The Daily - Thursday, Jan. 18, 2018

Episode Date: January 18, 2018

America’s addiction crisis has become a lucrative business, and fortunes have been made in the growing rehab industry. But the death of a patient in California has raised questions about how to treat people who want to get clean, and what it means to profit from the health crisis. Guest: Michael Corkery, an investigative reporter for The New York Times. For more information on today’s episode, visit nytimes.com/thedaily.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today, America's addiction crisis has become a lucrative business and fortunes have been made in the emerging rehab industry. But a patient's death has raised big questions about what it means to profit from crisis. It's Thursday, January 18th. Tell me about Michael Cartwright. Michael Cartwright is someone I met earlier this year in Nashville, where he grew up and where he lives. Michael Corkery is a business reporter at the Times. Michael suffered from addiction from a very early age through college. You know, I was really struggling, 23 years old,

struggling with mental health issues, substance abuse, and really desperate for help. There was nothing he wouldn't try, alcohol, drugs. 21 years ago, I was fortunate enough to get into the program of Alcoholics Anonymous. And from that experience, I got into helping others just like myself, went back to school, started working in the field. And he started his own treatment facility in inner city Nashville. So what does Cartwright set out to do with this treatment facility that he opens? Cartwright set out to do with this treatment facility that he opens.

He first looks to help people in the inner city that are both suffering from addiction and mental illness. But along the way, he starts to see the potential for something bigger. big national company or entity on the scale of like a Mayo Clinic that people could turn to and know that it was a place they could send their loved ones and get a really good quality of care. So he set out to create that. Mr. Speaker, I rise today to support the passage of the Paul Wellstone and Pete Domenici Mental Health and Addiction Equity Act of 2008, a comprehensive bill which will establish full mental health and addiction care parity. 2008, George W. Bush, one of the last things he did before he left office was to sign the Parity Act, which mandated that insurers give the same type of coverage for mental health and addiction as they did for other

types of illnesses. The legislation before us will fully ensure equity in the coverage for mental health and addiction as they did for other types of illnesses. The legislation before us will fully ensure equity in the coverage for mental illness and substance abuse disorders by requiring that group health plans with mental health coverage offer that coverage without the imposition of discriminatory financial requirements or discriminatory treatment limitations. It was a huge boon to people and businessmen like Mr. Cartwright who now had a dedicated funding stream for their businesses. So previously people had to pay out of their own pockets for this kind of thing and now suddenly their health insurer is going to pay a lot if not most of this kind of treatment. That's right. This opened up a whole class of people, lower middle class, middle class, working class people

that could now pay for addiction treatment. So how does he go about building this Mayo Clinic of drug treatment facilities? What does he actually do? Well, at the time, the addiction treatment field was dominated by mom and pop operators. So someone that owned one facility here, maybe two facilities there.

And his idea and his strategy was to go and buy up these small operators, and he rolled them up into a company, which he called... This place saved my life, and I'm forever grateful for that. This place is the answer. This place is American Addiction Centers.

What started out with one treatment center in inner city Nashville, Michael Cartwright grew into a national chain that spanned the country. He went out and acquired houses in cul-de-sacs in California. He bought a former spa in Texas. American Addiction Centers now has 30 facilities around the country. Every year, about 12,000 patients are being admitted for treatment. It's one of the largest treatment providers in the country. And how much does this kind of intensive inpatient stay at a facility treatment cost? It varies, but it could be as much as $10,000 a week. Wow. This is very expensive

and by extension, very lucrative. So from the beginning, Michael Cartwright seems to understand that drug treatment facilities can be a very profitable business. Yes, Michael Cartwright is a savvy entrepreneur, but what he didn't foresee was how addiction would seize the country as a serious, serious health crisis. The United States is in the midst of the worst drug addiction epidemic in its history. But it's not a crisis of illegal drugs. It's one of prescription painkillers. Something that had been thought of as an issue that celebrities dealt with,

an issue that poor and low-income people dealt with, was now affecting soccer moms and teenagers in the suburbs. The high school cheerleader addicted at 15. The 20-year-old baseball player dead. This is the real picture of America's opioid crisis. And Michael Cartwright was perfectly positioned to deal with this crisis. The only options for the millions of Americans now addicted to opioids. Death, jail, or recovery.

What Michael Cartwright and his company had and have is an extremely savvy and effective online marketing machine. If you type in the word addiction and rehab near me, there's a pretty good chance that Michael Cartwright's company is one of the first links that's going to come up on Google. Hi, I'm Michael Cartwright. I was once in and out of treatment programs. I went from being a hopeless case to living a happy, joyful life.

You can break free from your addiction and reclaim your life. Hope is here. Call now for a free confidential assessment. We'll also verify your insurance and explain your benefits, all at no charge. It was a huge success, a juggernaut that Wall Street quickly took notice of. So in 2014, Michael Cartwright,

as so many executives of new companies do, took the podium at the New York Stock Exchange and rang the bell for the first day of trading of his new company with the ticker AAC. Its shares within a few weeks of starting to trade go crazy. As you might imagine, AAC runs a chain of drug and alcohol addiction treatment centers. And we know that anything related to substance abuse in this country is sadly a growth industry. Now, when it comes to treating addiction, the business is highly fragmented. It's the largest player in the space. It's just 1.4% market share.

