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by Richard S. Leslie, J.D. Click here for profile.
Attorney at Law - "At the Intersection of Law and Psychotherapy"
Closing a Practice
(January 2010
, Volume 1)
… A reader suggested that I address
this subject, and upon reflection, I realized that in my many years of writing
articles regarding legal and ethical issues affecting psychotherapists and
counselors I don’t recall directly addressing this particular aspect of
practice. Some have asked – what are the legal and ethical issues involved with
closing one’s practice? Others ask – what is the practitioner required to do
when closing a practice, and what should the practitioner do in order to
protect herself/himself and his/her patients or clients? Some answers follow.
It is important to understand that this topic is broader than it may first
seem. This article will therefore not thoroughly address all aspects of
the topic. Hopefully, the article will alert the reader to some of the more
basic considerations and provide some general guidance.
A practitioner may need to close
his or her practice for a variety of reasons, such as geographic relocation,
career change, a desire to become an employee, or retirement. Most
practitioners will at some time during their professional careers think about
retirement. Some will be lucky enough to plan and execute their retirement well
in advance of the reality of such status. During that period of time, thought
must be given to the question of how closing the practice is to be handled with
respect not only to clients, but to former clients, employees, supervisees,
colleagues, and business associates (in the broadest sense). Others are not so
lucky, and closing a practice may not be the result of a voluntary retirement,
but rather, the result of an emergency or some unforeseen circumstance or
occurrence requiring closure of the practice on short notice.
A closure on short notice can clearly
make the process more complicated and frenetic. In the case of a sudden and
unexpected death of the therapist or counselor, a spouse (perhaps as executor,
trustee, or administrator) may have some responsibility for closing the
psychotherapy or counseling practice. In such a case, the spouse will likely
need to consult with an attorney, and maybe, a mental health practitioner –
perhaps a colleague of the deceased. A professional will can help to ease the
burden in such situations. Whatever the circumstance, it is important for
therapists, counselors, and others to keep some very basic information in mind
when closing a practice. This article addresses those basics. As an aside, and
perhaps the subject of another article, when a therapist or counselor sells his
or her practice, issues may arise that bear a striking resemblance to some of
the issues discussed in this article.
It is important to remember that each
state may address one or more aspects of closing a practice in its laws or
regulations. For example, in some states it may be mandatory for a therapist to
publish a notice in a newspaper of general circulation regarding his or her
retirement from practice and the present/future location of patient records.
Such a law may specify the procedural particulars for the publication as well
as the substantive content of the notice. Additionally, the ethical standards
of one or more professional associations may have relevance to certain aspects
of closing a practice. For example, ethical standards of most mental health
professions contain provisions regarding termination (and abandonment) of the
therapist-patient relationship. Thus, once the decision is made to close a
practice, the practitioner must determine what state laws, regulations, or
ethical standards (or guidelines) may require or suggest.
A major concern to be addressed when
closing a practice is the termination of the multiple therapist-patient
relationships - in an appropriate manner. This is critical because during the
time that the therapist-patient relationship exists, the therapist has certain
duties and responsibilities with respect to the patient. Once a proper
termination occurs, the therapist is no longer responsible for the patient’s
care. When closing a practice is pre-planned, as in a voluntary retirement from
practice, the termination process is usually unremarkable. Patients can be
advised well in advance of the actual retirement, giving them time to find
another therapist (with an appropriate referral from the retiring therapist) if
their course of therapy has not already ended. Practitioners should be mindful
of the fact that after a certain date, they should not be starting professional
relationships with new clients.
With respect to existing clients, it is
usually best to first raise the fact of an impending closure of the practice
and the need for termination and referral (if necessary) in a therapy or
counseling session with each client (with appropriate documentation in the
treatment records). If deemed necessary or appropriate, this can be followed up
with a confirming, personalized letter to the client. With respect to the
timing of the in-session notification of the client, practitioners must use
their best professional judgment, unless a law, regulation, ethical standard,
or recommended guideline specifies a time frame. Each circumstance is different
and professional judgments differ. While a longer time period may be
appropriate for some (e.g., six months’ notice may be appropriate for certain
long-term patients), I have found that a period between sixty and ninety days
prior notice seems reasonable to most therapists who have consulted with me on
this issue. Circumstances may necessitate a shorter notice period.
