61 sue NME over past psychiatric treatment
Company cites changes, new management

By Tracy Everbach / Staff Writer of The Dallas Morning News
Published 10-18-1994

Sixty-one plaintiffs sued National Medical Enterprises Inc. on Monday, alleging that they were "lured or forced" to its psychiatric treatment centers as part of a fraudulent scheme.

The suit, filed in state District Court in Dallas, alleges that the company and several of its subsidiaries and former psychiatric hospitals subjected the plaintiffs - most of them children - to confinement, restraints, strip searches and unwanted sexual advances and harassment.

The defendants, according to the suit, "were motivated not by a desire to provide competent and appropriate psychiatric care to plaintiffs, but by greed."

National Medical has sold or closed most of its psychiatric hospitals and is under new corporate management, said company spokeswoman Diana Takvam.

"The lawsuit stems from past problems," she said. "For the last 15 months, NME's management has acted aggressively and resolved the problems. But the new NME may face further litigation based on the actions of the old NME."

National Medical has been sued in the past two years by many former patients alleging that they were hospitalized unnecessarily so that the company and others could profit.

The psychiatric division of the Santa Monica, Calif., company pleaded guilty in June in Washington, D.C., to paying kickbacks to health care workers for patient referrals to its psychiatric hospitals. The company paid the government $362.7 million in restitution and fines.

National Medical also paid 19 insurance companies $214 million to settle claims of fraud and paid fines to 28 state governments, including Texas.

Former company vice president Peter Alexis, also named as a defendant in Monday's lawsuit, pleaded guilty in June to federal criminal charges and admitted that he paid more than $20 million in bribes for patient referrals to National Medical's Dallas and Fort Worth-area hospitals.

Most of the plaintiffs in Monday's lawsuit were hospitalized at various times between 1982 and 1992 in Psychiatric Pavilion of Fort Worth and Brookhaven Psychiatric Pavilion in Farmers Branch, said attorney Parks W. Bell. He and the law firm Baker & Botts filed the suit on behalf of the plaintiffs.

The suit alleges that many were pressured into hospitalization and some were abused. For example, the suit alleges that a 6-year- old boy's treatment included his being restrained to a bed with leather straps for hours at a time.

And a 16-year-old girl's parents were falsely informed that their daughter, who had a learning disability, was suicidal, the suit says. She was hospitalized for more than a month until a family lawyer " secured her release," the suit says.

The suit says that some patients received therapy "in which a number of staff members forcibly held a patient's back to the floor while verbally taunting and beating the patient in the rib or chest area." The plaintiffs are seeking unspecified damages. They allege fraud, battery, assault, negligence, violations of the Texas Deceptive Trade Practices Act, invasion of privacy, infliction of emotional distress, breach of contract and breach of fiduciary duty.