  If you continue to believe that this measure provides useful information to investors regarding your financial condition and results of operations, according to Item 10(e)(2) of Regulation S-K, please provide:
• A presentation, with equal or greater prominence, of the most directly comparable financial measure calculated and presented in accordance with GAAP, and
• A reconciliation (by schedule or other clearly understandable method), which shall be quantitative for historical non-GAAP measures presented, and quantitative for forward-looking information, of the differences between the non-GAAP financial measure disclosed with the most directly comparable financial measure calculated and presented in accordance with GAAP.

Form 10-Q for the Period Ended September 30, 2008

Notes to Condensed Consolidated Financial Statements

Note 2. Summary of Significant Accounting Policies

Goodwill and Other Intangible Assets, page 16

2. We have reviewed your response to our prior comment seven noting your
response did not fully address our comment, thus we are partially reissuing our
comment.  Per your disclosure on page 35 of your Form 10-Q for the quarter ended June 30, 2008, we note that there was substantial doubt about CompCare’s ability to continue as a going concern and CompCare’s board of directors were evaluating strategic alternatives including the sale of CompCare.  As the value of your healthcare services segment’s value is dependant on the synergies created by using CompCare’s infrastructure to facilitate the use of PROMETA, please tell us

Terren S. Peizer
Hythiam, Inc.
February 20, 2009 Page 3
how this decision did not trigger an impairment test.  Refer to paragraph 28 of SFAS 142 for further guidance.

3. In connection with the comment above, we note that you used the market and
income approach to estimate the fair value of the healthcare services reporting
unit.  We note that the value of your healthcare services segment amounted to $67 million at September 30, 2008 while the post-acquisition fair value was $65.5 million.  Considering the healthcare services reporting unit generated net losses before income taxes of approximately $41 million in the year ended December 31, 2007 and $9 million, $10.2 million, and $6.4 million for the three months ended March 31, 2008, June 30, 2008, and September 30, 2008.  Please provide us with a reasonably detailed summary of the analysis and identify and explain the basis for all significant assumptions.  Please discuss the inputs used in the valuation models (observable, unobservable), the priority of those inputs in the fair value hierarchy of SFAS 157 (e.g. level 1, level 2, or level 3), and provide additional detail regarding how you weighted each of the valuation models and why the weight given was deemed to be appropriate (versus another percentage).

Marketable Securities, page 14

4. We have reviewed your response to our prior comment eight noting that because
the ARS are owned by Hythiam (not CompCare) that you believe you have the intent and ability to hold these securities until June 30, 2010.  Please tell us how you have the ability to hold these securities until June 30, 2010, considering (i) your cash on hand as of September 30, 2008 was $13.7M, (ii) your healthcare services segments losses before income taxes, (iii) your negative cash flows from operations, and (iv) the loss of major customers for which you planned to use the behavioral health management care segment infrastructure to facilitate the use of PROMETA in their treatment programs.
 Note 5. Debt Outstanding, page 21

5. We have reviewed your responses to our prior comments nine.  Your responses
did not fully address our comments; as a result we will partially reissue our
comments.  Based on the amended terms of your senior secured note, please tell us how you determined the present value of cash flows related to the amended debt compared to the original debt resulted in a $1.8 million gain.  In your response, please identify and explain your basis for all significant assumptions used.

6. We have reviewed your response to our prior comment ten, noting that you
concluded the reclassification of warrants from additional-paid-in-capital to
liability was not material to your previous financial statements.  Tell us your

Terren S. Peizer
Hythiam, Inc. February 20, 2009 Page 4
 consideration of the effects of prior year misstatements when quantifying misstatements in current year financial statements, see SAB Topic 1N.  Considering your stock price decreased approximately 73% from the date of issuance of the original warrants to December 31, 2007, please tell us what qualitative and quantitative factors you examined in determining the prior year financial statements were not materially misstated.  As part of your response, please provide us with the assumption used each reporting period in determining the FMV of the warrants.
 Other Exchange Act Reports

 7. Please revise your other Exchange Act reports, as necessary, to comply with our
comments above.

 As appropriate, please amend your filing and respond to these comments within
10 business days or tell us when you will provide us with a response.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested information.  Detailed cover letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
You may contact William J. Kearns, St aff Accountant, at (202) 551-3727 or
Nasreen Mohammad, Assistant Chief Accountant, at (202) 551-3773 if you have any questions.
Sincerely,

John Reynolds Assistant Director

CORRESP
1
filename1.htm

    letter.htm

      January
21 2009

      VIA EDGAR
TRANSMISSION

                Securities
      and Exchange Commission

                Division
      of Corporation Finance

                450
      Fifth Street, N.W.

                Washington,
      D.C. 20549

                Attn:
      John Reynolds, Assistant Director

                Re:

                Hythiam,
      Inc.

                Form
      10-K for Fiscal Year Ended December 31, 2007 (“2007 Form
      10-K”)

                Filed
      March 17, 2008

                Definitive
      Revised Proxy Statement on Schedule 14A

                Filed
      June 3, 2008

                Forms
      10-Q for Fiscal Quarters Ended March 31, 2008 (March 31, 2008 10-Q), June
      30, 2008 (June 30, 2008 10-Q) and September 30, 2008 (September 30, 2008
      10-Q)

                File
      No. 001-31932

      Ladies
and Gentlemen:

      Reference
is made to the letter received by Hythiam, Inc. (the “Company”) from
Mr. Reynolds, Assistant Director of the Securities and Exchange Commission
(the “Staff”), dated December 22, 2008 (the “Comment Letter”) relating to the
Staff’s comments on the Form 10-K for Fiscal Year Ended December 31, 2007,
Definitive Revised Proxy Statement on Schedule 14A filed June 3, 2008 and Forms
10-Q for Fiscal Quarters Ended March 31, 2008, June 30, 2008 and September 30,
2008. The Company’s responses to the Staff’s comments contained in the Comment
Letter are set forth below. For the convenience of the Staff, each of the
Staff’s comments has been duplicated below and is set forth in italics
immediately prior to the corresponding response.

      Form 10-K for Fiscal Year
Ended December 31, 2007

      Management’s Discussion and
Analysis of Financial Condition and Results of Operations, page
36

      Liquidity and Capital
Resources, page 49

                1.

                We
      note your disclosure on page 51 that your cash operating expenditures
      average $2.5 million a month for the remainder of 2008. Cash Operating
      expenditures does not appear to be a GAAP measure, thus please include the
      required disclosure for non-GAAP measures under Item 10(e) of Regulation
      S-K.