During the process of notifying the
clients of the closing of the practice and the need to terminate the
relationship, the therapist or counselor will also need to inform clients about
the treatment records – for example, what will be done with the records and
where they will be kept. The location of
records is of critical importance when closing a practice, both to existing
patients and to former patients. With existing patients, the practitioner can
personally inform the patient about accessing the records after the practice is
closed (documenting the conversation in the records)) and can, if desired,
confirm that conversation in a letter.
As indicated above, some states have
enacted laws that require retiring therapists (and others who are closing their
practices for reasons other than retirement) to publish a notice in a newspaper
of general circulation. The primary purposes of the publication are to inform
former patients of the fact of the closing of the practice and the future
location of their treatment records. Publication is intended to provide
“constructive notice” to those former patients who do not see it, and provides
actual notice to those who do read it. If a former patient who has not seen the
published notice is trying to locate a practitioner who has closed his or her
practice, the patient may contact the licensing board to find out the
practitioner’s current address – assuming that the practitioner has kept the
licensing board informed – as is typically required by law or regulation.
Even if not required, practitioners may
want to arrange for publication of such a notice and to explain therein how and
where records can be accessed. Some may prefer to send a letter (return receipt
requested) so that there is proof that the former patient received actual
notice regarding the whereabouts and accessibility of his or her records.
Publication content, as with letters written to present or former patients,
must be carefully drafted. Questions arise concerning the appropriateness or
necessity of sending letters to those former patients who were “discharged”
many years earlier, many of whom may be difficult to locate. If the records of
the patient have already been destroyed because they are old enough to be
destroyed according to state law or practice, there would seem to be no
compelling reason to send a letter (unless the law or an ethical standard
dictates otherwise). Secure maintenance, storage, and destruction of patient or
client records are important, and compliance with applicable state law or
ethical standards is, of course, expected (including applicable requirements
under HIPAA – for covered providers).
There are other matters to think about
when closing a practice. For example, questions are asked about maintaining or
canceling malpractice insurance. I have always leaned and counseled against
letting the policy lapse or canceling the policy until a considerable amount of
time following retirement has passed, even when the practitioner has an
occurrence-based policy. I have encountered situations where the therapist
retired or closed his or her practice, but shortly after the retirement and
following cancellation of the malpractice policy, the therapist decided to see
someone in therapy because of some unexpected situation or emergency. Performing
services at a time when the practitioner has no professional liability
insurance is risky to one’s personal assets! Those with a claims-made
professional liability policy must take special care not to allow their
coverage to lapse upon the closure of the practice, and may need to purchase a
“tail.”
Thought should also be given to
notification of those who are not patients. There may be colleagues, referral
sources, supervisees, or business associates (individuals, corporations and
other business entities) that the therapist should notify. If a practitioner is
on insurance panels, he or she should make sure that the insurer is informed in
a timely way, and according to the terms of the contract, as to when no further
referrals or removal from the panel is desired. Additionally, if the therapist
or counselor conducts business under a fictitious business name, he or she may
want to (or may be required to) file a statement of abandonment of use of the
fictitious business name when closing his or her practice. If the practitioner
rents or leases space, notification to the landlord, as per the requirements of
the lease or rental agreement, is another necessity. Another consideration
involves the status of one’s license – that is, will the licensee request (if
available) to place the license on inactive or some other status, or keep the
license active for some period of time – just in case!
