The mental health watchdog says recent legislation improving oversight of youth behavioral facilities offers national hope, but warns that psychiatric hospitals involved in harm and fraud are evading justice through “no liability” deals.

By Jan Eastgate
President CCHR International
October 4, 2024

California’s newly enacted Accountability in Children’s Treatment Act could pave the way for nationwide protections for youths in behavioral treatment centers. Signed into law on September 27, the law establishes an online dashboard to report the use of restraints, seclusion rooms, and any serious harm occurring in Short-Term Residential Therapeutic Programs (STRTPs). CCHR commends celebrity entrepreneur, advocate and mother, Paris Hilton, for her powerful testimony before the state legislature calling for greater transparency and accountability in the “troubled teen” treatment industry.[1] 

Increased scrutiny and reporting are vital, but greater accountability is even more important. This includes revoking the right of residential treatment centers and psychiatric hospitals to involuntarily detain and treat patients against their will to milk insurance, with violations leading to the cancellation of insurance contracts and hospital closures. Psychiatric hospitals and their corporate owners should not be allowed to escape accountability through deals of “no liability admissions” that merely pay lip service with multimillion-dollar settlements, while they continue the same abusive practices, raking in billions of dollars in revenue.

Our concern comes in the wake of several recent New York Times exposés of unscrupulous practices uncovered in facilities owned by Acadia Healthcare. Last month the company agreed to pay $19.85 million to settle a U.S. Dept. of Justice investigation into its defrauding Medicaid and Medicare while admitting no wrongdoing.[2] Prosecutors in the DOJ case said that Acadia held patients for longer than necessary and admitted people who didn’t need to be there. Acadia reportedly kept staffing dangerously low, leading to assaults and suicides.[3] Acadia is now “facing a fresh round of federal investigations into how the company admits patients and bills for their stay,” according to the New York Times. In some states, the company is the subject of a grand jury investigation while the FBI and Health and Human Services are also investigating.[4]

Acadia also expects to receive similar inquiries from the Securities and Exchange Commission (SEC).[5] On September 9, the company agreed to pay $1.39 million to settle SEC charges for violating whistleblower protections. It was charged for having agreements in place that impeded employees from directly communicating with the SEC about potential securities violations.[6]

On October 3, Representatives Adam Schiff (D-Calif.), Judy Chu (D-Calif.), and Julia Brownley (D-Calif.) announced they had written to Acadia and demanded answers about their practices as exposed in the New York Times investigation. They raised concerns about patient intake processes, emergency hold evaluations, patient rights, communication access, and the qualifications of Acadia’s “assessors.”[7]

In July 2023, a jury in New Mexico also ruled that Acadia Healthcare pay $405 million in damages to a plaintiff involving a case of sexual abuse of a child. Again, the company admitted no liability.[8]

Another for-profit company that owns behavioral hospitals is Universal Health Services (UHS). UHS’s subsidiary, Cumberland Hospital for Children and Adolescents in Virginia, along with its medical director, recently suffered a massive financial blow when a Richmond civil court jury ruled in favor of three young women who alleged they were sexually abused while patients at Cumberland Hospital, awarding them $360 million. The civil trial is set to continue next March, with an additional 46 former patients having filed suit.[9]

Earlier this year, UHS faced another jury verdict over patient sexual abuse at one of its subsidiary facilities, Pavilion Behavioral Health System in Illinois. According to Behavioral Health Business, most UHS subsidiaries are self-insured for professional liability exposure up to $10 million for incidents that occurred in 2020, according to a note by an investment banking firm. The total insurance coverage, including excess policies, is approximately $250 million annually from 2014 to 2022. UHS may have also opted to buy additional commercial insurance for its operations.[10]

In an SEC filing of September 27, UHS said that resolving the lawsuits filed by Cumberland Hospital for Children and Adolescents in New Kent, Va., “may have a material adverse effect on the Company.” Cumberland is seeking to appeal the verdict amount.