      RESPONSE: The disclosure on
page 51 provides forward-looking information about expected cash to be paid to
employees of and other suppliers of goods and services to our healthcare
services segment – an amount that is consistent with GAAP (see FASB Statement
95, paragraph 27) and not a non-GAAP financial measure. The expected amount of
cash to be paid to employees and suppliers is broken down into two elements that
we consider meaningful: (1) payments for goods and services other than those
used in research & development activities and (2) payments related to
research & development activities. We consider this breakdown meaningful
because payments related to research & development activities are more
discretionary than the other payments. We believe that

          1

      this
breakdown is also consistent with paragraph 27 of Statement 95, which states,
“Enterprises are encouraged to provide further breakdowns of operating cash
receipts and payments that they consider meaningful and feasible. For example, a
retailer or manufacturer might decide to further divide cash paid to employees
and suppliers (category (d) above) into payments for costs of inventory and
payments for selling, general, and administrative expenses.” Thus, we do not
consider the term to be a non-GAAP measure. We included the disclosure to
provide investors and readers of our financial statements with information that,
when used in conjunction with the statements of cash flows, enables them to
assess the impact of our streamlining and cost reduction efforts.

      Report of Independent
Registered Public Accounting firm F-2

                2.

                We
      note the reports of the independent registered public accounting firm are
      unsigned. Please amend to provide a signed accountants report and a signed
      attestation report on internal control over financial reporting in
      accordance with Item 302 of Regulation
S-T.

      RESPONSE: In its letter to
the Company dated September 12, 2008, the Staff requested that we confirm that
BDO Seidman, LLP signed the reports dated March 14, 2008, relating to the
consolidated financial statements and the effectiveness of the Company’s
internal control over financial reporting, which appear in the Annual Report on
Form 10-K for the year ended December 31, 2007. In response, our external
counsel confirmed, in a letter to the Staff dated September 19, 2008, that BDO
Seidman, LLP signed the reports dated March 14, 2008 relating to the
consolidated financial statements and the effectiveness of the Company’s
internal control over financial reporting, which appear in the Annual Report on
Form 10-K for the year ended December 31, 2007, and that the original signed
reports are held in the Company’s files. Additionally, the Company would like to
note that it did include signed reports in the 2007 Annual Reports that were
distributed to investors as part of the Proxy solicitation materials and to
prospective investors.

      Notes to Consolidated
Financial Statements

      Note 1. Summary of
Significant Accounting Policies

      Goodwill,
F-15

                3.

                We
      note that you recorded $10.8 million of goodwill in the acquisition of
      CompCare of which you have allocated approximately 95% of the acquired
      goodwill to the healthcare services segment while only 5% of goodwill is
      allocated to the segment which includes CompCare. Please disclose the
      methodologies you used to allocate goodwill to your reporting
      segments.

      RESPONSE: $493,000 of the
goodwill recorded in the CompCare acquisition represents the carryover of the
minority interest in the goodwill already reflected on CompCare’s balance sheet
at the time of the acquisition. The remainder (i.e., all of the goodwill arising
from Hythiam’s acquisition of its controlling interest in CompCare) was assigned
to Hythiam’s healthcare services segment. In accordance with paragraph 34 of FAS
142, we assigned goodwill to the reporting unit that is expected to benefit from
the synergies of the combination. In the case of the CompCare acquisition, the
primary purpose of the acquisition was to create synergies to facilitate the use
of PROMETA treatment programs by managed care treatment providers and to provide
access to an infrastructure for our planned disease management product
offerings, which are part of the healthcare services segment. The Company’s
believes that the creation of such synergies resulted in a significant increase
in the overall market value of the healthcare services segment, but had no
material impact in the market value of the behavioral health managed care
services segment, where CompCare’s operations are included. Therefore, 100% of
the goodwill arising from the acquisition was allocated to the healthcare
services segment. The Company believes that this methodology is consistent with
the objectives of the process of assigning goodwill to reporting units described
in paragraph 35 of FAS 142.

          2

      We will
expand the discussion of the methodologies we used to assign goodwill to our
reporting segments in future filings.

                4.

                You
      state that your association with CompCare will create synergies and
      provide access to an infrastructure for your planned disease management
      product offerings. Please explain how the acquisition of CompCare will
      create synergies in your healthcare segment. Also, tell us what the fair
      value of the healthcare services segment was prior to and subsequent to
      the acquisition of CompCare using the guidance of paragraph 35 of SFAS
      142.

      RESPONSE: In a letter to
Company dated August 8, 2007, the Staff asked the Company to explain why the
amount allocated to goodwill was so significant in relation to the amounts
allocated to intangible assets. In its response to the Staff, in a letter dated
August 22, 2007, the Company stated:

      “We
believe our association with CompCare creates synergies to facilitate the use of
PROMETA treatment programs by managed care treatment providers and to provide
access to an infrastructure for our planned disease management product
offerings. CompCare’s infrastructure is already in place to provide substance
abuse/dependence disease management to accommodate nationwide third party
reimbursement that we expect will be driven by positive outcomes from PROMETA
pilots currently underway with managed care entities and various criminal
justice systems. These statements were included in Part 1, Item 1. Business on
page 4 of our 2006 Form 10-K where we discussed the key strategies and benefits
expected from our association with CompCare. The first statement was repeated in
Note 3 at the end of the second paragraph on page 13 in the March 31, 2007 Form
10Q”.

      In
addition in Part 1, Item 1, Business on page 6 of our 2007 Form 10-K, we
discussed under ‘Disease Management’ that we utilize CompCare infrastructure to
provide many disease management services, including credentialing, peer review,
monitoring, case management, coaching services, quality assurance and other
standard behavioral healthcare services. As discussed in above in the response
to comment 3, the creation of such synergies resulted in a significant increase
in the overall market value of the healthcare services segment, according to
management’s estimates. The estimated increase in the fair value of our
healthcare services reporting segment, resulting from the acquisition of
CompCare, amounted to approximately $10.4 million, based on pre and
post-acquisition fair value estimates of $55.1 million and $65.5 million,
respectively.

      Note 11. Share-based
Compensation, F-27

                5.

                We
      note that you transferred 695,000 options related to a status change from
      employee to non-employee. However, we did not find any disclosure of how
      you accounted for these options. Please tell us how you considered
      paragraph 51 of SFAS 123(R) in determining the amount of expense to record
      in the period related to this
modification.

      RESPONSE: The 695,000 options
relate to Hythiam employees that terminated during 2007, but were then retained
as part-time consultants upon their resignation from the
company.  Because the employees continued to provide services to
Hythiam, their options continued to vest in accordance with the original terms.
Due to the change in classification of the option awards, the unvested options
were considered modified at the date of termination in accordance with SFAS 123
(R). The modifications were treated as exchanges of the original awards in
return for the issuance of new awards. Of the 695,000 option awards that changed
in classification, 345,666 were fully vested and 349,334 were unvested at the
date of modification. At the date of termination, the unvested options were no
longer accounted for as employee awards under SFAS 123(R) and were accounted for
as new non-employee awards under EITF Issue No. 96-18, “Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services” (EITF 96-18). The accounting for the portion
of the total grants that had already vested and were previously expensed as
employee awards was not changed. We recorded approximately

          3

      $28,000
of expense in 2007 associated with the modified unvested awards, based on the
number of shares expected to vest, pursuant to the guidance in EITF
96-18.

                6.

