AAC Plunges After President Charged With Murdering Patient

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AAC Holdings Inc. fell 39 percent after disclosing that its president and four employees at the chain of drug and alcohol treatment clinics were charged with murder for the death of a patient.

Tuesday’s stock drop was the biggest decline since the company first disclosed the murder charges six days earlier. Trading in shares of AAC was halted, and then resumed, following Tuesday’s announcement in a regulatory filing that Jerrod Menz, who founded AAC unit ABTTC Inc., was charged July 21 with murder and dependent adult abuse by a California grand jury in Riverside County. ABTTC was also charged.

AAC said in a statement Tuesday that the allegations are “legally and factually unfounded,” and that it will “contest them vigorously.” The company said in its regulatory filing that it could suffer material losses if defendants in the case are convicted.

“Sadly, deaths occur in this industry, as they do in healthcare settings,” AAC said in its statement. The company said it remains focused on “care to individuals struggling with alcohol and drug conditions.”

An indictment unsealed July 29 described the deceased patient as a 53-year-old dependent adult. Gary Benefield died in July 2010, according to the indictment, which didn’t provide any details about his health or the cause of his death.

Natural Causes

AAC, based in Brentwood, Tennessee, said in a July 29 press release that the patient was found dead of natural causes in his room the morning after he checked in to one of the company’s facilities. AAC settled a civil case stemming from the death one year ago with no admission of liability, according to the statement.

According to AAC, a coroner’s report found the client died of hypertensive cardiovascular disease and a police report said he had a history of chronic obstructive pulmonary disease, according to the company statement.

“The coroner made absolutely no finding that the death had anything to do with his treatment at our facility,” according to the statement.

In 2012, the California Senate produced a report on health care that investigated four deaths at AAC’s facilities. One of the patients was Benefield, who was married with step-children and helped run a coal-operated power plant in Springerville, Arizona, according to the report.

Oxygen Tank

Benefield was coughing and wheezing when he arrived at AAC’s A Better Tomorrow Treatment Centers facility in Murrieta, California, according to the report, which said his oxygen tank had been emptied at the airport due to airline regulations.

The staff failed to get him an oxygen tank despite his history of pulmonary disease and emphysema and a recent hospitalization for pneumonia, according to the report.

Employees at the center gave him an anti-depressant and an anti-anxiety drug without a prescription from an “extra supply” of medication and didn’t check on him throughout the night he died, contrary to the program’s own guidelines, because they were asleep, the state’s investigation found.

The company said Menz voluntarily resigned to address charges in the indictment. Three of the other four defendants in the case are no longer with the company, according to the July 29 statement.

Thomas Beach, a lawyer for Menz, didn’t immediately respond after regular business hours to a call seeking comment on the indictment.

American Addiction Centers, founded in 2011, is run by Michael Cartwright, a former drug addict and alcoholic who says he’s been sober for 23 years. The company owns eight facilities in six states and treats about 5,000 patients annually. In 2013 its revenue was $116 million, up from $28 million in 2011.

In October, it became what analysts called the first business focused solely on addiction treatment to go public, raising $75 million in an initial public offering. The company’s shares tripled after the IPO.

Kristin Ford, a spokeswoman for California Attorney General Kamala Harris, who unsealed the indictment, didn’t immediately respond to phone and e-mail messages seeking comment on the case.

The case is California v. McCausland, SWF1501351, California Superior Court, Riverside County.

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