So there's a lot of green field. AAC's goal is to be a consolidator in the industry and become the first nationally recognized brand in quality addiction treatment services. And what does that successful public offering mean for Michael Cartwright himself? Michael Cartwright was one of the largest shareholders in his own company. And by extension of how high the stock price went, you know, in a few short weeks, he was worth tens of millions of dollars. He owns a private plane. He went and bought up lots and lots of land on a set of islands in the Bahamas. Islands?

He has all the trappings of a very, very successful entrepreneur. That's not just rich. That's super rich. So this is a fortune built on addiction. Yeah. So it seems like this is all going exceptionally well for Cartwright and for his company. It's now public. It's now doing very well in the stock market. And then what happens? Michael Cartwright in the summer of 2015 is on vacation in Italy with his family when he

gets a call from the General Counsel of American Addiction Centers who informs him that the company is about to be charged by the California Attorney General with murder. A grand jury in Southern California has indicted a drug and alcohol rehab center for murder. Prosecutors say the company accepted a client it wasn't prepared to care for and killed him by not refilling his oxygen. The California prosecutor alleged that the company in treating one of its patients in 2010 was so negligent in its care that it amounted to murder. For the first time, such a charge has ever been leveled in California history.

We'll be right back. Michael, what could possibly have happened in Michael Cartwright's company that would lead to the company being charged with murder? It involved a man named Gary Benefield, who was an alcoholic, who drank 12 Budweiser's a day. His marriage was in trouble. He needed help. In addition to his alcoholism, Mr. Benefield also was very sick. He had a lung problem that made it very difficult to breathe. He required oxygen to go anywhere. He was a really sick man. And the reason that the Benefields were

so attracted to this particular treatment company was that they said they could take care of all of his medical needs, which were serious, in addition to helping him get sober. They said they would have supplemental oxygen there for him. They said if he ever got into a problem breathing, they would take care of it. It turns out they didn't have oxygen for him. And as he was becoming more and more agitated throughout the first day of his treatment, because he was having trouble breathing, instead of taking to a doctor, the staff gave him, on several occasions, sedatives, very powerful sedatives, for which they had no prescription to give him.

So when do people in the treatment facility actually get around to calling the hospital or the paramedics? When one of the staff members had woken up from his overnight shift, he went in to check on Mr. Benefield and found that he was dead. And at that point, for the first time, they called 911. He dies within 24 hours of arriving there. Several of the employees testified that they were instructed to give Mr. Benefield sedatives to calm him down. The employees also testified that they were discouraged from calling 911 because the company didn't want to, quote, lose patients to hospitals. By losing patients, they meant the insurance money would go to the hospitals

instead of to the treatment company. Hmm. Because they wanted to hold on to their patients as much as they could, presumably, because that's how you make money. That's how you make money. they could presumably because that's how you make money. That's how you make money. Sean has always been a great dad, great provider, hard worker, but had a drinking problem.

His thing was beer. He drank a lot of beer. So we know of at least five deaths in the company's California treatment houses alone between 2009 and 2013, including the death of a patient named Sean Rayna. I talked to Sean Rayna's wife, Anna. He was an alcoholic, but he was also addicted to Xanax. Their drinking progressively got worse, and the dependency on the Xanax got worse. He came to one of their homes in Southern California and within a few hours was experiencing seizures

and was hallucinating. The staff, some of them noted this, but again, he was not taken to a hospital. He was allowed to go up to his room where, according to his lawyers, he was left unsupervised for several hours. When the staff came back to check on him, he had taken a razor that he'd brought with him for shaving, and he'd cut himself and had killed himself and was dead. But he hadn't even been there 24 hours ago. He hadn't been there 24 hours.

He had just gotten there. His wife, who's sued the company, is still angry about how the company could have known about, you know, very, very standard responses to withdrawing from Xanax. And yet, again, according to some of the staff that have been deposed in that case, he was left alone. And they said that he used razor blades, the razor blade. And I'm thinking, razor blade? Well, don't they check this shit? Don't they check this crap before they put him in the room? And I'm thinking to myself, they took a cell phone away from him, but nothing else. She, like so many other people that have come to American Addiction Centers and other treatment facilities like it,

found it on the Internet and knew very little about it, but believed what they told her was that they could help and care for her husband. It was really a beautiful brochure. The wording was beautiful. Everything was great. They made it sound so good. It'll be in good hands. You know, we do everything we can. I mean, when I had asked, what are we going into? He goes, we're going to go into a medical treatment center. He's going to be there. And medical care to me is doctor, nurse. That's how I perceive the medical facility. Look at the facility. Supposedly it's a medical facility. I go, what? This is what this