                We
      note the statement on page 60. General Instruction G(3) to Form 10-K
      permits an issuer to incorporate Part III information into the Form 10-K
      from its definitive proxy material, if the definitive  proxy
      material is filed within 120 days after the end of the issuer’s fiscal
      year. We note that your definitive proxy statement was not filed within
      120 days after the end of your fiscal year. Please amend your filing
      accordingly. Also, see Question 104.09 of the Compliance and Disclosure
      Interpretations for Exchange Act Form, which is available at
      http://www.sec.gov/divisions/corpfin/guidance/exhangeactforms-interps.htm.

      RESPONSE: The Company filed a
preliminary version of its proxy material on April 29, 2008, within the 120 days
after the end of its fiscal year, that included the disclosure required in Items
10 through 14 of Form 10-K. We filed amendments to the proxy materials,
including the definitive proxy statement on June 3, 2008, that principally
served to amend the notification to shareholders of matters to be brought to a
vote and to make other changes to our proxy soliciting materials, but did not
affect the information disclosed
in Items 10 through 14.

      Form 10-Q for the Period
Ended September 30, 2008

      Notes to Condensed
Consolidated Financial Statements

      Note 2.  Summary
of Significant Accounting Policies

      Goodwill and Other
Intangible Assets, page 16

                7.

                We
      note that you recorded $10.5 million of goodwill related to the
      acquisition of CompCare as of December 31, 2007. You state that you
      evaluated $493,000 of goodwill related to CompCare for impairment with no
      exceptions as of September 30, 2008. We note on page 39 that under the
      current plan there is substantial doubt about CompCare’s ability to
      continue as a going concern. Tell us how you evaluated the remaining
      goodwill of $9.8 million in the healthcare services as of September 30,
      2008. As part of you response, provide a reasonably detailed summary of
      the analysis. Identify, and explain the basis for, all significant
      assumptions used.

      RESPONSE: Because the $9.8
million of goodwill is allocated to the healthcare services reporting segment,
the Company tested goodwill for potential impairment based on the estimated fair
value of that reporting unit. As we stated in ‘CRITICAL ACCOUNTING
ESTIMATES’ on page 42, we evaluate goodwill for impairment annually, or
on a more frequent basis if necessary, based on the estimated fair value of our
healthcare services reportable segment. We also stated that in estimating the
fair value, management considers both the income and market approaches to fair
value determination. As part of the first step of the goodwill impairment test
used to identify potential impairment, we compared the fair value of the
healthcare services reporting unit with its carrying value, including the
goodwill. The fair value of the healthcare services reporting unit was estimated
using both the market and income approaches; however, more weight was placed on
the market approach. Our estimate of the fair value under the market approach
was based primarily on reference to transactions involving the company’s common
stock and the quoted market prices of the company’s common stock, adjusted to
exclude the estimated fair value of the Behavioral Health Managed Care reporting
unit, and amounted to $67.0 million at September 30, 2008. Based on this
analysis, the fair value of the healthcare services reporting unit exceeded its
$25.3 million book value at September 30, 2008; therefore, the goodwill was not
considered to be impaired at that date.

      CompCare’s
operations are included and reported in the behavioral health managed care
services reporting segment and have no impact on the healthcare services
reporting unit. Additionally, as we

          4

      have
noted in Management’s Discussion and Analysis Liquidity and Capital Resources on
page 39, Hythiam is under no obliga

CORRESP
1
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    letter.htm

    January
7, 2009

    VIA
EDGAR

    John
Reynolds, Assistant Director

    U.S.
Securities and Exchange Commission

    Mail Stop
3561

    Washington,
DC 20549

        Re:           Hythiam,
Inc.

        Form 10-K for Fiscal Year Ended
December 31, 2007

        Filed March 17, 2008

        Definitive Revised Proxy Statement on
Schedule 14A

        Filed June 3, 2008

        Forms 10-Q for Fiscal Quarters Ended
March 31, 2008, June 30, 2008 and September 30, 2008

        Registration Statement on Form
S-3

        Filed on August 15, 2008; amended
September 19, 2008

        File No.
001-31932

    Dear Mr.
Reynolds:

    Reference
is made to the letter received by Hythiam, Inc. from Mr. Reynolds, Assistant
Director of the Securities and Exchange Commission (the “Staff”), dated December
22, 2008, relating to the Staff’s comments on our Form 10-K for Fiscal Year
Ended December 31, 2007, Definitive Revised Proxy Statement on Schedule 14A
filed June 3, 2008, Forms 10-Q for Fiscal Quarters Ended March 31, 2008, June
30, 2008 and September 30, 2008 and Registration Statement on Form S-3 filed on
August 15, 2008 and amended September 19, 2008. As discussed with Bill
Kearns, Assistant Chief Accountant, Hythiam, Inc. (the "Registrant") hereby
requests an additional 10 business days to respond to such comments in order to
provide sufficient time to and review such responses with our independent
accountants and outside counsel. We will provide a response on or before January
21, 2009.

    If the
Staff has any questions or comments regarding the foregoing or requires
additional information, please contact the undersigned at (310)
444-4338.

      Very
truly yours,

      /s/ Maurice
Hebert

      Maurice
Hebert

      Chief
Financial Officer

    cc:  John
C. Kirkland, Esq.

Mail Stop 3561
        December 22, 2008

Terren S. Peizer
President and Chief Executive Officer
Hythiam, Inc.
11150 Santa Monica Boulevard
Suite 1500
Los Angeles, CA  90025

Re: Hythiam, Inc.
  Form 10-K for Fiscal Year Ended December 31, 2007
Filed March 17, 2008
Definitive Revised Proxy St atement on Schedule 14A
Filed June 3, 2008
Forms 10-Q for Fiscal Quarters Ended
March 31, 2008, June 30, 2008 and September 30, 2008
  File No. 001-31932

Dear Mr. Peizer:

We have reviewed your filings and have th e following comments.  Where indicated, we
think you should revise your document in response to these comments.  If you disagree, we will
consider your explanation as to why our commen t is inapplicable or a revision is unnecessary.
Please be as detailed as necessa ry in your explanation.  Please do so within the time frame set
forth below.  You should comply with the remaining comments in all future filings, as applicable.  Please confirm in writing that you w ill do so and also explain to us how you intend
to comply, within the time frame set forth below.   Please understand that after our review of all
of your responses, we may raise additional comments.

Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requir ements and to enhance the overall disclosure in
your filings. We look forward to working with you in these respects.  We welcome any questions
you may have about our comments or any other aspect of our review.  Feel fr ee to call us at the
telephone numbers listed at the end of th is letter.

Terren S. Peizer
Hythiam, Inc. December 22, 2008
Page 2
Form 10-K for Fiscal Year Ended December 31, 2007

Management’s Discussion and Analysis of Financ ial Condition and Results of Operations, page
36
Liquidity and Capital Resources, page 49

1. We note your disclosure on page 51 that your  cash operating expenditures average $2.5
million a month for the remainder of 2008.  Ca sh Operating expenditures does not appear
to be a GAAP measure, thus please incl ude the required disclosures for non-GAAP
measures under Item 10(e) of Regulation S-K.

Report of Independent Registered  Public Accounting Firm, F-2

2. We note that the reports of the independe nt registered public accounting firm are
unsigned.  Please amend to provide a signed ac countants report and a signed attestation
report on internal control over financial re porting in accordance with Item 3-02 of
Regulation S-T.

