Mental health industry watchdog praises recent Senate Committee on Finance report, “Warehouses of Neglect,” for exposing egregious systemic abuse of youths within the behavioral treatment industry. However, they urge even stronger penalties against offenders to ensure accountability and justice.

By Jan Eastgate
President CCHR International
June 21, 2024

CCHR applauds the recent Senate Committee on Finance report exposing youth residential treatment facilities (RTFs). The report was the culmination of Committee Chair Ron Wyden’s two-year investigation, which uncovered systemic child abuse and neglect in youth RTFs funded by federal dollars, including Medicaid and child welfare funding. The investigation into four major operators—Universal Health Services, Acadia Healthcare, Devereux Advanced Behavioral Health, and Vivant Behavioral Healthcare (formerly known as Sequel)—revealed RTFs routinely subject children to abuse, inappropriate restraints, unsafe conditions, and inadequate behavioral health care.[1]

The groundbreaking 136-page report, “Warehouses of Neglect: How Taxpayers Are Funding Systemic Abuse in Youth Residential Treatment Facilities,” released at a hearing in Washington, DC, on 12 June 2024, is testimony to the egregious abuse in the for-profit youth mental health system, about which CCHR has been informing legislators since 2015.[2]  

The Senate investigators concluded that “abuse, neglect, overuse of restraint and seclusion, and inadequate staffing are direct results of choices RTF companies have made about how to run their businesses, many of which are in violation of long-standing federal rules.”[3] 

CCHR agrees with Senator Wyden’s solution to “shut off the fire hose of federal funding” for the industry.[4] However, we see that stiffer regulations and stronger penalties for violations are needed to protect children.

“The harms, abuses, and indignities children in [residential treatment facilities] have experienced and continue to experience today occur inevitably and by design: they are the direct causal result of a business model that has incentive to treat children as payouts and provide less than adequate safety and behavioral health treatment in order to maximize operating and profit margin,” the report states. Further, “Providers will continue to operate this model because it’s good business, unless there is some bold intervention.”[5]

In 2020, CCHR reported at least 32 cases of sexual abuse in facilities owned by Universal Health Services, including several convictions of staff responsible; about 18 abuses involving seclusion rooms or restraints use in children as young as 6, and including 3 deaths; wrongful deaths, assault; breaking a patient’s arm and fracturing the nose of another; and, at least 6 suicides that may have been preventable.[6]

It has continued to investigate and expose abuses not only in UHS, Acadia Healthcare and other facilities but also in the wider spectrum of all behavioral-psychiatric treatment facilities for youths, including “wilderness” camps. This includes more recently the death of a 12-year-old on February 3, 2024, atTrails Carolina in North Carolina, within 24 hours of his admission. Transylvania County detectives found him lying on the floor of a bunkhouse, naked from the waist down, with his pants and underwear on the floor at his right shoulder. The case is under investigation by the local Sheriff’s office, the FBI, and the NC Department of Health and Human Services. Trails’ license was revoked in May 2024 and it has 60 days to appeal.[7] A petition online calls for its closure, which can be signed here.

This case has also been reported to the Senate Committee on Finance as an example of the wider implications of abuses in all facilities treating troubled children and youths.

According to the most recent data from the Centers for Disease Control and Prevention, there are 30,600 residential care communities in the U.S. with a total of 1,197,600 licensed beds across the country, of which 81.9% have for-profit ownership.[8]

Companies turned over 25,000 pages of documents to the committee.[9] Senator Wyden said during his prepared remarks that Marc Miller, the CEO of UHS, was invited but declined to participate in the meeting.[10]

Senate staff also visited facilities in person, in what they describe as a representative sample of the industry. “Some kids they met were so heavily dosed on psychotropic drugs they appeared to move in a daze and struggled to hold conversations. A nurse at one site told investigators most kids took five to eight medications,” The Imprint reported.[11]

The troubled teen treatment industry was found to prioritize cost-cutting, which often resulted in severe trauma or even death for the children involved. It was concluded that sub-par conditions are baked into the taxpayer-supported business model of many residential treatment facilities, known as RTFs — that institutions fill beds while hiring minimal staff with no experience to “optimize revenues,” costing taxpayers or parents as much as $1,200 a day per child.[12]

