KidsPeace: 17 Former Residents Receive Settlement from Owner of Now-Closed Child Psych Hospital

April 6, 2021

Seventeen former residents of Mesabi Academy, a now-closed juvenile facility in northern Minnesota, have received $1.495 million as part of a legal settlement, newly released documents reveal.

The former residents and their families sued Mesabi Academy’s parent company, Pennsylvania-based KidsPeace, in 2017, a year after APM Reports published a series of stories detailing abuse and neglect of kids at the Buhl, Minnesota, facility. KidsPeace closed Mesabi Academy a month after the stories were published.

The legal settlement comes at a time when the juvenile justice industry is rapidly changing. Large residential facilities like Mesabi Academy have been closing across the country amid abuse allegations and a broader push by advocates to keep kids in local communities.

Those trends mean that fewer Minnesota children are being sent out of state for residential treatment. But many of the closed facilities — including Mesabi Academy — also served children with severe mental health needs. Many of those young people now must wait weeks or even months for in-patient care.

The Mesabi settlement was reached in 2019, but attorneys for KidsPeace and the families worked to shield the details from public view. APM Reports filed a motion last year requesting Hennepin County Judge Edward T. Wahl release a court transcript that outlined the settlement.

In August, Wahl agreed to release the transcript and the settlement amount but redacted the payouts to each plaintiff. Attorneys for KidsPeace appealed Wahl’s ruling but were rebuffed by both the Minnesota Court of Appeals and the Minnesota Supreme Court. The court documents detailing the settlement were released to APM Reports in February.

Under the $1.495 million agreement, the 17 families split $500,000 equally, the plaintiff’s attorneys received $495,000, and another $500,000 was distributed by a court-appointed special master based on each child’s treatment at the facility.

“As attorneys, because we represent everybody, we didn’t want to be the ones deciding who got what,” plaintiff attorney Ashwin Madia said at a December 16, 2019, court hearing.

Attorneys representing the 17 plaintiffs declined comment. A spokesperson for KidsPeace declined an interview request but issued a written statement maintaining the facility was “managed appropriately.”

The settlement required plaintiffs who are minors or adults with a legal guardian to set up a trust to help pay for their future needs.

Court records show the initial settlement was $1.5 million. But when APM Reports learned of the proposed settlement amount, attorneys revised it so they could tell APM Reports that the $1.5 million figure wasn’t correct.

“We renegotiated an amount with KidsPeace for $1.495 million,” Madia said at the hearing. “We took $5,000 off the global settlement so the media couldn’t report an accurate number.”

This is an excerpt from a December 2019 settlement hearing in Hennepin County District Court between 17 families of children placed at Mesabi Academy and Mesabi Academy's parent company, KidsPeace. Full transcript

Two juvenile justice legal experts told APM Reports that most settlements remain confidential, so the release of the court records for the Mesabi deal offers a rare glimpse into how juvenile detention centers handle such settlements.

Experts say that families of kids abused in residential treatment centers face several barriers to filing, let alone winning, a lawsuit. A federal law requires a child to file grievances with a facility before pursuing a lawsuit in federal court. Many children are also reluctant to talk about their experiences at a facility once they leave it. And with legal settlements often remaining confidential, the truth of what kids endured often never becomes public.

“A lot of what happens in facilities stays hidden in facilities,” said Jessica Feierman, senior managing director of the Juvenile Law Center in Philadelphia.

In the Mesabi case, each family was required to sign a nondisclosure agreement that forbids them from discussing the settlement.

On the day of the settlement hearing, at least one plaintiff — whose name was redacted in the court transcript — raised concerns about the confidentiality agreement.

“They’re covering up everything that they did to people,” he said.

In the end, all the plaintiffs signed the agreement not to disclose the settlement amount or discuss what happened to them at Mesabi.

A last resort for troubled youth

The 123-bed Mesabi Academy opened in 1998, and local leaders hoped the facility would generate jobs on the Iron Range, a stretch of northern Minnesota known for mining. Mesabi initially housed boys who had committed crimes, referred to the facility by Minnesota counties and from states across the country. But over time, Mesabi began accepting a broader range of kids, including those with severe mental health needs and foster children.

Because it accepted such an array of kids, Mesabi served as a catchall and last resort for Minnesota’s troubled youth, including kids who had bounced through other facilities and who counties and states had trouble placing elsewhere.

In May 2016, APM Reports published a series of stories highlighting problems at the facility, including alleged abuse, institutional neglect, improper staff training and a lack of government oversight. Days after the first story ran, officials in Hennepin and Ramsey counties removed 41 boys from the facility. The state of Minnesota also froze new admissions, and KidsPeace decided to close Mesabi in June of that year.

While KidsPeace officials maintained that there was no wrongdoing at the facility, subsequent government investigations found five instances of mistreatment of residents at Mesabi in 2015 and 2016, including a staff member allowing boys as young as 12 to participate in a “fight club” and an employee breaking a resident’s clavicle.

After Mesabi’s closure, communities across Minnesota had to scramble to find alternatives. That resulted in counties shipping more kids to facilities in other states. The number of Minnesota youth sent to out-of-state facilities increased 37 percent from 2016 to 2017.