is? It was not a medical facility. It go, what? This is what this is? It was not a medical facility. It was a guiding house in the middle of a cul-de-sac. It was a residential area. And I was livid. I was livid. It was in the middle of a cul-de-sac. Cul-de-sac. And she believes that this company that held itself out there as a company that could treat addicts of all kinds with medical issues of all types

should have prevented him from hurting himself. I want to know everything. I want to know where the hell did it go wrong? Who failed? Somebody in there failed miserably. One of the things we, when we talk to people in the industry, they will say, these are vulnerable people and they're struggling with a lot and they're unhealthy sometimes. And sometimes like they'll die. If they were to say that to you. They're full of crap. They're full of crap. If you're a facility, that's a good facility. You should know what they're going through. If you see a problem off the bat, you take care of that problem. You just don't go back to bed and just, here you go. You're on your own. You should know what they're going through. And if you see a problem off the bat, you take care of that problem. You just don't go back to bed and just, here you go, you're on your own. You should know. You should stop what you're doing.

If you're not trained for that, then don't be there. You shouldn't have, you have no business being there. I want to understand the point that Anna is making here in her interview with you. Is she saying that, yes, these facilities are inevitably dealing with sick people, and inevitably, bad things will sometimes happen to sick people. But whereas at a hospital, the bottom line is do your best to help sick people get better, that doesn't seem to be the bottom line at these facilities. Yes, I think Anna was getting at the crux of what the concern is about this industry, which is that it seems to have a lot of incentive to hold on to patients even when their medical needs may be too great for a facility like this to take care of them.

And I think that in the Benefield case resulted in real questions about whether by doing that, the facility was acting negligently, criminally negligently. But Michael, how do we get from negligence to a murder charge, even if the incentives of this company seem questionable, murder suggests a malicious intent. How does anyone make the case that this company actually murdered someone? What the prosecutor was alleging was that the behavior of this company in holding on to Gary Benefieldfield when he showed symptoms of just being so sick and so in need of serious medical attention. He needed to see a doctor right away, according to these prosecutors, that by not calling 911, by the managers of the folks that

were taking care of him saying, no, give him sedatives, he'll be fine. That was a level of negligence that rose by California standards, the prosecutor said, to second-degree murder. The argument being that the negligence was so great and motivated at least in part by profit that there actually is a maliciousness to the intent. that there actually is a maliciousness to the intent. There's a theory in California state law that second-degree murder is defined as someone showing an abandoned or malignant heart. So basically, having no heart. That's what the prosecutor alleged this company did. How have the courts reacted to that idea? So a judge pretty quickly dismissed the

murder charge against the company, saying that the prosecutors had failed to prove that the company committed second-degree murder. It was lowered down to an abuse charge, and even that ultimately fizzled out. But even though this very sensational legal case went away, the questions that it raised are still very much front and center. What is this system? Who are these operators? What are these companies that are promising that they can help treat this very serious illness that millions of Americans are facing right now. So what does Michael Cartwright, the founder of this company, what does he make of what happened to his company

and of this whole moment in the addiction industry? I think Michael Cartwright feels that he was unfairly targeted. He believes that he's doing a good thing, that as a former addict, he has stepped into the void and created a far-reaching treatment company that can reach a lot of addicts. He also believes he created a successful business model and that he's providing both good treatment and a successful profit-making business for his shareholders. He points to other industries that have faced similar questions about their care. Nursing homes, for-profit hospitals, that these same questions have come up in their history.

Addiction treatment, certainly the for-profit model, is very new. Addiction treatment, certainly the for-profit model, is very new. And I think Cartwright believes that in its early stages, it's going to face these doubters and these critics, and it will eventually find its footing, and he's in it for the long haul. He's continuing to expand his company, and he has no plans of slowing down.

On the other hand, they irresponsibly promised a care that they couldn't provide at enormous life-or-death risks to the people that they took on. Yeah, and I think that's where you see where the profit incentives bump up against providing the best care for the patients and making the best choices for the patient's care. And that's what is at the heart of the Benefield case and Sean Raina's case. Thank you, Michael.

Thank you, Michael. Thank you. lawmakers that President Trump had not been fully informed when promising a wall along Mexico's border, and that he had persuaded the president that such a wall was not necessary. His comments, which contradict the president's public statements, came as Kelly tries to convince Democrats to work with Trump on an immigration deal, despite their opposition to his plans for stricter border control. Kelly assured the Democrats that no matter what Trump has said, he wants to reach an agreement with them. And... On Wednesday, in their most dramatic gesture of reconciliation in a decade,

North and South Korea agreed to march together during the opening ceremonies of the Olympic Games under one flag, a white and blue banner containing the image of an undivided Korean peninsula. The two countries will also field a joint women's hockey team, the first time that a unified team from the Koreas will compete in the games. In a statement, South Korea's president, Moon Jae-in, said,

I believe our people and people around the world will be moved while watching such a sight. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.