Senator Wyden continued: “The findings are simply horrific. And the report shows a terrible pattern of mistreatment and abuse happening to kids — at facilities which now receive billions of dollars in federal funds.” Further, “Overwhelmingly, it’s clear that the operating model for these facilities is to warehouse as many kids as possible while keeping costs low, in order to maximize profit.”[13]

The presentation of the report enlisted the support of Paris Hilton, a staunch critic of the at-risk youth industry, following her own experience in a Utah facility as a teen. Paris’s group organized survivors of behavioral treatment facilities to submit testimony for the record, which Senator Wyden acknowledged during the hearing, holding up a thick stack of testimonies that had been submitted.  

“After reading it [the report], I honestly have never felt so seen and heard: it validates everything that I’ve been fighting for over the past four years,” Hilton said in a video statement. Addressing legislators, she said: “As a survivor, please do something. I am begging you to protect your constituents before it’s too late.”[14]

Both UHS and Acadia have been subject to federal Department of Justice and State Attorney General investigations and subsequent settlements of $132 million in 2020 for one behavioral chain, UHS.[15] Earlier this year, UHS settled a lawsuit over accusations that a minor was sexually abused at its Pavilion Behavioral Health in Illinois. A whopping $535 million jury verdict was delivered, which UHS is appealing.[16]

In 2019, Acadia Healthcare agreed to pay $17 million to settle accusations of fraud, representing the largest fraud-related settlement in the history of West Virginia, according to a settlement agreement with the state.[17] Last year, Acadia also settled a lawsuit for $400 million regarding the rape of an 8-year-old girl in one of its facilities in New Mexico.[18]

The report making several compelling recommendations, including that many states’ historic reliance on residential treatment facilities was inappropriate and, therefore, they should “ramp up their oversight capabilities for youth in both in-state and out-of-state facilities.”[19]

The recommendations are a huge step towards safeguarding troubled children but could have additional, stronger penalties for repeat offenders. Attention must be directed to the Joint Commission, a hospital oversight body that relies upon payments from hospitals it gives accreditation to, despite persistent abuses being reported. The report recommends the Commission should more actively monitor facilities’ implementation of corrective actions, including with revisits, and accrediting bodies should consider withholding accreditation when they identify sustained, longitudinal noncompliance.[20]

However, the Joint Commission itself needs an overhaul. The surveys the Commission asks hospitals to fill out are paid for by the healthcare corporations or facilities it is overseeing.[21] A 2008 Office of the Inspector General report, “Adverse Events in Hospitals: State Reporting Systems” said that the Joint Commission encourages but does not require accredited hospitals to report certain adverse events deemed sentinel events to the Joint Commission; i.e., a patient safety event that results in death, permanent harm, or severe temporary harm..[22] Staff from 15 of 26 states “acknowledged that hospitals do not always submit reports when adverse events occur.”[23]

A Seattle Times article on the Joint Commission says “private psychiatric hospitals” have a “hidden safety record, a human cost,” and while the commission posts its accreditation decisions online, its inspection reports are confidential.[24]

CCHR recommends the added protections:

• As a requirement for acquiring a state license and/or contracting with the Center for Medicare and Medicaid Services (CMS), mental health and behavioral treatment (congregate) facilities must ascribe in writing to a code of ethics and practice and legally swear to abide by it at all times, which includes agreeing to a policy of non-coercive or punitive use of restraints and seclusion, or other forms of physical or chemical restraint, including the use of medication to control behavior.

• Increase the penalties for hospitals and congregate treatment facilities that repeatedly violate plans of correction for deficiencies that put residents at risk, and to include hospital closure and steep fines.

• There should be uniform state restraint legislation throughout the country that aligns with the October 2023 World Health Organization  guidance of Mental Health, Human Rights and Legislation that calls for “all forms of restraint and seclusion in mental health services” to be eliminated because “Not only are seclusion and restraint contrary to international human rights law, their use is incompatible with a recovery approach, counters the purpose of care and can lead to physical and psychological harm, even death.” Legislation should “prohibit the use of seclusion and restraint in any health or social care facility.”[25]

• A national reporting system be established similar to the Food and Drug Administration’s MedWatch adverse drug reporting system, where consumers, their families and others can report incidents of abuse in hospitals (confidentially and without fear of reprisal.) All patients upon admission to a hospital to be informed in writing of this.