Notes to Consolidated Financial Statements
Note 1.  Summary of Significant Accounting Policies
Goodwill, F-15

3. We note that you recorded $10.8 million of goodwill in the acquisition of CompCare of
which you have allocated approximately 95% of the acquired goodwill to the healthcare
services segment while only 5% of goodwill is allocated to the segment which includes
CompCare.  Please disclose the methodologies you used to allocate goodwill to your reporting segments.

4. You state that your association with CompCare will create synergies and provide access
to an infrastructure for your planned di sease management product offerings.  Please
explain how the acquisition of CompCare will create synergies in your health care segment.  Also, tell us what the fair value of the healthcare services segment was prior to
and subsequent to the acquisi tion of CompCare using the guidance of paragraph 35 of
SFAS 142.

Note 11.  Share-based Compensation, F-27

5. We note that you transferred 695,000 options relate d to a status change from employee to
non-employee.  However, we did not find any disclosure of how you accounted for these
options.  Please tell us how you considered paragraph 51 of SFAS 123(R) in determining the amount of expense to record in th e period related to this modification.

Terren S. Peizer
Hythiam, Inc. December 22, 2008
Page 3
Part III

6. We note the statement on page 60.  General In struction G(3) to Form 10-K permits an
issuer to incorporate Part III informati on into the Form 10-K from its definitive proxy
material, if the definitive proxy material is filed within 120 days after the end of the
issuer’s fiscal year.  We note that your de finitive proxy statement was not filed within
120 days after the end of your fiscal year.  Please amend your filing accordingly.  Also,
see Question 104.09 of the Compliance and Disclo sure Interpretations for Exchange Act
Forms, which is available at http://www.sec.gov/divisions/corpfin/guidance/exchangeactforms-interps.htm.

Form 10-Q for the Period Ended September 30, 2008

Notes to Condensed Consolidated Financial Statements
Note 2.  Summary of Significant Accounting Policies
Goodwill and Other Intangible Assets, page 16

7. We note that you recorded $10.5 million of  goodwill related to the acquisition of
CompCare as of December 31, 2007.  You state that you evaluated $493,000 of goodwill related to CompCare for impairment with no exceptions as of September 30, 2008.  We
note on page 39 that under the current plan there is substa ntial doubt about CompCare’s
ability to continue as a going concern.   Tell us how you evaluated the remaining
goodwill of $9.8 million in the heal thcare services as of September 30, 2008.  As part of
your response, provide a reas onably detailed summary of the analysis.  Identify, and
explain the basis for, all si gnificant assumptions used.

Marketable Securities, page 14

8. We note that you were unable to complete auctions for $11.5 million of auction-rate
securities (ARS) and have recorded a te mporary decline in the fair value of
approximately $1.1 million.   Further, we note that UBS has offered to purchase the ARS from you at par plus accrued but unpaid in terest beginning on June 30, 2010 and ending
on July 2, 2012.  Tell us the factors you considered in determining that you have the
ability to hold these securities until June  30, 2010.  It appears inconsistent when you
consider footnote four, the loss of major contracts with Pennsylvania, Maryland and
Indiana which represented approximately 62.5% of your revenues for the nine-months
ended September 30, 2008, you continue to genera te net losses, negative operating cash
flows, and have a working capital deficit.

Note 5.  Debt Outstanding, page 21

9. We note that you amended your senior secure d note with Highbridge to extend the
optional redemption date by one year and re move certain restrictions and granted
additional redemption rights.  Please disclose whether the am ended debt instrument is

Terren S. Peizer
Hythiam, Inc. December 22, 2008
Page 4
considered to be “substantially differe nt” as defined by EITF 96-19 and how you
accounted for the costs incurred for the amendmen t and the costs of the original debt.

10. We note that as part of the amended seni or secured note you also amended the existing
warrant held by Highbridge for 285,185 shares  of your common stock at $10.52 per
share.  You state that the amended warrant expires five years from the amendment date
and is exercisable for 1,300,000 shares of your  common stock at $2.15 per share.  Please
explain if the original warrant is still outstanding and is being recorded as a liability in accordance with EITF 00-19.  As a result of th e modification, you state that you recorded
approximately $1.8 million of incremental costs, fair value of the costs of the warrants as
debt discount.  Please advise why you record ed the changes in the fair value of the
warrants as a debt discount a nd the guidance you relied upon.   On page 33, we also note
that you recorded $1.3 million gain to reclassi fy the warrants from additional-paid-in-
capital, and the changes in fa ir value from the issuance date to June 30, 2008 which was
recognized during the three months ende d September 30, 2008.  Tell us how this
accounting complies with paragraph 10 of EITF 00-19.

Management’s Discussion and Analysis
Liquidity and Capital Resources, page 37

11. We note your disclosure on page 39 that you are under no obligation to provide CompCare with any form of financing, and do not currently anticip ate making additional
cash investment in CompCare and there is s ubstantial doubt about CompCare’s ability to
continue as a going concern.  Pl ease disclose the affect to your financial statements in the
event CompCare is not able to continue as a going concern.  Please i ndicate the course of
action you have taken or propose to ta ke to remedy any deficiencies.

Critical Accounting Estimates, page 40
Accrued Claims Payable and Claims Expense, page 41

12. We note that your accrued claims payabl e is $6.4 million at September 30, 2008 and has
increased from $5.4 million since December 30, 2007.  Please disclose your obligations
to pay these claims if CompCare is unable to pay these liabilities.

Other Exchange Act Reports

13. Please revise your other Exchange Act repo rts, as necessary, to comply with our
comments above.

Definitive Revised Proxy Statement on Schedule 14A

Compensation Discussion and Analysis, page 14

14. In future filings, please clarify what the company’s performance objectives are for the
payment of incentive awards to the named ex ecutive officers.  We note that you indicate

Terren S. Peizer
Hythiam, Inc. December 22, 2008
Page 5
that the amount of any bonus is  discretionary.  To the extent  that you have targets to be
achieved for your named executive officers to earn their incentive aw ards, please disclose
the specific performance ta rgets used to determine in centive amounts or provide a
supplemental analysis as to why it is appr opriate to omit these targets pursuant to
Instruction 4 to Item 402(b) of Regulation S-K.   In addition, we note that part of this
compensation is based upon qualitative performan ce factors, in partic ular the individual
objectives.  Please note that qualitative goals generally need to be presented to conform
to the requirements of Item 402(b)(2)(v).  To the extent that it is  appropriate to omit
specific targets, please provide the disclosure  pursuant to Instruction 4 to Item 402(b).
General statements regarding the level of di fficulty, or ease, associated with achieving
performance goals either corporately or individually are not sufficient.  In discussing how
likely it will be for the company to achieve the target levels or othe r factors, provide as
much detail as necessary without providing in formation that poses a reasonable risk of
competitive harm.

