An investor in Psychiatric Solutions has filed a lawsuit in the United States District Court for the Middle District of Tennessee on behalf of purchasers of Psychiatric Solutions, Inc. (NASDAQ:PSYS) common stock during the period between February 21, 2008 and February 25, 2009, against Psychiatric Solutions and other over alleged violations of Federal Securities Laws.

According to the complaint the plaintiff alleges that Psychiatric Solutions and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between February 21, 2008 and February 25, 2009, materially false and misleading statements concerning Psychiatric Solutions safeguards and controls over its operations, including at its Riveredge Hospital facility. The plaintiff accuses that the defendants downplayed incidents at Psychiatric Solutions facilities, indicating that the deficiencies had all been resolved and that defendants assured investors that corrective actions had already been taken at its facilities to improve the quality, safety and risk management. The plaintiff claims that as a result of defendants false and misleading statements, Psychiatric Solutions stock traded at artificially inflated prices between February 21, 2008 and February 25, 2009.

On July 17, 2008, the Chicago Tribune issued an investigative report which disclosed unreported violence among juvenile patients at Psychiatric Solutions Riveredge Hospital facility. As a result of the Chicago Tribunes investigation, the Illinois Department of Children and Family Services placed a hold on admitting youths in the custody of the state to Riveredge Hospital. As a further result, the Department of Justice initiated an investigation into the facility and its operations, so the lawsuit. Then, on February 25, 2009, Psychiatric Solutions announced the fourth quarter and year-end financial results due. Psychiatric Solutions missed its 2008 income guidance from continuing operations of $2.02 to $2.03 per diluted share, instead reporting $1.92 per diluted share. The guidance miss was based upon the problems at Psychiatric Solutions Riveredge Hospital facility, including the effect of the continuing hold at the facility by Illinois Department of Children and Family Services, additional charges related to the investigation and an increase in Psychiatric Solutions general and professional liability reserves, so the lawsuit.

Psychiatric Solutions, Inc., located in Franklin, TN, is a provider of inpatient behavioral healthcare services in the United States. The Company operates 95 inpatient behavioral healthcare facilities with approximately 10,000 beds in 31 states, Puerto Rico, and the United States Virgin Islands. Psychiatric Solutions reported in 2007 Total Revenue of $1.46068billion with a Net Income of $76.21million and in 2008 Total Revenue of $1.7659billion with a Net Income of $107.88million. Shares of Psychiatric Solutions traded recently at $29.63 per share and were down from a 52weekHigh of $40.90 per share and almost $42 per share in 2007.