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History Repeats Itself: Patients are Kept in Psychiatric Hospitals for Profit, not Medical Need, says the New York Times

All News September 3, 2024

On September 2, the New York Times reported that Acadia Behavioral Health Systems, which operates more than 250 psychiatric facilities in 38 states, allegedly “is holding people against their will to maximize insurance payouts.” The Times’ investigation, which gathered evidence from “more than 50 current and former executives and staff members”, found that patients were often “trapped” in inpatient facilities “for financial rather than medical reasons.” The Times noted that Acadia’s stock price has soared. In 2023, it reported revenues of $2.9 billion. It seems that U.S. taxpayers are largely footing the bill — 69% of those revenues came from Medicare and Medicaid. Acadia is owned by Waud Capital, a private equity firm.

Regrettably, allegations that vulnerable patients with mental health challenges have been exploited for corporate profit are not new. In 2020, Acadia’s main competitor, Universal Health Services (UHS) paid $122 million to the government to settle no less than 18 False Claims Act qui tam whistleblower cases alleging that UHS provided medically unnecessary inpatient behavioral health services, including imprisoning patients in UHS facilities against their will, to increase Medicare and Medicaid reimbursements. The government’s allegations were strikingly similar to those described by the New York Times in its recent article about Acadia.

But there’s more. In the 1990s, the for-profit hospital chain National Medical Enterprises (later renamed Tenet Healthcare) paid the government $379 million in fines and penalties to resolve criminal and civil False Claims Act charges that it provided unnecessary treatment to thousands of patients in its psychiatric hospitals, including detaining patients for longer than medically necessary, and paid kickbacks in order to maximize insurance payments. Many patients were young children and adolescents, some wrongfully kept for more than a year. Senator Charles Grassley observed aptly that “in the annals of corporate fraud, National Medical Enterprises more than holds its own among the worst corporate wrongdoers.”

The philosopher George Santayana famously said that those who do not remember history are doomed to repeat it. More likely, however, Big Health Care remembers all too well that patients who are least able to defend themselves are the most vulnerable to being exploited for financial gain. Whistleblowers, and the False Claims Act, have been critical to holding these corporate wrongdoers accountable.

Getnick Law is one of the nation’s foremost whistleblower firms, having recovered more than $1 billion for the government and record awards for our clients. Contact us for more information or to discuss a potential case.