UHS has previously faced significant lawsuits. In 2020, it paid $117 million to settle False Claims Act Allegations against it.[11] The federal lawsuit

alleged the company had billed for unnecessary inpatient behavioral health services and received illegal kickbacks. The company denied all allegations.[12] 

Both UHS and Acadia also faced a damning report, “Warehouses of Neglect: How Taxpayers Are Funding Systemic Abuse in Youth Residential Treatment Facilities” (RTFs) issued as a result of a two-year U.S. Senate Finance Committee investigation into the companies and two other behavioral treatment chains. According to the report, “The harms, abuses, and indignities children in [RTFs] 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.” Further, “Providers will continue to operate this model because it’s good business, unless there is some bold intervention.”[13]

In light of these alarming findings, CCHR views the recent California law as a crucial step toward bold intervention. The establishment of STRTPs was a direct response to California’s decision to end the practice of sending foster youth with behavioral issues to out-of-state programs, often owned by for-profit psychiatric hospital chains where children were mistreated.[14] In July 2021, California took a significant stand by banning the transfer of foster youth and teens charged with crimes to out-of-state facilities.[15] Oregon State Senator Sara Gelser Blouin was instrumental in putting an end to this practice.[16]

Both Hilton’s 11:11 Media Impact, the tax-exempt advocacy arm of her media company, and Think of Us have been vigorous advocates for legislation aimed at cracking down on the “troubled teen” industry and congregate care.[17] As MindSite News reports, Hilton’s compelling 2020 YouTube documentary This is Paris now has 80 million views. In it, she disclosed alleged abuse as a teen at the notorious Provo Canyon School, a residential treatment center in Utah, that was later acquired by UHS. Outraged by the lack of meaningful oversight by state and federal authorities, activists have built a movement to fight against the “troubled teen industry,” launching organizations like Unsilenced.[18]

Other organizations, including Disability Rights Network, have long fought for the rights of those abused in the industry. Meanwhile, CCHR has been assisting former patients, their families and whistleblowers in the for-profit behavioral industry since the early 1990s. At that time, CCHR played a pivotal role in exposing National Medical Enterprises, leading to FBI and other federal agency raids, multi-million fines, and the eventual closure of the company’s psychiatric branch. In 2010, CCHR also exposed a Florida UHS-owned psychiatric facility, the National Deaf Academy (NDA), which eventually closed in 2016 in the wake of abuse allegations.[19] NDA was one of 21 UHS-owned behavioral facilities that were under federal investigation, and which culminated in the 2020 DOJ $117 million settlement.[20]

CCHR commends the growing movement toward increased oversight and accountability in youth treatment programs, including “wilderness therapy camps.” However, it cautions that the ongoing practice of hospital chains settling federal and state criminal and civil investigations without admitting liability allows egregious abuses to persist.

To effectively address these issues, a comprehensive overhaul of the industry is essential. Penalties must be sufficiently robust to ensure that facilities lose contracts with Medicaid, Medicare, Tricare, and other insurance providers at the first indication of violations or systemic patient abuse.

Based on the evidence already available, for-profit and privately owned psychiatric hospitals should be stripped of the authority to involuntarily detain patients, and closures must be swift for those found to have a history of repeated abuse. Only through these decisive actions can we hope to protect vulnerable youth and ensure their safety.

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[1] Kathryn Palmer, “California enacts Paris Hilton-backed law for ‘troubled teen’ programs,” The Desert Sun, 27 Sept. 2024, https://www.desertsun.com/story/news/politics/elections/2024/09/27/newsom-signs-california-troubled-teen-law-backed-by-paris-hilton/75411494007/

[2] Jessica Silver-Greenberg and Katie Thomas, “Acadia Hospitals Reach $20 Million Settlement With Justice Dept.” The New York Times, 26 Sept. 2024, https://www.nytimes.com/2024/09/26/health/acadia-doj-settlement-fbi.html; “Acadia Healthcare Company Inc. to Pay $19.85M to Settle Allegations Relating to Medically Unnecessary Inpatient Behavioral Health Services,” Dept. of Justice, 26 Sept. 2024, https://www.justice.gov/opa/pr/acadia-healthcare-company-inc-pay-1985m-settle-allegations-relating-medically-unnecessary

[3] Jessica Silver-Greenberg and Katie Thomas, “Acadia Hospitals Reach $20 Million Settlement With Justice Dept.” New York Times, 26 Sept. 2024, https://www.nytimes.com/2024/09/26/health/acadia-doj-settlement-fbi.html; “Acadia Healthcare Company Inc. to Pay $19.85M to Settle Allegations Relating to Medically Unnecessary Inpatient Behavioral Health Services,” Dept. of Justice, 26 Sept. 2024, https://www.justice.gov/opa/pr/acadia-healthcare-company-inc-pay-1985m-settle-allegations-relating-medically-unnecessary

