Acadia Healthcare will pay $400 million to settle three cases alleging a nonprofit operated by a now-shuttered New Mexico facility placed children in a foster care setting where they were repeatedly sexually abused.
According to an Oct. 30 filing with the Securities and Exchange Commission, the $400 million settlement fully resolves three cases brought against Acadia and its subsidiary Desert Hills, an Albuquerque residential behavioral treatment clinic that closed in 2019. The settlement does not include any admission of liability by Acadia or Desert Hills.
According to a July 11 report from the Albuquerque Journal, Desert Hills was a residential treatment facility for children with intellectual and developmental disabilities as well as behavioral issues. Desert Hills operated Familyworks, a nonprofit organization licensed to train foster parents.
In January, Clarence Garcia, the former foster parent named in the cases, pleaded guilty to seven counts of criminal sexual contact with a minor, the Albuquerque Journal reported.
One lawsuit was brought on behalf of an eight-year-old child who was repeatedly assaulted by Mr. Garcia after being placed in his care by Familyworks. The lawsuit alleged Familyworks had prior knowledge and received reports Mr. Garcia had sexually assaulted children placed in his care, according to the report.
In July, a New Mexico jury awarded $485 million in damages in total in the case, $250 million of which was punitive damages against Acadia.
Of the $400 million settlement, $200 million will go to settle this case, while cases brought on behalf of two other children abused by Mr. Garcia will settle for $100 million each, according to the SEC filing.
The settlement resolves the $485 million in damages awarded by the jury in July.
Acadia will pay for the settlement with a combination of insurance payments, cash on hand and credit lines, according to the SEC filing. The company had $112.2 million in cash on hand on June 30, and $505 million available in credit.
"Our hearts go out to these children. What this abuser did was horrible. We recognize that these individuals will have much healing to do and hope these settlement agreements are a step forward in that process," an Acadia spokesperson said in a statement shared with Becker's. "The company noted that the allegations did not arise from conduct occurring at Desert Hills or any Acadia facility, or the conduct of any Acadia employee, and there is no admission or finding of liability by Acadia or Desert Hills as part of the agreements."