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DEATH OF THE PRACTITIONER – COVERAGE, RECORDS, AND PROFESSIONAL WILLS
(March 2011
, Volume 1)
Death - what an unpleasant thought! However, I was asked to comment on the subject, so I will. The more complete background is that several insured practitioners have asked CPH and Associates about what happens to their coverage when they die. Suppose that an insured therapist or counselor dies, and then his or her estate is sued for the alleged negligence or wrongdoing of the practitioner that occurred prior to death and while engaged in active practice. Is there professional liability coverage after the death of the practitioner? Does the coverage “die” with the death of the practitioner? Will the insurer defend the case? If there are records in existence, what will or should happen to patient records once the practitioner dies? These questions give rise to one other question (at least for this article) - is it necessary to prepare a “professional will?” Some thoughts on these subjects follow.
Coverage
I do not speak for the insurer (or any insurer) on coverage questions, but merely express my views about the subject generally, and these views are not applicable to a particular set of circumstances faced by an individual insured. Coverage decisions are of course made by the insurer and depend upon many factors, not the least of which are the policy provisions and applicable state law.
When an insured therapist or counselor dies, his or her coverage does not necessarily die. While there is seemingly no coverage for acts, errors, or omissions that occur after the death of the practitioner (since there can be no acts, errors, or omissions by a person once dead), there is coverage for acts, errors or omissions that occurred while the practitioner was alive, assuming that the premium had been paid, the policy was in full force and effect, and the act, error or omission was a covered professional incident. There could be a factual scenario where the insured knew about a possible claim (or should have known), failed to notify the insurer as required under the policy, and then died. While the insurer could try to deny coverage because of the alleged lack of proper notice by the insured, the insurer would, in most situations involving death of the insured, have a heavy burden in court should its decision to deny coverage on this basis be challenged. Of course, much depends upon the particular facts and circumstances of the case.
Suppose that a mental health practitioner negligently treated a patient or is engaged in a dual relationship with the patient that caused emotional harm to the patient. Assuming that the therapist dies at some point during the course of treatment, perhaps suddenly and without prior warning, the patient or client is not precluded from filing a claim or suit against the therapist’s estate for the negligence of the practitioner that occurred during the course of treatment. There would, in my view, be coverage under such a circumstance and a claim or suit should be defended (or settled, depending on the circumstances) by the insurer, and any judgment should be paid – within policy limits. On the other hand, suppose that the therapist or counselor who died unexpectedly left a “professional will,” and suppose that those charged with carrying out the duty to wind down the business handle things in a shoddy and negligent manner. Would the malpractice insurer cover claims or suits arising out of the negligence of the executor or licensed professional hired to assist in the winding down of the practice? My un-researched opinion is that, at a minimum, the insurer would be reluctant to accept coverage for such events happening after the death of the insured.
Records
In defending cases involving the death of the therapist, the insurer and the law firm retained to represent the deceased practitioner (and estate) are both without a very important witness – the alleged wrongdoer. Defending such a case, in the event that it is not settled, could prove difficult. However, depending upon the facts and circumstances, such as the nature and extent of the treatment records and the relative strength or weakness of the allegations, a case may be successfully defended. For example, even if the plaintiff proves some amount of negligence, he or she may have trouble proving monetary damages (harm). Further, a jury or judge may be disinclined to render a judgment against someone who is not there to defend himself/herself, unless the case for negligence is clear and the harm is substantial.
As for the treatment records, it would generally be a mistake for anyone to destroy the records after the death of the practitioner, even if done to protect patient privacy. Records are kept for the benefit of both the therapist or counselor and the patient. Patients have specified rights to access (inspect, copy, amend/addend) their records under state law and under HIPAA (for covered providers). Concerns about privacy of the patient (and therefore, destruction of the records) should give way to maintenance of the records in a safe and secure manner so that the patient can continue to be treated by the subsequent therapist or counselor (or facility), who might want or need the benefit of the treatment records. Confidentiality of the content of the records must be uppermost in everyone’s mind. It is important to remember that HIPAA regulations and most state laws (check if you are not sure) allow licensed health practitioners to share patient records and information with other health care providers and certain health care facilities for the purpose of diagnosis or treatment of the patient – without a written authorization (although one may be easily obtained).