• Review the Federal Trade Commission’s approval of new mental health, substance abuse, or troubled teen behavioral hospitals, and to ensure all applications disclose any completed lawsuits against the company alleging fraud, abuse, negligence, or other actions that may have put patients at risk, as well as state agency sanctions and disciplinary measures.

• Demand proven, effective results for treatment programs offered children and teens, and implement a policy that works towards the de-escalation and reduction of psychotropic drug use in these age groups, and also prohibiting such drug use as “chemical restraint” to control behavior.

Breakdown and Sample of The Senate Report Findings:

On July 21, 2022, Senate Committee on Finance Chairman Wyden and Senate Health, Education, Labor, and Pensions Chair Murray co-launched an investigation into allegations of systemic abuse and neglect of children at RTFs operated by four providers, each owning facilities with a history of public abuse and neglect allegation (p. 14)

The Companies

Universal Health Services (UHS)

• In 2023, Marc Miller, UHS CEO, received total compensation of nearly $14.5 million. For year ending December 31, 2023, Medicaid represented 39% of UHS’ revenue in the Behavioral Health category, compared to 27% for its overall revenue, which includes medical facilities. The behavioral sector generated $6.2 billion, comprising 43% of the net revenue. (p. 28)

Acadia Healthcare

• In 2023 Christopher Hunter, Acadia’s CEO, received total compensation of nearly $7.5 million. For the year ending December 31, 2023, 53.9% of Acadia’s revenue came from Medicaid, compared to 50.6% in 2022. 2022 also represented an increase in the percentage of total revenue from Medicaid from the prior year (49.6% in 2021). Today, the company is valued at roughly $6.5 billion.11 (p. 29)

Sequel Youth & Family Services/Vivant

• Vivant, founded in 2021 by John “Jay” Ripley, is a private, for-profit company which does not have any public-facing corporate presence. Vivant was Ripley’s third foray into the youth behavioral health industry, having previously co-founded the private, for-profit RTF provider Sequel Youth and Family Services (Sequel) in 1999, and Youth Services International (YSI) before that. (p. 26) Ripley reported that he had recognized a demand for behavioral health services (at the time, a $135-billion dollar industry) and opened a series of RTFs under YSI. Ripley eventually sold his ownership stake in that company to co-found Sequel, through which he operated many of the same facilities as YSI. (p. 27)

• In 2021, after being plagued by reporting on abuse and neglect allegations, Sequel Youth & Family Services sold 13 facilities to a newly-incorporated company, Vivant Behavioral Health (Vivant), also founded by Jay Ripley. Vivant retained many members of Sequel leadership and its footprint has significant overlap with Sequel’s. (p.6) 

• “Public reporting has alleged that this move to private ownership has allowed providers to escape liability for serious allegations, including the death of a Sequel patient in 2020. Multiple former Sequel executives and staff joined Ripley at Vivant in leadership roles. Vivant and Sequel’s facility footprints initially overlapped significantly, and the two companies share leadership and staff, raising questions about whether Vivant is a new, wholly distinct entity.” (pp. 26-27) Ripley likened the demand for his facilities to “drinking from a firehose. ”When asked how his company is able to turn a profit, Ripley said that Sequel is able to get “good margins out of the per diems” states pay for placements. He shared his secret for how to accomplish this: “you can make money in this business if you control staffing.” (p. 27)

Devereux

• Devereux, headquartered in Villanova, Pennsylvania, is a non-profit company with a network of behavioral healthcare facilities. Devereux has a supporting not-for-profit organization, called The Helena Devereux Foundation, that holds and invests assets on its behalf. In 2021, Carl E. Clark, President and CEO of Devereux, received around $800,000 in reportable compensation and estimated other compensation. As of October 2023, according to Fitch, “the organization’s revenues are highly concentrated with governmental payors” with Devereux receiving half of its total revenue from Medicaid. As of the organization’s most recent IRS filing, the organization’s total revenue is more than $500 million. (p. 30)

