Acadia Healthcare Under Federal Scrutiny
Acadia Healthcare, recognized as one of the largest for-profit psychiatric hospital chains in the United States, is currently facing a new wave of federal investigations regarding its patient admission practices and billing procedures. This announcement was made public on Friday, sparking concerns among investors.
The company, which operates over 50 psychiatric hospitals nationwide and relies heavily on government insurance programs for revenue, revealed that federal prosecutors in Manhattan recently requested information from them. Additionally, Acadia received subpoenas from a federal grand jury in Missouri. The company anticipates similar inquiries from the Securities and Exchange Commission (SEC) in the near future.
As news of these investigations broke, investors reacted swiftly, leading to a significant drop in Acadia’s stock price, which plummeted by more than 25 percent during Friday morning trading. Although some losses were mitigated later in the day, the initial impact was felt strongly within the market.
The impetus for these federal investigations seems to stem from a profound exposé conducted by The New York Times. Their investigation revealed alarming practices at Acadia, including instances where patients were held against their will in a manner that seemingly contravened state laws. Reports indicated that some individuals seeking routine mental health care in emergency rooms were subsequently transferred to Acadia facilities, where they found themselves locked in without consent.
This investigative report drew from a wealth of sources, including official complaints, court documents, and testimonies from numerous current and former Acadia employees, alongside patients who described feeling trapped within the confines of the company’s facilities.
The timing of the federal inquiries is particularly notable, coinciding with the Justice Department’s recent announcement that Acadia had agreed to a substantial settlement of nearly $20 million. This settlement addressed claims of defrauding government health insurers by retaining patients longer than medically necessary and admitting individuals who did not require hospitalization. Moreover, the government highlighted that once patients were admitted, Acadia often failed to provide adequate therapy, and staffing levels were alarmingly low, resulting in tragic incidents such as assaults and suicides.
As part of the settlement, which covered conduct from 2014 through 2017, Acadia agreed to compensate the federal government along with four states—Florida, Georgia, Michigan, and Nevada—for alleged violations of state laws. It is important to note that Acadia did not admit to any wrongdoing in this case.
In its latest communication, Acadia stated that the recent federal subpoenas and information requests pertain specifically to its admissions processes, the duration of patient stays, and billing practices. The company expressed its commitment to fully cooperating with authorities, while also indicating that it is unable to predict whether these investigations will affect its business operations.
Furthermore, Acadia responded to the allegations raised in The Times report, asserting that the patient experiences described were “completely inconsistent with Acadia’s policies.” They emphasized that all decisions regarding patient care—determining the necessity of treatment and its duration—are made by licensed physicians in accordance with the law.
In a related development, it has been reported that several former employees of Acadia in Georgia and Missouri have recently been approached by agents from the FBI, as well as the inspector general’s office of the Health and Human Services Department, indicating a broader investigation into the company’s practices.