Many states have laws that require the records to be kept for a prescribed period of time. The time frame is usually different for adults and minors. Some of these laws may address how the requirement to keep records is affected by the death of the practitioner. State law may also specify what happens to the records upon the death of the therapist and what actions the estate of the therapist or others must take to announce the death of the therapist. State law may specify the location and manner of access to the records. Other states may have no law that covers the time frame for the maintenance of treatment records, other than laws that establish psychotherapist-patient privilege and the duty of confidentiality. Licensed marriage and family therapists in California are required by law to keep that amount of records consistent with sound clinical judgment, the standards of the profession, and the nature of the services being rendered. However, no time frame is specified for how long records must be kept after the termination of treatment, although there is such a law that applies to licensed psychologists.
The “Professional Will”
With further respect to the death of the practitioner, there is the topic of the “professional will.” I only address in this article the issue of whether there is a duty to have a professional will, and what the liability might be for not having one. I posit this scenario: A healthy 45 year-old therapist or counselor, in a sole private practice, dies suddenly and unexpectedly in an automobile accident or in a home invasion robbery turned fatal. The practitioner had no professional will, but did have a traditional will disposing of his or her personal and real property. Suppose further that a patient claimed harm and sought monetary damages for the manner in which her transfer to another therapist took place (after the death of her therapist), or questioned the quality of the referral made, or complained about the fact that no referral was made and she was forced to find her next therapist without assistance. What if she alleged that the deceased practitioner was negligent in not having a professional will? What is the liability of the estate, if any, for the alleged negligence of the practitioner?
I do not believe that a mental health practitioner has a duty (absent a law, regulation, or applicable ethical standard establishing or suggesting such a duty), nor do I believe there should be a duty, to prepare for one’s sudden and unexpected death by establishing a written plan that is intended, either directly or indirectly, to take care of the patient’s needs after the unexpected death of the practitioner. I believe that the liability of the deceased practitioner and the estate in the scenario described above should be minimal, if not non-existent. A key determinant of liability would be whether or not there is any law, regulation, case law, or ethical code provision that imposes such a duty.
In California, for example, there is no legal or ethical obligation for LMFTs to prepare for their untimely death by executing a professional will. Some may desire to prepare a professional will to make it easier (at least that is the goal) for their estates to deal with the proper closing of their practices. I have no quarrel with that desire. The prudent therapist could, however, in his or her standard last will and testament or trust, instruct the executor or trustee to protect patient confidentiality, to preserve patient records, and to hire a licensed person or persons to help with the winding down of the deceased’s practice. Notes can be left covering the many details involved with closing a practice.
Most private practice therapists and counselors, at some point in their professional careers, decide to retire or change professions. They may sell their practices or simply wind them down over a period of time. In the process, some patients may be referred to other practitioners, some may see their course of treatment end because of improvement (or perhaps lack of improvement), and the practitioner may limit the number of new cases initiated. Thus, there is a deliberate winding-down – at least ideally. In the process, patients are told that their treatment records will remain with the practitioner (or elsewhere) in safe-keeping and will be informed about how to access the records. While it is possible to address the issue of the practitioner’s death in a disclosure statement given to the patient at the outset of therapy or counseling, this topic is typically not addressed (unless there is a requirement to do so). While such disclosure statements may contain information about termination of therapy, they typically do not address termination because of the death of the patient or the practitioner, although they could.
The American Counseling Association’s Code of Ethics provides, in relevant part, that counselors prepare and disseminate to an identified colleague or “records custodian” a plan for the transfer of clients and files in the case of their incapacitation, death, or termination of practice. The provision does not specify when this is to be done or in what form the plan should be. Whether or not such a provision would be interpreted by a court to create a duty on the part of the practitioner to have a professional will or other plan would depend upon many factors, not the least of which would be a determination as to whether the provision should be viewed as a guideline or suggested practice, or whether failure to comply with such a provision constitutes per se unethical conduct. Liability might be imposed by a court or jury if either is convinced that the failure to provide for a professional will violated the standards of the profession and therefore constituted negligence. (See Section C.2.h. of the ACA Code of Ethics)
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