The key driver of that increase was Minnesota’s most populous county, Hennepin. Of the 297 Minnesota children placed in out-of-state treatment centers in 2017 and 2018, a third were from Hennepin County.

Many of those kids were sent to facilities run by Sequel Youth and Family Services, a for-profit company that is one of the nation’s largest operators of treatment centers for children with behavioral health problems. Staff at some Sequel facilities have also been accused of abusing residents. Amid stories by APM Reports and other media outlets documenting mistreatment of youth, the company has closed a dozen facilities since 2019. Hennepin County announced last year that it would stop sending children to Sequel facilities after a 16-year-old died at a Michigan facility.

Since then, Hennepin County and other Minnesota counties have relied less on residential treatment outside of Minnesota.

The number of Minnesota children sent out of state has declined 46 percent since 2017, according to data gathered by the Minnesota Department of Human Services.

Minnesota’s out-of-state placements decline after 2018 spike

The number of children sent to out-of-state facilities has declined after spiking in the years after Mesabi Academy’s closure in 2016. The data was gathered by the Minnesota Department of Human Services under the Interstate Compact for the Placement of Children, a national system that tracks where states send children.

As it once spurred the increase of Minnesota kids sent out of state, Hennepin County drove the decrease too: Its use of out-of-state facilities dropped by more than half since 2018, according to county data.

Officials with Hennepin County declined an interview request but issued a statement saying the county “has increased the use of community based culturally specific service providers to better meet the needs of youth in the justice system, thus helping to reduce the use of out of home placements.”

Mesabi’s closure in 2016 was also part of a national contraction in the juvenile justice industry. In the addition to Sequel’s 12 closures, regulators in Pennsylvania also pulled 14 licenses from the Glen Mills School after repeated reports of abuse.

The pandemic also played a role in the reduction of child placements. Nationwide, there’s been a 26 percent reduction in the number of kids held in youth detention in the past year, according to a survey by the Annie E. Casey Foundation.

Juvenile justice advocates are pleased with the shift. “I think it’s a changing moment in the juvenile justice system,” said Feierman with the Juvenile Law Center. “We are seeing systems all over the country turn away from a model that is largely about pulling young people from their homes.”

Covid-19 helped accelerate that change, said Mark Soler with the Center for Children’s Law and Policy, a Washington D.C.-based nonprofit that protects the rights of at-risk children in juvenile facilities. “The front-end facilities have dramatically reduced their populations because judges didn’t want to bring kids in who they didn’t need to,” Soler said. “Correctional facilities can be very dangerous in terms of spread of coronavirus.”

But the pandemic put other pressures on the system. A greater number of children are seeking mental health treatment — and with fewer facilities to take them, many are being forced to wait longer for care.

Waiting for months

Hennepin County’s child placement data shows how complicated and often disjointed the system can be. There has been a significant drop in the number of kids removed from their homes since 2016, according to county data. That decline was mostly driven by a reduction in referrals by the county’s juvenile corrections division. Kids who broke the law were more likely to be kept in their community than sent away to a residential facility. Advocates have hailed this trend as progress.

But the news isn’t all good. The county also saw much less of a drop in the number of foster kids and children with mental health needs placed in residential facilities. Those children need immediate care. The pandemic also exacerbated the shortage of psychiatric treatment beds for children.

A national study by the Centers for Disease Control and Prevention found that mental health visits to emergency rooms between March and October last year increased for children ages 5 to 17 compared to the previous year.

A study of weekly emergency room visits shows children’s mental health-related visits to the emergency room between April 2020 and October 2020 increased 24 percent for children aged 5-11 and 31 percent for children aged 12-17 compared with the same period in 2019.

Wait times for residential treatment at Minnesota facilities can be as long as six months for some services, said Kirsten Anderson, executive director of Aspire MN, an association of Minnesota children’s service providers.

“Children have had to wait for access to intensive treatment for a long period of time; this is not a new trend,” Anderson said.

She said private insurance refuses to cover some services. The difficulty in attracting and retaining qualified employees also makes it challenging for treatment centers to increase services.

Mental health advocates say they support efforts to focus on community-based treatment. But they say that residential treatment still needs to be an option for children with severe mental health needs.

“The needs are exploding, and our system is not ready to help them,” said Sue Abderholden with the Minnesota chapter of the National Alliance on Mental Illness. “Covid hasn't impacted us all equally, and so while we’re all in the same sea, we’re in different boats.”

While advocates for at-risk youth continue to look for options to expand services for children, it will not happen in Buhl, Minnesota.

Nearly a year after 17 boys agreed to settle their lawsuit over their treatment at Mesabi Academy, the city of Buhl gave up efforts to attract another provider to operate in the building that once housed Mesabi Academy.

The city announced in November that it had sold the building. The new owner plans to train service dogs there.

Source: Tom Scheck, “Former residents of troubled youth facility receive settlement money,” APM Reports, Apr. 2, 2021, URL: https://www.apmreports.org/story/2021/04/02/former-residents-mesabi-academy-youth-facility-receive-settlement-money