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Psychiatric Solutions' Executive Pay Probed by Justice Department

The Justice Department is investigating executive compensation at Psychiatric Solutions Inc., the inpatient mental health care company that has been the subject of several articles by ProPublica. The company substantially increased executives' salary and options about two weeks before reports surfaced that the company was in talks to be acquired.

The U.S. Department of Justice has opened an investigation into executive compensation at Psychiatric Solutions Inc., which is the nation’s leading provider of inpatient mental health care and has been the subject of several articles by ProPublica.

According to a report filed earlier this week with the SEC, the Tennessee chain has received a subpoena demanding records related to executive salaries, stock sales, stock options and option exercises. The Justice Department also has asked for communications between company leaders, investors and investment firms, the filing says.

A story published today in the Tennessean says the probe may have been triggered by the timing and composition of 2010 pay packages for top PSI managers, which were set about two weeks before reports surfaced in March that the company was in talks to be acquired. No deal has been struck to date. The 2010 pay packages boosted executives’ stock and option awards substantially over 2009 levels. The company’s stock price has risen since it confirmed buyout talks.

A PSI spokesman declined to comment on the Justice Department investigation beyond what appears in the company’s SEC filing, which says it is cooperating and providing the information requested.

The Justice Department’s action represents a new kind of trouble for PSI, which has found itself in regulators’ cross-hairs repeatedly in recent years for its patient care.

Last week, we reported that Florida authorities had halted admissions to Manatee Palms Youth Services, a 60-bed facility for children and adolescents, after finding that administrators had not made promised safety improvements.

The Chicago Tribune and ProPublica, in partnership with the Los Angeles Times, have published reports detailing violence, sexual abuse and neglect at several PSI hospitals across the country. The Tribune articles prompted Illinois to put a hold on the admission of foster children to Riveredge Hospital, a PSI hospital near Chicago.

Portrait of Robin Fields

Robin Fields

Robin Fields is a reporter with ProPublica. She joined ProPublica as a reporter in 2008, became a senior editor in 2010 and served as managing editor from 2013 to 2022 prior to returning to the reporter role.

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