Forms 10-Q for Fiscal Quarters Ended March 31, 2008, June 30, 2008 and September 30, 2008

15. We note that you deleted the language “(the regist rant’s fourth fiscal quarter in the case
of an annual report)” in para graph 4(d) of the certificati ons required by Exchange Act
Rule 13a-14(a).  In future filings, please  comply fully with Item 601(b)(31)(i) of
Regulation S-K.

* * * * *

As appropriate, please amend your filing and respond to these comments within 10
business days or tell us when you will provide us with a response.  You may wish to provide us
with marked copies of the amendment to expedite  our review.  Please furn ish a cover letter with
your amendment that keys your responses to  our comments and pr ovides any requested
information.  Detailed cover lette rs greatly facilitate our review .  Please understand that we may
have additional comments afte r reviewing your amendment and responses to our comments.

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filings to be certain that the filings includes all information re quired under the Securities
Exchange Act of 1934 and that they have provi ded all information investors require for an
informed investment decision.  Since the compa ny and its management are in possession of all
facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of
the disclosures they have made.

 In connection with responding to our comme nts, please provide, in writing, a statement
from the company acknowledging that:

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filings;

Terren S. Peizer
Hythiam, Inc. December 22, 2008
Page 6
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and

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

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the sta ff of the Division of Corporati on Finance in our review of your
filings or in response to our  comments on your filings.

 You may contact Bill Kearns at (202) 551-3727 or Nasreen Mohammed, Assistant Chief
Accountant, at (202) 551-3773 if you have que stions regarding comments on the financial
statements and related matters.  Please cont act David Link at (202) 551-3356 with any other
questions.

Sincerely,

        John Reynolds
Assistant Director

CORRESP
1
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    formcorresp.htm

      Hythiam,
Inc.

      11150
Santa Monica Boulevard

      Suite
1500

      Los
Angeles, California 90025

      September
25, 2008

      VIA
EDGAR

      John
Reynolds, Assistant Director

      U.S.
Securities and Exchange Commission

      Mail Stop
3561

      Washington,
DC 20549

                Re:

                Hythiam,
      Inc.

      Registration
Statement on Form S-3

      Filed on
August 15, 2008; amended September 19, 2008

      File No.
333-153053

      Dear Mr.
Reynolds:

      Hythiam,
Inc. (the "Registrant") hereby requests acceleration of the effective date of
the above-referenced registration statement to 4:00 p.m., EDT, September 26,
2008.

      In
connection with the above request, the Registrant hereby acknowledges
that:

                1.

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

                2.

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

                3.

                the
      Registrant may not assert staff comments and 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.

      If the
Staff has any questions or comments regarding the foregoing or requires
additional information, please contact the undersigned at (310)
444-4320.

                Very
      truly yours,

                /s/ Chuck Timpe

                Chuck
      Timpe

                Chief
      Financial Officer

      cc:  John
C. Kirkland, Esq.

MAIL STOP 3561

 September 12, 2008

Mr. Terren S. Peizer, Chief Executive Officer
Hythiam, Inc.
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025

Re: Hythiam, Inc.
Registration Statement on Form S-3
File No. 333-153053
  Filed on August 15, 2008

Dear Mr. Peizer:

We have limited our review of your filing to those issues we have addressed in
our comments.  Where indicated, we think you should revise your document in response
to these comments.  If you disagree, we w ill consider your explanation as to why our
comment is inapplicable or a revision is unneces sary.  Please be as detailed as necessary
in your explanation.  In some of our comme nts, we may ask you to provide us with
information so we may better understand your  disclosure.  After reviewing this
information, we may raise additional comments.

Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

General

1. Please confirm that BDO Seidman, LLP signed the reports dated March 14, 2008,
relating to the consolidated  financial statements and the effectiveness of the
company’s internal control over financia l reporting, which app ear in the Annual
Report on Form 10-K for the year ended December 31, 2007.

Mr. Terren C. Peizer
Hythiam, Inc.
September 12, 2008 Page 2
2. Please have counsel revise the legal opini on to identify the go verning state law.

Closing comments

As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review.  Please understa nd that we may have
additional comments after reviewing your amendment and responses to our comments.

 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filings reviewed by the staff to be certain that they have provided all
information investors require for an info rmed decision.  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 ev ent the company requests acceleration of
the effective date of the pending registration statement, it should furnish a letter, at the time of such request, acknowledging that

‚ should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the 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 the disclosure in the filing; and

‚ the company may not assert this action as  defense in any proceeding initiated by
the Commission or any person under the fe deral securities laws of the United
States.

 In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in connection
with our review of your filing or in response to our comments on your filing.

We will consider a written request for acceleration of the effective date of the
offering statement as a confirmation of the fact that those requesting acceleration are
aware of their respective responsibilities under the Secu rities Act of 1933 and the
Securities Exchange Act of 1934 as they rela te to the proposed public offering of the
securities specified in the above registration statement.  We will act  on the request and,
pursuant to delegated authority, grant acce leration of the effective date.

Mr. Terren C. Peizer
Hythiam, Inc.
September 12, 2008 Page 3
We direct your attention to Rules 46 0 and 461 regarding requesting acceleration
of a registration statement.  Please allow ad equate time after the filing of any amendment
for further review before submitting a request for acceleration.  Please provide this request at least two business days in a dvance of the requested effective date.

 Any questions may be directed to Cath ey Baker at (202) 551-3326 or Jim Lopez,
who supervised the review of your filing, at (202) 551-3790.

        S i n c e r e l y ,

        John Reynolds
Assistant Director

cc: John C. Kirkland, Esq.
 Fax: (424) 202-6250

Via Facsimile and U.S. Mail
Mail Stop 6010

                                                                                                October 17, 2007

Terren S. Peizer
Chief Executive Officer
Hythiam, Inc.
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025

Re: Hythiam, Inc.
 Form 10-K for Fiscal Year Ended December 31, 2006 - Filed March 15, 2007
 Form 10-Q for the Period Ended March 31, 2007 - Filed May 9, 2007
File No. 001-31932

Dear Mr. Peizer:

We have completed our review of your Form 10-K and have no further comments
at this time.

        S i n c e r e l y ,

        J i m  A t k i n s o n
        A c c o u n t i n g  B r a n c h  C h i e f

CORRESP
1
filename1.htm

Hythiam, Inc.

August 22, 2007

VIA EDGAR TRANSMISSION

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

Attn: Jim B. Rosenberg, Senior Assistant Chief Accountant

    Re:

    Hythiam, Inc.

    Form 10-K for Fiscal Year Ended

    December 31, 2006 (“2006 Form 10-K”)

    Filed March 15, 2007

    Form 10-Q for the Period Ended

    March 31, 2007 (March 31, 2007 10-Q)

    Filed May 9, 2007

    File No. 001-31932

Ladies and Gentlemen:

Reference is made to the letter received by Hythiam, Inc. from Mr. Rosenberg,
Senior Assistant Chief Accountant of the Securities and Exchange Commission (the “Staff”), dated
August 8, 2007 (the “Comment Letter”) relating to the
Staff’s comments on our Form 10-Q for the
period ending March 31, 2007. Our responses to the Staff’s comments contained in the
Comment Letter are set forth below. For the convenience of the Staff, each of the Staff’s comments
has been duplicated below and is set forth in italics immediately prior to the corresponding
response.

