A San Diego jury has leveled $105 million in damages against an Acadia Healthcare (Nasdaq: ACHC) entity, Fashion Valley Comprehensive Treatment Center.
Signed on May 12, the jury found that Fashion Valley Comprehensive Treatment Center’s managers had wrongfully terminated a female staffer after she had reported concerns about a potentially unsafe work environment and the sexual harassment of herself and patients. The firing amounted to retaliation, the jury found.
The plaintiff in the case filed suit in San Diego Superior Court in January 2024; she was terminated in October 2023.
The company declined to comment on the matter beyond what it filed in a publicly available disclosure with the U.S. Securities and Exchange Commission on May 18.
“Fashion Valley vehemently denied the allegations and asserted the plaintiff was terminated for legitimate reasons,” the filing states. “This award far exceeds any reasonable expectation based on precedent for comparable employment cases. … Fashion Valley is evaluating all legal options and intends to vigorously challenge the verdict in post-trial motions and, if necessary, on appeal. We can make no assurances regarding the ultimate outcome of the case or whether the damages awarded by the jury will ultimately be reduced.”
Acadia Healthcare was not named in the suit. Fashion Valley is a part of Acadia Healthcare’s subsidiary San Diego Health Alliance. It was part of CRC Health when Acadia acquired it in February 2015.
Here’s how the jury’s damages award breaks down:
— $20 million in past noneconomic damages
— $15 million in future noneconomic damages
— $70 million punitive damages
The original complaint claims that leaders at Fashion Valley Comprehensive Treatment Center didn’t appropriately address sexually inappropriate actions by a patient and an employee, forbade employees from speaking to law enforcement after a hidden camera was found in a staff bathroom and terminated the plaintiff on spurious grounds. The jury specifically found that the underlying claims presented with the plaintiff’s dismissal were not a motivating factor. Rather, the jury found that the Fashion Valley Comprehensive Treatment Center was motivated to terminate by the plaintiffs’ reporting of unsafe working conditions.
The news of this jury verdict comes as the company attempts to reposition itself following the departure of CEO Chris Hunter. In doing so, the company and its board of directors have reached out to boomerang executives, Debbie Osteen as CEO and David Duckworth as CFO. In part, Osteen has said her first few months back on the job have been focused on a refresh of the company’s management and leadership structure.
This news also comes as the company attempts to revitalize its financial performance. It finished 2025 with a $1.09 billion loss on an absolute basis. Adjusted earnings slipped 14% to $609 million.
Late last year, the company announced two downward revisions of its financial performance in 2025. As part of the second revision, the company said it needed to put more money into professional and general liability costs “associated primarily with patient litigation.”
About a month before the second earnings projection revision, the company agreed to pay $179 million to settle a class action lawsuit that alleged securities fraud. In 2023, it agreed to pay $400 million to settle a patient sexual abuse lawsuit in Nevada.
Acadia Healthcare closed a facility in Illinois last year after allegations of sexual abuse and a New York Times exposé that alleged repeated abuses at the facility.
On top of challenges over alleged mismanagement of staff and patients, the company faces substantial examination by the federal government on multiple fronts.
The Senate Finance Committee launched an informational probe into the opioid treatment program (OTP) industry; Acadia Healthcare’s comprehensive treatment center (CTC) business is among the largest in the nation. The company is also presently being investigated by the U.S. Department of Justice and the SEC, according to its 2025 annual financial report.
The San Diego verdict could continue to elevate the company’s legal costs in 2026. In 2025, the company paid $135 million in legal fees related to government investigations, according to its 2025 annual financial report.