2.2.0.7 false Contingencies and Other 0211 - Disclosure - Contingencies and Other true false false false 1 USD false false USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Contingencies and Other [Abstract] 0 psys_ContingenciesAndOtherAbstract psys false na duration Contingencies and Other. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Contingencies and Other. false 3 Contingencies and Other 1 us-gaap_CommitmentsAndContingenciesDisclosureTextBlock us-gaap true na duration No definition available. false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>11. Contingencies and Other</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">We are, from time to time, subject to various claims and legal actions that arise in the ordinary course of our business, including claims for damages for personal injuries, medical malpractice, breach of contract, business tort and employment related claims. In these actions, plaintiffs request a variety of damages, including, in some instances, punitive and other types of damages that may not be covered by insurance. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In October 2010, we received a subpoena from the United States Department of Justice requesting certain documents regarding one of our inpatient facilities in Philadelphia, Pennsylvania. We intend to provide the requested documents to the Department of Justice. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">In the opinion of management, we are not currently a party to any proceeding that would have a material adverse effect on our business, financial condition or results of operations. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The reserve for professional and general liability increased to $23.5 million as of September 30, 2010 from $19.0 million as of December 31, 2009, which is primarily due to new and existing claim developments in 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Litigation Related to the Merger</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">Seven putative class action complaints were filed on behalf of alleged public stockholders of the Company. Two of the lawsuits, <i>Carpenters Pension Fund of West Virginia v. Psychiatric Solutions, Inc., et al.</i>, Case No. 38359, and <i>Pedric v. Psychiatric Solutions, Inc., et al.</i>, Case No. 38391, were filed in the Chancery Court for Williamson County, Tennessee. One of the lawsuits, <i>Smith v. Psychiatric Solutions, Inc., et al.</i>, Case No. 10-862-II, was filed in the Chancery Court for Davidson County, Tennessee. The <i>Smith </i>case was transferred to Williamson County. Another three lawsuits, <i>Oklahoma Police Pension and Retirement System v. Jacobs, et al.</i>, Case No. CA 5514, <i>City of Miami Police Relief and Pension Fund v. Jacobs, et al.</i>, Case No. 5515, and <i>Plumbers & Pipefitters, Local 152 Pension Fund v. Psychiatric Solutions, Inc., et al.</i>, Case No. 5532, were filed in the Court of Chancery for the State of Delaware. A seventh lawsuit, <i>Rosinek v. Psychiatric Solutions, Inc., et al.</i>, Case No. 3:10-cv-00534, was filed in the United States District Court for the Middle District of Tennessee. The defendants generally include us, members of our board of directors and, in certain of the cases, our officers. UHS and/or its affiliates are named as defendants in some of the lawsuits. The lawsuits allege, among other things, that our directors breached their fiduciary duties in connection with the proposed Merger by failing to maximize stockholder value. The lawsuits also allege that our directors have put their personal interests ahead of those of our stockholders, including by approving the Merger to extinguish any personal liability they could suffer from previously asserted derivative claims related to, among other things, violations of fiduciary duties and federal securities laws and also by negotiating a Merger Agreement that includes broad director and officer insurance and indemnification provisions protecting them against civil and criminal claims for six years from the date of the Merger Agreement. Certain of the lawsuits allege that various individual defendants will receive improper change of control payments and Merger Consideration in connection with equity awards that plaintiffs contend were improper. Certain of the lawsuits also allege that we and UHS aided and abetted the various breaches of fiduciary duty. Certain of the lawsuits also allege that various individual defendants caused us to issue a proxy statement containing materially false and misleading statements and omissions in connection with our 2010 annual stockholder meeting. Among other things, the lawsuits seek to enjoin us and our directors from consummating the Merger and also seek rescission of the allegedly improper equity awards. The three Delaware cases were consolidated and set for trial beginning on August 5, 2010. The three Tennessee state court cases were consolidated in Williamson County, and then stayed in favor of the consolidated Delaware action by agreed order of the Williamson County court. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">After substantially completing fact discovery in the consolidated Delaware action, without admitting liability on the part of any of the defendants, the parties to the consolidated Delaware action and the consolidated Tennessee state court action have agreed in principle to terms of settlement as follows: (1) requiring additional disclosures in the proxy statement delivered to stockholders in connection with the Special Meeting called to vote on the Merger regarding, among other things, the background of and negotiations relating to the Merger, the Executive Performance Incentive Plan, the amendment to our 2009 Long-Term Equity Compensation Plan and adoption of the 2010 Long-Term Equity Compensation Plan, the circumstances surrounding our compensation committee’s approval of equity and restricted stock grants in February 2010, and the financial disclosures relating to the transaction, including the discounted cash flow and other analyses performed by Goldman Sachs & Co.; (2) allowing our stockholders to revote on the proposal to amend the Psychiatric Solutions, Inc. Equity Incentive Plan (the “Equity Incentive Plan”) to increase the number of shares of Common Stock subject to grant under the Equity Incentive Plan by 900,000 and to restrict the repricing of options, originally approved by our stockholders at our annual meeting of stockholders in May 2010, and which revote was held on October 5, 2010, with stockholders again approving the amendment to the Equity Incentive Plan; (3) requiring the release by the class of stockholders entitled to vote on the Merger of any and all claims that have been or could have been made against any of the defendants relating to the Merger, the disclosures made by or on behalf of us through and including consummation of the Merger, and the compensation received by any defendant through and including the consummation of the Merger; and (4) requiring us to pay plaintiffs’ reasonable attorneys’ fees and expenses in the amounts ordered by the courts. The settlements in those actions are subject to court approval, which has not yet been obtained. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The parties to the <i>Rosinek </i>case have agreed in principal to settle that case on terms identical to the proposed settlement in the consolidated cases, with the additional promise from the <i>Rosinek</i> plaintiff that she will participate in and not object to the class certification necessary in the consolidated cases for the court to approve the settlement. The United States District Court has stayed the <i>Rosinek </i>case in light of the parties proposed settlement and in favor of the settlement approval proceedings in the consolidated cases. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">The settlements in the consolidated and <i>Rosinek </i>cases will not affect the form or amount of the consideration to be received by our stockholders in the Merger. The defendants have denied and continue to deny any wrongdoing or liability with respect to all claims, events, and transactions complained of in the aforementioned lawsuits or that they have engaged in any wrongdoing. The defendants have entered into the settlements to eliminate the uncertainty, burden, risk, expense and distraction of further litigation. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other Litigation</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">A stockholder lawsuit and a stockholder derivative lawsuit alleging violations of federal securities laws were filed in 2009 against us and certain of our executives. We believe that the lawsuits are without merit and are defending them vigorously. The stockholder derivative lawsuit will be extinguished by the closing of the Merger. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock Includes disclosure of commitments and contingencies. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Interpretation (FIN) -Number 14 -Paragraph 3 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 5 -Paragraph 9, 10, 11, 12 false 1 2 false UnKnown UnKnown UnKnown false true