Harm to and Sexual Assault of Children

• The risk of harm is endemic to the operating model of these companies. (p.3)

• Children suffer routine harm, including sexual, physical and emotional abuse. Horrific instances of sexual abuse persist. (p. 4)

• The risk of harm looms across the industry. This includes abusive interactions (emotional, verbal, physical, and sexual) by staff and other youth as well as harmful treatment practices, like seclusion and restraint. (p. 32)

• Public reporting of Devereux facilities in Pennsylvania, Florida, and Georgia, including an investigation detailing more than 40 instances of rape and sexual assault. A 2020 Philadelphia Inquirer investigation uncovered widespread sexual violence at Devereux facilities, finding more than 40 children were raped or sexually assaulted over 25 years at Devereux facilities. (p. 34)

Restraints

• RTFs have ignored federal restraint and seclusion regulations and their use amounts to abuse. (p. 4)

• At Piney Ridge Treatment Center (Acadia; Arkansas) staff routinely simultaneously chemically restrained and secluded children, in violation of federal regulation. At the same facility, staff conducted 110 restraints and seclusions in a 30-day period. (p. 4)

Foster Care Child Abuse

• In 2018, Congress amended Title IV-E by passing The Family First Prevention Services Act (Family First) which sought to prevent the need for foster care placements by investing in prevention services to prevent abuse and neglect. (p. 14)
• Medicaid is the primary payer for health care services for children in the child welfare system. (p. 14)

• Allegations of verbal abuse at facilities are widespread and, in some cases, appear to go unaddressed.

• In the Think of Us report “Away From Home” a child described being mocked by a staff member who said, “[t]hat’s why your mom didn’t want to keep you. That’s why you’re in foster care.” (p. 74, Think of Us, Away From Home: Youth Experiences of Institutional Placements in Foster Care, July 2021)

• Documents from Cedar Ridge Treatment Facility (UHS; Oklahoma) show that a staffer and a child had a “verbal exchange” where the staffer allegedly threatened, “I can make sure they put you back in foster care.” (p. 76)

In a 2020 joint investigation with The San Francisco Chronicle, The Imprint published Far from Home, Far from Safe, which revealed a pattern of abuse at dozens of facilities run by Sequel, where more than 1,200 California foster youth had long sent in violation of state law barring for-profit providers. All of the children sent out of state were brought back to California as a result of the reporting, and the governor signed a law barring foster youth and kids in the justice system from being sent out of state.[26]

Putting Profit Above Patients

• The RTF providers profit from filling large facilities to capacity while concurrently reducing the number of staff. Operators “optimize revenues and operating and profit margin.”[27] (pp. 3 & 4)

• The companies have created environments that are more like detention facilities than therapeutic settings. (p. 5)

• RTF industry leaders have an incentive to prioritize operating and profit margins over care, creating the conditions in which the children who are remanded to institutions leave worse off than when they arrived. (p. 25)

Hiring Criminals

• Facilities and individual actors at the facility or corporate level may be subject to criminal or civil proceedings for abuse, neglect, or other harms. (p. 20)

• Background checks, including state abuse registry checks and licensure checks, are not completed properly. In some cases, criminal history or background checks reveal that staff have histories that may disqualify them from working with children. (p. 107)

Joint Commission/Accreditation Agencies

The report detailed prior Government Accountability Office (GAO) investigations, all which failed to change the profitable, abusive climate. [From CCHR’s perspective, the underlying problem is the facilities know they can get away with abuse, knowing they simply have to submit a plan of correction, which they can violate time and time again, with impunity.]

• 2008: The GAO released a second report detailing how “[w]eaknesses in the current federal-state regulatory structure have failed to safeguard the civil rights and well-being of some of the nation’s most vulnerable youth.” (pp. 17- 18)

• 2015: GAO reviewed state use of congregate care for children in the child welfare system and found that, while Health and Human Services (HHS) had taken steps to address overreliance on facilities, inappropriate congregate care, including RTF placements, for this population continued.

