Editor’s note: As part of our year-end coverage, we’re checking in on the latest on each of our in-depth stories.
Psychiatric Solutions Inc., the nation's leading provider of private mental health care, faces a raft of challenges coming into the New Year, from a Justice Department investigation to a growing number of lawsuits over patient deaths and employee disputes.
The company, which operates in 31 states, raced to the top of its industry over the last five years, going from five facilities to 95.
Poor supervision, understaffing and worker training played a role in patient rapes, beatings, riots and suicides, state and federal inspection reports showed. In several cases, patients suffered grave harm as a result of medical oversights or errors.
An analysis of inspection data showed that PSI's hospitals often fared worse in meeting government safety standards than other comparable private hospitals.
Company executives have said (PDF) the story focused on "relatively few" incidents, and earlier this month, deflected questions about the article at an investment conference.
"I'm not here to talk about that," PSI executive vice president Brent Turner told a questioner at a meeting hosted by J.P. Morgan.
Several days later, an analyst with Longbow Research downgraded PSI's stock from buy to neutral, saying increases in admissions had slowed and might drag down the company's typically robust revenue growth.
The company is also incurring costs related to a Justice Department investigation into one of its facilities, Riveredge Hospital near Chicago.
The government issued subpoenas to Riveredge in July after a Chicago Tribune article reported that violence at the hospital had not been reported to the proper authorities. PSI's most recent earnings report says the company has spent the better part of $1.4 million responding to the subpoenas.
The Illinois Department of Children and Family Services froze admissions of foster children to Riveredge hospital after the Tribune story.
During an October earnings call with Wall Street analysts, PSI's chief executive, Joey Jacobs, predicted that the admissions would resume this quarter, but the agency's spokesman, Kendall Marlowe, said there's no date set for the freeze to end.
"The facility will remain on hold until the safety of our clients can be assured," Marlowe said.
PSI's Sierra Vista Hospital in Sacramento still faces regulatory scrutiny in the wake of a patient's death in February, as well as for violations (PDF) of the federal anti-patient-dumping law. A Centers for Medicare and Medicaid Services spokesman said two follow-up surveys were recently completed at the hospital, and results of the inspections will be mailed to Sierra Vista in a matter of weeks.
In the coming year, lawyers representing PSI hospitals will face a parade of former employees and families of deceased patients in courtrooms from Florida to California.
Attorneys representing the family of Ramona Knapp, who died in 2005 after she was improperly restrained at Sierra Vista Hospital, are scheduled to meet with PSI attorneys in Sacramento Superior Court for a trial-setting conference Jan. 5.
Sacramento attorney Robert Buccola contends that Knapp died as a result of inadequate worker training and substandard staffing practices. The hospital's attorneys have denied the allegation.
Attempts to settle another case involving a Sacramento PSI hospital failed earlier this month. Attorneys for the family of Shigeru Tateyama, 81, say he was inadequately supervised before he took his life at Heritage Oaks Hospital in August of 2007.
After a failed settlement conference, attorneys for the hospital noted that "it is premature to consider resolving" the case, as Tateyama was depressed, psychotic and refused to take his medications. Another hearing is set for February.
In a separate case, a former Heritage Oaks staffer faces a criminal trial set for February on charges that he repeatedly sexually assaulted a 17-year-old patient.
An employment case (PDF) in Texas is scheduled to go to trial in March. The case involves an incident in which a nurse gave an 8-year-old boy a shot of a potent anti-psychotic because he was crying for his mother at PSI-owned Laurel Ridge Treatment Center in San Antonio, court records say. The boy began to exhibit neurological side effects, and nurse Kimberly Gilyard -- after trying but failing to reach a physician -- gave the boy a shot of a counteracting drug.
Gilyard was later fired, essentially for practicing medicine without a license. Weeks later, though, another nurse ordered a staffer to administer a shot to a child without doctor's orders, court records say. The other nurse, who is white, was not fired. The question of whether Gilyard, who is African-American, was discriminated against will go before a jury.
Another employment case is pending (PDF) in Florida. Former Gulf Coast Youth Services therapist Leslie Smith filed a case alleging that the facility tried to cover up abuse and retaliated against her for trying to report it. She also accuses the facility -- operated by a PSI subsidiary -- of urging her to commit Medicaid fraud by signing documents that were not true. The facility's attorneys have generally denied the allegations.