Psychiatric Solutions Inc. (PSI), a unit of Universal Health Services Inc. (UHS), has reached a settlement with shareholders. PSI will pay $65 million to end shareholders’ claims that the mental health services provider concealed earnings liabilities such as an alleged policy of short-staffing that put patients at risk of abuse. The settlement was announced in an SEC filing, in which UHS also said the litigation would cost it $34 million. That amount will likely be reduced substantially after insurance recoveries. UHS bought Psychiatric Solutions in 2010.
It was alleged that PSI deceived its investors by concealing the information that it kept its facilities understaffed “below levels necessary to assure adequate patient care or protect patients from physical or sexual abuse from other patients,” didn’t properly report safety issues and incidents, and covered up operating problems at older care centers. According to the allegations, Franklin, Tenn.-based PSI provides inpatient behavioral-health services to mostly children and teens at 95 centers.
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