• 2022: GAO set out opportunities to improve oversight agencies’ (e.g., child welfare system, education system, and facility licensing) information sharing to better prevent abuse and neglect in youth congregate care.

• Many of the GAO’s recommendations, across all reports, remain unaddressed by the relevant government entities. (pp. 17- 18)

• State and federal oversight authorities failed to effectively identify and address harm to children at RTFs. (p. 6)

Recommendations

• Congress must legislate to improve the conditions in RTFs and the broader behavioral health landscape (p. 7)

• States should improve RTF oversight activities in order to compel providers to raise the bar on standards within RTFs. (p. 8)

• A significant portion of foster children placed at RTFs have no demonstrated behavioral health needs, so family court judges should be dissuaded from placing children in RTFs, particularly if those facilities have a record of abuse, neglect, or overuse of restraint or seclusion (p. 9)

• Accrediting bodies, such as the Joint Commission, should closely monitor facilities following the discovery of noncompliance with requirements or elements. In instances where accrediting entities identify areas of noncompliance, they should more actively monitor facilities’ implementation of corrective actions, including with revisits.

• Accrediting bodies should consider withholding accreditation when they identify sustained, longitudinal noncompliance. (p. 10)

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[1] Samantha Manning, “Senate investigation reveals abuses, neglect at federally funded youth treatment centers,” WDBO Orlando News & Talk, 13 June 2024, https://www.wdbo.com/news/trending/senate-investigation-reveals-abuses-neglect-federally-funded-youth-treatment-centers/GTXWTKBKUZA5NCXKJDGL3NOVWM/; “Wyden Investigation Exposes Systemic Taxpayer-Funded Child Abuse and Neglect in Youth Residential Treatment Facilities,” U.S. Senate Committee on Finance Newsroom, 12 Jun 2024, https://www.finance.senate.gov/chairmans-news/wyden-investigation-exposes-systemic-taxpayer-funded-child-abuse-and-neglect-in-youth-residential-treatment-facilities

[2] “Psychiatric Hospital Chain Reports Further Govt. Troubles—Universal Health Services’ Timberlawn Hospital Could Close Because of Jeopardy to Patients,” CCHR International, 10 Aug. 2015, https://www.cchrint.org/2015/08/11/universal-health-services-timberlawn-hospital-could-close-jeopardy-to-patients/; “Concerns Increase About Abuses & Rights Violations Reported At Universal Health Services Behavioral Centers,” CCHR International, 4 Apr. 2016, https://www.cchrint.org/2016/04/04/concerns-increase-about-abuses-at-uhs-behavioral-centers/

[3] Senate Finance Committee report, “Warehouses of Neglect: How Taxpayers Are Funding Systemic Abuse in Youth Residential Treatment Facilities,” released on 12 June 2024, p. 7, https://www.finance.senate.gov/imo/media/doc/rtf_report_warehouses_of_neglect.pdf

[4] Michael Fitzgerald and Sara Tiano, “Senate Investigation Slams Residential Treatment Centers for Children as ‘Warehouses of Neglect,’” The Imprint, 12 June 2024, https://imprintnews.org/top-stories/senate-investigation-slams-residential-treatment-centers-for-children-as-warehouses-of-neglect/250056

[5] Chris Larson, “Senate Finance Committee Releases Excoriating Investigation of Abuse in At-Risk Youth Industry,” Behavioral Health Business, 12 June 2024, https://bhbusiness.com/2024/06/12/senate-finance-committee-releases-excoriating-investigation-of-abuse-in-at-risk-youth-industry/

[6] https://www.cchrint.org/2020/10/30/child-abuse-allegations-in-the-behavioral-psychiatric-industry-universal-health-services-uhs/

[7] Jennifer Emert, “Warrants show clearer timeline, disturbing details after boy found dead at Trails Carolina,” ABC 13 News, 13 Feb. 2024, https://wlos.com/news/local/trails-carolina-death-investigation-lake-toxaway-transylvnia-county-search-warrants-disturbing-details-12-year-old-boy-timeline-state-oversight-requirements-north-carolina-department-health-human-services-regulation

[8] Op. cit., Senate Finance Committee report, p. 25

[9] Ibid., p. 3

[10] Op. cit., Chris Larson, Behavioral Health Business; Op. cit., U.S. Senate Committee on Finance Newsroom

[11] Op. cit., Michael Fitzgerald and Sara Tiano, The Imprint

[12] Ibid.