Form 10-Q — Period Ending March 31, 2007

Part 1 — Financial Information, page 2

Item 1. — Financial Statements, page 3

Notes to Consolidated Financial Statements, page 6

Note 3-Acquisition of Woodcliff and Controlling Interest in CompCare, page 13

    1.

    Please tell us how your “corporate operations” qualifies as both a
Reporting Unit under FAS 142 paragraphs 30, 34 and 35 and an Operating
Segment under FAS 131 paragraphs 10 and 11 to allow it to be assigned
the Goodwill and Intangibles from the acquisition of Woodcliff
(CompCare).

    RESPONSE: In response to your letter, we reassessed our segment reporting practices for the
second quarter ended June 30, 2007 and determined that we will no longer use or refer to
“corporate operations” as an operating segment or reporting unit. Consequently, our footnote
and MD&A segment disclosures in Note 5 — Segment Information and Management’s Discussion and
Analysis (MD&A), ‘Results of Operations’ in our
June 30, 2007 Form 10-Q have been changed to
reflect the revised presentation.

    Initially, management determined that it would assess segment performance based on operating
income or loss, which excluded non-operating items like interest income and interest expense.
Additionally, CompCare’s results, which were included in the behavioral health managed care
segment, were being evaluated on a stand-alone reporting basis, excluding the effects of
purchase accounting. The goodwill and intangible assets acquired in the CompCare acquisition
and all remaining non-operating income and expenses, were retained in corporate operations. We
have revised our approach of evaluating segment performance to focus on income or loss before
taxes, including non-operating income and expenses. Also, intangible assets related to the
CompCare acquisition are now assigned to the behavioral health care services segment operations to
which they

    relate, and goodwill has been assigned to the healthcare services segment since
this is the segment that is expected to benefit from the synergies resulting from the
acquisition.

    2.

    With regard to the acquisition of Woodcliff, please provide in
disclosure-type format a discussion of how the estimated fair values
of the amortizable intangible assets were determined. Also explain why
the amount allocated to goodwill was so significant in relation to the
amounts allocated to intangible assets. Refer to paragraph 51B of FAS 141.

    RESPONSE: The allocation of the total acquisition cost is based primarily on a valuation of
identifiable intangible assets completed by an independent valuation
specialist, Actuarial Risk Management. We enhanced
our disclosure in Note 3 — ‘Acquisition of Woodcliff and Controlling Interest in CompCare’ in
our June 30, 2007 Form 10-Q to include such a statement and we also noted that the allocation of the
acquisition cost could change based on resolution of contingencies related to assumed
liabilities. We understand that references to the use of a specialist require the consent of
that person in 1933 Act filings and will include such consent in any subsequent 1933 Act
filing that incorporates by reference this Form 10-Q.

    We believe our association with CompCare creates synergies to facilitate the use of PROMETA
treatment programs by managed care treatment providers and to provide access to an
infrastructure for our planned disease management product offerings. CompCare’s infrastructure
is already in place to provide substance abuse/dependence disease management to accommodate
nationwide third party reimbursement that we expect will be driven by positive outcomes from
PROMETA pilots currently underway with managed care entities and various criminal justice
systems. These statements were included in Part 1, Item 1. Business on page 4 of our 2006 Form
10-K where we discussed the key strategies and benefits expected from our association with
CompCare. The first statement was repeated in Note 3 at the end of the second paragraph on
page 13 in our March 31, 2007 Form 10Q. The excess amount of purchase price allocated
to goodwill compared to the amounts allocated to identified intangible assets reflects the much greater
value that we placed on such synergies compared to the expected future value attributable to the managed
care contracts and other intangible assets acquired.  The lower amount of value attributed to
CompCare’s identified intangible assets was also partly driven by the existing accumulated
deficit in stockholders’ equity of CompCare at the time of the acquisition.

    We enhanced the disclosure in Note 2 — ‘Summary of Significant Accounting Policies’ under the
caption ‘Goodwill and Other Intangible Assets’ on page 11
in our June 30, 2007 Form 10-Q to
describe why our purchase price resulted in the recognition of goodwill in accordance with FAS
141. We will expand our disclosure in future filings to name the
valuation specialist and to explain why the amount allocated to
goodwill was so significant in relation to the amounts allocated to
the identified intangible assets.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Contractual Obligations and Commercial Commitments, page 28

    3.

    Please provide us in a disclosure-type format a revised contractual
obligations table that includes your Accrued Claims Payable and
Accrued Reinsurance Claims Payable as it would appear that these
liabilities represent future legal obligations of the Company and are
material. The purpose of Financial Reporting Release 67 is to obtain
enhanced disclosure concerning a registrant’s contractual payment
obligations and the exclusion of ordinary course items would be
inconsistent with the objective of the Item 303(a)(5) of Regulation
S-K.

    RESPONSE: In response to your letter, we included accrued claims payable and accrued
reinsurance claims payable in the contractual obligations table in
our June 30, 2007 Form 10-Q. We
did not include these items in the table for our March 31, 2007
Form 10-Q since there is typically
no minimum contractual commitment associated with such claims and because of the short-term
classification of these items on our balance sheet. Additionally, we noted that the practice
among companies in the managed care industry regarding the inclusion of these items in the
table is varied. The following revised table,

    along with the explanatory footnotes, was included in ‘Contractual Obligations and Commercial
Commitments’ on page 28 in our June 30, 2007 Form 10-Q:

    Less than

    More than

    Contractual Obligations

    Total

    1 year

    1 - 3 years

    3 - 5 years

    5 years

    Long-term debt obligations

    $
    15,712

    $
    1,246

    $
    14,466

    $
    —

    $
    —

    Claims payable (1)

    5,183

    5,183

    —

    —

    —

    Reinsurance claims payable (2)

    2,526

    2,526

    —

    —

    —

    Capital lease obligations

    633

    225

    318

    90

    —

    Operating lease obligations (3)

    4,866

    1,500

    2,636

    730

    —

    Contractual commitments for clinical studies

    3,907

    3,907

    —

    —

    —

    $
    32,827

    $
    14,587

    $
    17,420

    $
    820

    $
    —

    (1)

    These claim liabilities represent the best estimate of benefits to be paid under
capitated contracts and consist of reserves for claims and IBNR. Because of the nature of
such contracts, there is typically no minimum contractual commitment associated with
covered claims. Both the amounts and timing of such payments are estimates, and the actual
claims paid could differ from the estimated amounts presented.

    (2)

    This item represents a potential liability to providers relating to denied claims for
a terminated contract. Management believes no further unpaid claims remain, but has not
reduced the liability since the statutory time limits have not expired relating to such
claims (See Note 6 — Major Customer/Contracts).

    (3)

    Operating lease commitments for Hythiam and CompCare’s corporate office facilities
and two PROMETA Centers, including deferred rent liability.

