
Karma is a Sanskrit word meaning “action.” Generally, we understand it to mean the consequences of one’s actions. The word “karma” is commonly used to indicate bad karma, and the word “merit” is often used to indicate good karma. The law of karma is best described as “cause and effect” because every action (or cause) has a corresponding consequence (or effect). If you plant good causes, you will reap good effects, and if you plant bad causes you will reap bad effects.
There have been many quotes about karma. “Karma is a cruel mistress.” “For the keynote of the law of karma is equilibrium, and nature is always working to restore the equilibrium whenever through man’s acts it is disturbed.”
Karma comes at unexpected times and in unexpected ways. Case in point, recent statements made by Christopher Hunter, the current CEO of Acadia Healthcare. In August, in response to a question about the recent damning Senate Committee report about Acadia, Mr. Hunter stated: “Yes. I would say we just haven’t seen any real impact from the Senate hearing in the report. … And so, it’s also not overly material from a financial standpoint to begin with.”
About six weeks after Mr. Hunter’s heartless statement, the Justice Department announced that Acadia agreed to pay $19.85 million to settle an investigation into Acadia.
The United States contended that between 2014 and 2017, Acadia knowingly submitted false claims for payment to Medicare, Medicaid and Tricare for inpatient behavioral health services that were not reasonable or medically necessary. In particular, the United States contended that Acadia admitted beneficiaries who were not eligible for inpatient treatment and failed to properly discharge beneficiaries when they no longer needed inpatient treatment and had improper and excessive lengths of stay.
The United States further alleged that Acadia knowingly failed to provide adequate staffing, training and/or supervision of staff, which resulted in assaults, elopements, suicides and other harm resulting from these staffing failures. In addition, Acadia allegedly failed to provide inpatient acute care in accord with federal and state regulations, including, but not limited to, by failing to provide active treatment, to develop and/or update individualized assessments and treatment plans, to provide adequate discharge planning and to provide required individual and group therapy.
Despite this punitive payment and financial hit, Mr. Hunter had this to say, “The allegation that Acadia systematically holds patients longer than medically necessary is false and goes directly against everything we do and stand for when it comes to patient care.”
It is curious that Mr. Hunter believes those claims to be false after Acadia agreed to pay almost $20 million to make those claims go away.
Of course, karma was just beginning for Mr. Hunter. Since Mr. Hunter focuses on the financial bottom line alone, we can assume he must be greatly concerned that Acadia’s stock hit a 52-week low of $42.56 on October 31, 2024. Acadia shares are down more than 44% since the beginning of the year. In fact, Acadia’s stock price has not been this low since November 2020.
Even still, karma was not through with Mr. Hunter. In September 2024, the Justice Department and Inspector General, through Robert DeConti, the inspector general’s chief counsel, stated that the $20 million settlement does not impede investigators from exploring allegations regarding more recent activities.
And so, on September 27, 2024, Acadia disclosed that it received a request for information from the U.S. Attorney’s Office for the Southern District of New York, a grand jury subpoena from the U.S. District Court for the Western District of Missouri, and that it expects similar requests from the U.S. Securities and Exchange Commission related to the Company’s patient admissions, as well as its length of stay and billing practices.
On October 18, 2024, the New York Times published an article titled “Veterans Dept. Investigating Acadia Healthcare for Insurance Fraud.” The article stated that the Veterans Affairs Department is investigating whether Acadia is defrauding government health insurance programs by holding patients longer than is medically necessary. The New York Times also stated that several former Acadia employees in Georgia and Missouri have also been interviewed by agents from the F.B.I. and the inspector general’s office of the Health and Human Services Department.
In a separate press release, Acadia Healthcare said the company is cooperating fully with authorities in response to that on-going government investigation.
Naturally, Mr. Hunter a/k/a Captain Smith continued to steer the HMS Acadia toward the iceberg. In addressing these reports, he stated they are inconsistent with Acadia’s policies and do not reflect the medical complexities involved in behavioral healthcare. Dear Captain Smith… An organization is defined by its conduct, not by its CEO’s words.
Karma had one last present for Mr. Hunter. Acadia, its former CEO, its current and former Chief Financial Officers, and of course, Christopher Hunter were all named as defendants in a recent class action lawsuit filed in Tennessee. Acadia, Mr. Hunter and the other defendants were sued for allegedly violating securities laws following Acadia’s September 27, 2024 announcement about the federal grand jury subpoena.
Not coincidentally, Acadia’s stock price fell 16% alone on September 27, 2024, wiping out over $1 billion in market capitalization.
$1 billion in market capitalization.
It gets worse. When Captain Smith was brought aboard the HMS Acadia on April Fool’s Day in 2022, the market capitalization of Acadia was $6.04 BILLION. Market capitalization is regarded as the most accurate value of a publicly listed company. What was Acadia’s market capitalization at the close of business Friday, November 2, 2024? $3.9 billion. So, after ramming into the side of the iceberg, Mr. Hunter/Captain Smith steered the HMS Acadia to a $2.14 BILLION dollar, 35% loss in the company/stock value.
As the HMS Acadia fills with water and starts to list, we are certainly justified in asking Mr. Hunter / Captain Smith, “Is it overly material now … that is, from a financial standpoint to begin with?”
Karma can be oh so cruel.
And as the HMS Titanic plunges toward the bottom of the icy ocean, shouldn’t families, patients and people suffering from any mental illness ask themselves, “why in the world would I subject myself to the HMS Acadia after it plowed into the iceberg and is sinking to the bottom of the North Atlantic?”
Get someone else to rearrange the deck chairs.