[13] Ibid.

[14] Op. cit., Chris Larson, Behavioral Health Business

[15] “UHS—For-Profit Psych Hospital’s $132 Million Payout Over DOJ & MA Fraud Investigations,” CCHR International, 20 July 2020, https://www.cchrint.org/2020/07/20/uhs-for-profit-psych-hospitals-132-million-payout-over-doj-ma-fraud-investigations/

[16] “Jury renders $535 million judgment against The Pavilion in 2020 rape of patient,” The News Gazette, 29 Mar. 2024, https://www.yahoo.com/news/jury-renders-535-million-judgment-145500758.html; Taylor Kopf, “Former employees say short-staffed NC psych hospital rife with violence, abuse,” NC Health News, 6 May 2024, https://www.northcarolinahealthnews.org/2024/05/06/former-employees-say-short-staffed-nc-psych-hospital-rife-with-violence-abuse/

[17] “UK Legislators Called On To Increase Oversight And Criminal Accountability In U.S. Owned For-Profit Behavioral Hospitals,” CCHR International, 5 Nov. 2019, https://www.cchrint.org/2019/11/05/uk-legislators-called-on-to-increase-oversight-and-criminal-accountability/, citing “Acadia Healthcare to pay $17 million in settlement of Medicare fraud case: Medicaid paid Acadia’s facilities a much higher amount for blood and urine tests than its lab had charged for the analysis,” Healthcare Finance, 8 May 2019, https://www.healthcarefinancenews.com/news/acadia-healthcare-pay-17-million-settlement-medicare-fraud-case

[18] “Acadia Healthcare Reaches $400M Settlement for Abuse Litigation,” Behavioral Health Business, 31 Oct. 2023, https://bhbusiness.com/2023/10/31/acadia-healthcare-reaches-400m-settlement-for-abuse-litigation/

[19] Op. cit., Chris Larson, Behavioral Health Business

[20] Op. cit., Senate Committee on Finance report, p. 10

[21]  https://www.jointcommission.org/what-we-offer/accreditation/health-care-settings/behavioral-health-care/learn/pricing/?utm_content=dm-o-205

[22]  Department of Health and Human Services, OFFICE OF INSPECTOR GENERAL, “ADVERSE EVENTS IN HOSPITALS: STATE REPORTING SYSTEMS,” https://oig.hhs.gov/oei/reports/oei-06-07-00471.pdf; https://www.jointcommission.org/resources/sentinel-event/#:~:text=A%20sentinel%20event%20is%20a,harm%2C%20or%20severe%20temporary%20harm

[23] Department of Health and Human Services, OFFICE OF INSPECTOR GENERAL, “ADVERSE EVENTS IN HOSPITALS: STATE REPORTING SYSTEMS,” https://oig.hhs.gov/oei/reports/oei-06-07-00471.pdf

[24] “UHS: Multiple Child Sexual Abuse Charges And $127m Lawsuit,” CCHR International, 27 Oct. 2020, https://www.cchrint.org/2020/10/27/uhs-multiple-child-sexual-abuse-charges-and-127m-lawsuit/; “At private psychiatric hospitals, a hidden safety record, a human cost: The hidden costs of the mental-health industry’s expansion,” Seattle Times, 8 Sept. 2019, https://projects.seattletimes.com/2019/public-crisis-private-toll-part2/

[25] https://www.cchrint.org/2023/09/18/who-guideline-condemns-coercive-psychiatric-practices/, citing: “Guidance on Mental Health, Human Rights, and Legislation,” World Health Organization & United Nations Office of the High Commissioner for Human Rights, Oct. 2023, p. 72, https://www.ohchr.org/sites/default/files/documents/publications/WHO-OHCHR-Mental-health-human-rights-and-legislation_web.pdf

[26] Op. cit., Michael Fitzgerald and Sara Tiano, The Imprint

[27] Op. cit., Senate Finance Committee report, pp. 3 & 4