Company Acknowledgement

     Pursuant to the Staff’s request, we hereby acknowledges that:

    •

    We are responsible for the adequacy and accuracy of the disclosure in the filings;

    •

    Staff comments or changes to
disclosure in response to staff comments do
not foreclose the Commission from taking
any action with respect to the filing; and

    •

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

If the Staff has any questions or comments regarding the foregoing or requires additional
information, please contact the undersigned at (310) 444-4320. Facsimile transmissions may also be
sent to the undersigned at (310) 444-5300.

    Very truly yours,

    /s/ Chuck Timpe

Chuck Timpe

    Chief Financial Officer

Via Facsimile and U.S. Mail
Mail Stop 6010

                                                                                                August 8, 2007

Terren S. Peizer
Chief Executive Officer
Hythiam, Inc.
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025

Re: Hythiam, Inc.
 Form 10-K for Fiscal Year Ended December 31, 2006 - Filed March 15, 2007
 Form 10-Q for the Period Ended March 31, 2007 - Filed May 9, 2007
File No. 001-31932

Dear Mr. Peizer:

We have reviewed your filings and have the following comments.  We have
limited our review to only your financial stat ements and related disclosures and do not
intend to expand our review to  other portions of your documents.  In our comments, we
ask you to provide us with information so we may better understa nd your disclosure.
Please be as detailed as nece ssary in your explanation.  Afte r reviewing this information,
we may raise additional comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filings.  We look forward to working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Form 10-Q – Period Ending March 31, 2007

Part 1 – Financial Information, page 2

Item 1. – Financial Statements, page 3

Notes To Consolidated Financial Statements, page 6

Note 3. Acquisition of Woodcliff and Contro lling Interest in CompCare, page 13

Terren S. Peizer
Hythiam, Inc.
August 8, 2007  Page 2

1. Please tell us how your “corporate operat ions” qualifies as both a Reporting Unit
under FAS 142 paragraphs 30, 34 and 35 and an Operating Segment under FAS 131 paragraphs 10 and 11 to allow it to be  assigned the Goodwill and Intangibles
from the acquisition of Woodcliff (CompCare).

2. With regard to the acquisition of Woodc liff, please provide in disclosure-type
format a discussion of how the estimated fair values of the amortizable intangible assets were determined.  Also explai n why the amount allocated to goodwill was
so significant in relation to the amounts al located to the intangible assets.  Refer
to paragraph 51b of FAS 141

Item 2. Management’s Discussion and Analys is of Financial Condition and Results of
Operations, page 18

Contractual Obligations and Comm ercial Commitments, page 28

3. Please provide us in a disclosure-type format a revised contractual obligations table that includes your Accrued Claims Payable and Accrued Reinsurance
Claims Payable as it would appear that these liabilities represent future legal obligations of the Company and are mate rial. The purpose of Financial Reporting
Release 67 is to obtain enhanced disclosu re concerning a regist rant’s contractual
payment obligations and the exclusion of ordinary course items would be
inconsistent with the ob jective of the Item 303(a)(5) of Regulation S-K.

*    *    *    *

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your responses to our comments and provide the requested information.  Detailed letters gr eatly facilitate our
review.  Please furnish the letter to us via EDGAR under the form type label CORRESP.

 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filings to be certain that the filings include all information required under the Securities Exchange Act of 1934 and that they have provided all information
investors require for an informed invest ment decision.  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.

 In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filings;

Terren S. Peizer
Hythiam, Inc.
August 8, 2007  Page 3
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filings or in response to our comments on your filings.

You may contact James Pe klenk, Staff Accountant, at (202) 551-3661, or Lisa
Vanjoske, Assistant Chief Accountant, at (202) 551-3614, if you have questions regarding the comments.  In th is regard, do not hesitate to  contact me, at (202) 551-3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief Accountant

CORRESP
1
filename1.htm

Hythiam, Inc.

[HYTHIAM, INC. LETTERHEAD]

April 3, 2007

VIA EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attn: Jeffrey Riedler, Assistant Director

    Re:

    Hythiam, Inc.

Registration Statement on Form S-3

File No. 333-140114

Dear Mr. Riedler:

     Hythiam, Inc. hereby requests acceleration of the effective date of the above-referenced
registration statement on Form S-3 for the resale of 4,105,258 shares of common stock of the
registrant by the Selling Stockholders named in the registration statement, so that such
registration statement shall become effective at 2:00 p.m. Eastern time on Friday, April 6, 2007,
or as soon thereafter as practicable.

     The registrant acknowledges that should the Commission or the staff, acting pursuant to
delegated authority, declare the filing effective, it does not foreclose the 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 registrant from its
full responsibility for the adequacy and accuracy of the disclosure in the filing; and the
registrant may not assert this action as defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

    Respectfully yours,

HYTHIAM, INC.

    By:
    /s/ CHUCK TIMPE

    Chuck Timpe

    Chief Financial Officer

cc: John C. Kirkland, Esq.

Mail Stop 6010

         February 14, 2007

John C. Kirkland, Esq.
Dreier Stein & Kahan LLP
Hythiam, Inc.
The Water Garden
1620 26Th Street – 6th Floor – North Tower
Santa Monica, California 90404

Re:   Hythiam, Inc.
Form S-3 Registration Statement
Filed January 19, 2007
 File No. 333-140114

Dear Mr. Kirkland:

We have limited our review of your filing to the issues we have addressed in our
comments.  Where indicated, we think you should revise your document in response to these
comments.  If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary.  Please be as detailed as necessary in your explanation.  In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.  After reviewing this information, we may raise additional comments.  After our comments have been satisfied, we will consider your request for acceleration of the effective date of the registration statement.
Please understand that the purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to working with you in these respects.  We welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Comments

1. Please refer to the Selling Stockholder table on page 12 of the registration statement.  Please tell us whether any of the selling shareholders are broker-dealers or affiliates of broker-dealers.

John C. Kirkland Hythiam, Inc. February 14, 2007 Page 2
2. You must amend the registration statement to state, for each seller that is an affiliate of a broker-dealer, that the seller purchased the securities in the ordinary course of business and that at the time of the purchase of the securities to be resold, the seller had no agreements or understandings, directly or indirectly, with any person to distribute the securities.  If you are unable to make that statement, you must amend the registration statement, before effectiveness, to be on a form that the company is eligible to use to make a primary offering and the prospectus must state that the seller is an underwriter.

3. Any seller who is a broker-dealer must be identified as an underwriter in the prospectus, and the registration statement must be on a form that the company is eligible to use to make a primary offering.  The only exception to this is if the securities being resold were received as compensation for underwriting activities.

As appropriate, please amend your registration statement in response to these comments.
You may wish to provide us with marked copies of the amendment to expedite our review.  Please furnish a cover letter with your amendment that keys your responses to our comments and provides any requested information.  Detailed cover letters greatly facilitate our review.  Please understand that we may have additional comments after reviewing your amendment and responses to our comments.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes all information required under the Securities Act of 1933 and that they have provided all information investors require for an informed investment decision.  Since the company and its management are in possession of all facts relating 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 the company requests acceleration of the
effective date of the pending registration statement, it should furnish a letter, at the time of such request, acknowledging that:

‚ should the Commission or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the 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 the disclosure in the filing; and

John C. Kirkland Hythiam, Inc. February 14, 2007 Page 3
‚ the company may not assert staff comments and 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.