[4] Jessica Silver-Greenberg and Katie Thomas, r article ran, “Acadia Healthcare Says It Faces New Federal Investigations: Shares of the company, one of the largest chains of for-profit psychiatric hospitals, were down 25 percent at one point,” The New York Times, 27 Sept. 2024, https://www.nytimes.com/2024/09/27/business/acadia-federal-investigations.html

[5] Jessica Silver-Greenberg, Katie Thomas, “Acadia Healthcare Says It Faces New Federal Investigations: Shares of the company, one of the largest chains of for-profit psychiatric hospitals, were down 25 percent at one point,” The New York Times, 27 Sept. 2024, https://www.nytimes.com/2024/09/27/business/acadia-federal-investigations.html

[6] “US SEC hits 7 public companies with penalties for violating whistleblower protections,” MSN.com, 9 Sept, 2024, https://www.msn.com/en-us/money/companies/us-sec-hits-7-public-companies-with-penalties-for-violating-whistleblower-protections/ar-AA1qgxpV

[7] “Following Bombshell Report, Schiff Demands Answers from Acadia Healthcare Regarding Wrongfully Detained Patients in Psychiatric Facilities,” Rep Schiff’s press release, https://schiff.house.gov/news/press-releases/following-bombshell-report-schiff-demands-answers-from-acadia-healthcare-regarding-wrongfully-detained-patients-in-psychiatric-facilities

[8] Morgan Gonzales “UHS Ordered to Pay $535M in Legal Case,” Behavioral Health Business, 1 Apr. 2024, https://bhbusiness.com/2024/04/01/uhs-to-pay-535m-in-sexual-assault-suit/

[9] “Jury delivers $360 million verdict in trial against Cumberland Hospital, former medical director,” WTVR CBS 6 News, 1 Oct. 2024, (CBS 6 Investigative Reporter Laura French was inside the courtroom when the verdict was announced and has been investigating Cumberland Hospital for five years), https://www.wtvr.com/news/local-news/jury-reaches-verdict-in-cumberland-hospital-trial-sept-27-2024

[10] Morgan Gonzales “UHS Ordered to Pay $535M in Legal Case,” Behavioral Health Business, 1 Apr. 2024, https://bhbusiness.com/2024/04/01/uhs-to-pay-535m-in-sexual-assault-suit/

[11] https://www.cchrint.org/2015/06/29/psychiatrists-over-represented-in-commission-of-fraud/; “Universal Health Services, Inc. to Pay $117 Million to Settle False Claims Act Allegations,” Dept. of Justice Eastern District of Pennsylvania, 10 July 2020, https://www.justice.gov/usao-edpa/pr/universal-health-services-inc-pay-117-million-settle-false-claims-act-allegations

[12] Morgan Gonzales “UHS Ordered to Pay $535M in Legal Case,” Behavioral Health Business, 1 Apr. 2024, https://bhbusiness.com/2024/04/01/uhs-to-pay-535m-in-sexual-assault-suit/

[13] 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/

[14] Kathryn Palmer, “California enacts Paris Hilton-backed law for ‘troubled teen’ programs,” The Desert Sun, 27 Sept. 2024, https://www.desertsun.com/story/news/politics/elections/2024/09/27/newsom-signs-california-troubled-teen-law-backed-by-paris-hilton/75411494007/

[15] https://www.cchrint.org/2022/02/21/the-kids-are-not-alright-report-confirms-profit-is-put-before-troubled-teens-mental-health-safety/; “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth,” Private Equity Stakeholder Project, 17 Feb. 2022, https://pestakeholder.org/wp-content/uploads/2022/02/PESP_Youth_BH_Report_2022.pdf, p. 17

[16] https://www.cchrint.org/2022/02/21/the-kids-are-not-alright-report-confirms-profit-is-put-before-troubled-teens-mental-health-safety/

[17] 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

[18] https://mindsitenews.org/2024/08/31/troubled-teen-industry/

[19] https://www.cchrint.org/2016/08/17/cchr-calls-for-legislative-intervention-against-for-profit-psych-facility-planned-for-pennsylvania/

[20] https://www.cchrint.org/2015/06/29/psychiatrists-over-represented-in-commission-of-fraud/; “Universal Health Services, Inc. to Pay $117 Million to Settle False Claims Act Allegations,” Dept. of Justice Eastern District of Pennsylvania, 10 July 2020, https://www.justice.gov/usao-edpa/pr/universal-health-services-inc-pay-117-million-settle-false-claims-act-allegations