A class action lawsuit claiming Acadia Healthcare (Nasdaq: ACHC) and three of its current and former executives misled investors will move forward and be heard by a jury, a federal judge in Nashville ruled Wednesday.
In addition to Acadia, the suit names current Acadia CFO David Duckworth, as well as former President Brent Turner and former CEO and board chair Joey Jacobs.
The action dates back to 2018 and alleges the defendants misled investors after stock prices dropped as a result of understaffing and other issues, according to Law360.
Specifically, the suit, launched by St. Clair County Employees’ Retirement System, accuses Acadia of falsely claiming to have a commitment to excellent patient care, while calling out reports of understaffing and allegations of violence at Acadia facilities.
Acadia has said complaints against behavioral health care providers are known to happen given the populations they serve. Plus, the company says it warns investors about that.
The company filed a bid to dismiss the suit in 2019, arguing that “their statements regarding the quality of the care services provided at Acadia facilities are inactionable puffery because the word ‘quality’ is too vague to communicate anything important,” according to U.S. District Judge William L. Campbell Jr.
But on Wednesday Campbell said it would be up for a jury to decide if the accusations had merit and if Acadia violated federal securities laws, as alleged by investors in the original complaint.
“Defendants’ statements regarding staffing levels and the quality of care at Acadia’s facilities are both capable of objective measurement and verification using standard tools of evidence,” Campbell said.
As such, the suit will move forward.
Headquartered in Franklin, Tennessee, Acadia is one of the nation’s largest behavioral health providers. It has about 220 facilities across 40 U.S. states and Puerto Rico, in addition to around 360 facilities in the UK, which it is currently selling for about $1.47 billion.