The least you need to know about the AAC charges

Over the past several days, the industry has been entrenched with the news that the California Department  of Justice has charged subsidiaries of American Addiction Centers (AAC) and five AAC employees with murder. The charges are related to the June 2010 death of Gary Benefield, a 53-year-old patient who died within hours of admission to an AAC facility.

As the news spread, AAC stock suffered, dipping about 50 percent at one point on August 4.

It will be up to the industry as a whole to decide what actions to take in light of this highly publicized development, if any. Many could view the news—whether AAC is exonerated or not—as having potential taint for the entire treatment field, while others could view it as an opportunity to differentiate individual programs based on transparency, care and quality.

Here is the least you need to know about the AAC developments of late.

• The recent California indictment does in fact include murder charges. The word “murder” is not a creative twist on the part of the media or observers.
• AAC settled a civil lawsuit filed by Benefield’s widow in 2014, with no admission of liability and without disclosing the terms of the settlement.
• On July 29, 2015, about a week after the indictment, Jerrod Menz, president and a member of the board of directors, voluntarily stepped down from those specific roles. He owns about 25 percent of AAC and remains active in its business development.
• In a second-quarter earnings call also on July 29, CEO Michael Cartwright said that “there is no at-fault here,” and that Benefield died of natural causes, according to the local coroner.
• The initial coroner’s report stated that Benefield died from cardiovascular disease. In his deposition testimony, the coroner also said he “might not have reviewed” the patient’s medical records at the time of the autopsy.
• Testimony on February 2, 2014, from  Frank Sheridan, MD, the chief medical examiner in San Bernardino County, which was uncovered in a Bleecker Street analysis, indicates the care provided by AAC was reckless and substandard and led directly to the patient’s death. Specifically, the testimony says Benefield was supposed to be on oxygen 24/7, and AAC’s failure to provide oxygen was the factor leading to his death. Had Benefield been provided oxygen, he would not have died, according to Sheridan. Prescription drugs trazodone (a tetracyclic antidepressant) and oxazepam (a benzodiazepine) also contributed to Benefield’s death, according to Sheridan.
• Testimony from eye witnesses alleges that employees who were untrained and unlicensed gave Benefield the prescription drugs and that there was no prescription written for the drugs to be dispensed. The order to give the two medications to Benefield allegedly came from Meg Dean, who is not a physician. Dean is named in the indictment.
• Employees interviewed by Bleecker Street indicated that giving patients trazodone and oxazepam from an on-hand stock of sample drugs was typical protocol.
• Testimony alleges that Benefield did not have a medical examination before the trazodone and oxazepam—respiratory depressants—were administered.
• The Bleecker Street post opines that there are likely other charges forthcoming related to as many as seven other deaths of AAC patients who allegedly were too medically fragile for AAC’s capabilities and not appropriately cared for. Sheridan’s testimony lists the patients by name and details their cases.
• Allegedly the practices are still going on today, as reported in Bleecker Street’s discussions with former employees.
• From a business standpoint, AAC might have difficulties raising money going forward, and it’s possible that Forterus—representing 20 percent of AAC’s empire—could be shut down in California.
• Holzer & Holzer, a private law firm is investigating AAC separately on behalf of investors who suffered a loss as result of the market reaction to the news.
• As of 2 p.m. on Friday, August 07, 2015, stock was trading at $18.30. That’s in contrast to a high on July 2  of $44.75.