 In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in connection with our review of your filing or in response to our comments on your filing.

We will consider a written request for acceleration of the effective date of the registration
statement as confirmation of the fact that those requesting acceleration are aware of their
respective responsibilities under the Securities Act of 1933 and the Securities Exchange Act of 1934 as they relate to the proposed public offering of the securities specified in the above registration statement.  We will act on the request and, pursuant to delegated authority, grant acceleration of the effective date.
We direct your attention to Rules 460 and 461 regarding requesting acceleration of a
registration statement.  Please allow adequate time after the filing of any amendment for further review before submitting a request for acceleration.  Please provide this request at least two business days in advance of the requested effective date.

Please contact Mary K. Fraser at (202) 551-3609 or me at (202) 551-3710 with any other
questions.

     S i n c e r e l y ,

     J e f f r e y  R i e d l e r
Assistant Director

CORRESP
1
filename1.htm

corresp

[HYTHIAM, INC. LETTERHEAD]

September 29, 2005

BY EDGAR

Securities and Exchange Commission

Division of Corporate Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

Attn: Assistant Director Jeffrey P. Riedler

    Re:
    Hythiam, Inc.

Registration Statement on Form S-3/A

Filed September 29, 2005

File Number 333-128544

Dear Mr. Riedler:

     Hythiam, Inc. hereby requests acceleration of the effective date of the above-referenced
registration statement on Form S-3 so that such registration statement shall become effective at
9:00 a.m. EST on Monday, October 3, 2005, or as soon thereafter as practicable.

     The registrant acknowledges that should the Commission or the staff, acting pursuant to
delegated authority, declare the filing effective, it does not foreclose the 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 registrant from its
full responsibility for the adequacy and accuracy of the disclosure in the filing; and the
registrant may not assert this action as defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

    Respectfully yours,

HYTHIAM, INC.

    By:
    /s/ CHUCK TIMPE

    Chuck Timpe

    Chief Financial Officer

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 6010

							September 29, 2005

Terren S. Peizer
Chief Executive Officer
Hythiam, Inc.
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025

Re:	Hythiam Inc.
	Registration Statement on Form S-3
	File Number 333-128544

Dear Mr. Peizer:

      This is to advise you that we have limited our review of the
above referenced registration statements to only the issues
identified below.  Where indicated, we think you should revise
your
document in response to these comments.  If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary.  Please be as detailed as necessary in
your
explanation.

      Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

Form S-3
1. Pursuant to Rule 413, a post-effective amendment cannot be used
to
registered additional securities.  As such, please revise your
registration statement to delete all language referring to a post-
effective amendment, and include a discussion regarding the use of
Rule 429 to include shares from a previous registration statement
to
the current registration statement.

*	*	*

      As appropriate, please amend your registration statement in
response to these comments.  You may wish to provide us with
marked
copies of the amendment to expedite our review.  Please furnish a
cover letter with your amendments that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review.  Please file
your cover letter on EDGAR under the form type label CORRESP.
Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating 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 the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:

* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
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 the disclosure in the filing; and

* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

	In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.

	We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.

Please contact Song Brandon at (202) 551-3621or me at (202) 551-
3710
with any questions.

							Sincerely,

							Jeffrey P. Riedler
							Assistant Director

cc:	John C. Kirkland, Esq.
Greenberg Traurig, LLP
2450 Colorado Avenue, Suite 400E
Santa Monica, California 90404

??

??

??

??

</TEXT>
</DOCUMENT>

CORRESP
1
filename1.htm

corresp

[HYTHIAM, INC. LETTERHEAD]

April 1, 2005

BY FAX AND EDGAR

Securities and Exchange Commission

Division of Corporate Finance

450 Fifth Street, N.W.

Washington, D.C. 20549

Attn: Jeffrey Riedler, Assistant Director

    Re:

    Hythiam, Inc.

    Post-Effective Amendment No. 2 to Form S-1 on Form S-3

    File Number: 333-112353

Dear Mr. Riedler:

     Hythiam, Inc. hereby requests acceleration of the effective date of the above-referenced
post-effective amendment No. 2 to Form S-1 on Form S-3 registration statement so that such
registration statement shall become effective at 9:00 a.m. EST on Wednesday, April 6, 2005, or as
soon thereafter as practicable.

     The registrant acknowledges that should the Commission or the staff, acting pursuant to
delegated authority, declare the filing effective, it does not foreclose the 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 registrant from its
full responsibility for the adequacy and accuracy of the disclosure in the filing; and the
registrant may not assert this action as defense in any proceeding initiated by the Commission or
any person under the federal securities laws of the United States.

    Respectfully yours,

HYTHIAM, INC.

    By:
    /s/ CHUCK TIMPE

    Chuck Timpe

    Chief Financial Officer

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Via Facsimile and U.S. Mail
Mail Stop 03-09

										March 3, 2005

Terren S. Peizer
Chairman and Chief Executive Officer
Hythiam, Inc.
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, California 90025

Re:	Hythiam, Inc.
	Post-Effective Amendment to Form S-1 on Form S-3
      Filed February 18, 2005
	File Number 333-112353

Dear Mr. Peizer:
      This is to advise you that we have undertaken a limited
review
of the above referenced registration statement and have the
following
comments.  After and issues that arise during our examination of
the
request have been satisfied, we will consider your request for
acceleration of the effective date of the registration statement.

      Where indicated, we think you should revise your document in
response to these comments.  If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary.  Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.

      The purpose of our review process is to assist you in your
compliance with the applicable disclosure requirements and to
enhance
the overall disclosure in your filing.  We look forward to working
with you in these respects.  We welcome any questions you may have
about our comments or on any other aspect of our review.  Feel
free
to call us at the telephone numbers listed at the end of this
letter.

1. Please incorporate by reference your Form 10-K for the period
ended December 31, 2003.
2. Please file the consent of your independent auditors, BDO
Seidman.

*	*	*

      As appropriate, please amend your registration statement in
response to these comments.  You may wish to provide us with
marked
copies of the amendment to expedite our review.  Please furnish a
cover letter with your amendment that keys your responses to our
comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our review.  Please
understand that we may have additional comments after reviewing
your
amendment and responses to our comments.

      We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filings reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision.  Since the company and its management are in
possession of all facts relating 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 the company
requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such
request,
acknowledging that:

* should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
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 the disclosure in the filing; and
* the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

	In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in connection with our review of
your
filing or in response to our comments on your filing.

      We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.

      We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement.  Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration.  Please provide this
request at least two business days in advance of the requested
effective date.

      Please contact Albert Lee at (202) 824-5522 or me at (202)
942-
1840 with any questions.

      Sincerely,

								Jeffrey P. Riedler
								Assistant Director

cc:	John C. Kirkland
	Greenberg Traurig, LLP
	2450 Colorado Avenue, Suite 400E
	Santa Monica, California 90404

??

??

??

??

Terren S. Peizer
Hythiam, Inc.
Page 1

</TEXT>
</DOCUMENT>