CPH and Associates Professional Liability Insurance Counselor Malpractice

by Richard S. Leslie, J.D. Click here for profile.
Attorney at Law - "At the Intersection of Law and Psychotherapy"

Fees - Sue the Patient?

(January 2006 , Volume 1)

… Suppose that the patient has been allowed to delay the payment of fees and that the balance now owed to the therapist or counselor is, for example, $1500. Suppose further that the patient now terminates treatment and that the patient has not responded to one or two written requests for payment of the $1500 or some portion thereof. Is a lawsuit appropriate? Might the bringing of a lawsuit constitute a breach of confidentiality? Might a lawsuit stir things up with the patient, possibly igniting a malpractice claim or the threat of one?

In answer to the first question, a lawsuit (usually in small claims court) is often appropriate. The lawsuit is brought so that the therapist can obtain an enforceable judgment against the debtor-patient. Payment of the debt is enhanced once a court’s judgment has been rendered. In fact, a lawsuit is often preferable to other options, such as referral of the matter to collections or frequent and persistent communication by phone and in writing (“harassment” in the eyes of the patient) where repeated requests or veiled threats are delivered to the patient. I usually discourage therapists from referring the matter to collections because of the problems that could arise from such action. Too much communication and persistence may propel the patient into action against the therapist.

It would be surprising to me if any state’s law would not provide an exception to confidentiality and privilege so that a lawsuit by a health care practitioner against a patient for monies owed could lawfully be brought. If such an exception did not exist, that would mean that physicians and therapists would effectively be prohibited from being paid for services lawfully and appropriately rendered. The law should not (and generally doesn’t) countenance such an absurd result. One must take care to assure that the lawsuit (e.g., the pleadings – the complaint) and the evidence (e.g., the testimony) presented do not address clinical or treatment issues, but are focused on the financial and contractual aspects of the relationship.

With respect to the third question asked above, the answer is “yes.” A lawsuit against a delinquent patient may well stir things up, like the patient alleging that the treatment provided was ineffective or grossly negligent and that therefore the patient doesn’t need to pay for such shoddy services. Sometimes it is wise for the therapist to drop the matter, even if the amount owed is substantial. Conversely, I have counseled therapists who have pursued, as a matter of principle, payment of $100 by filing a small claims court action. They refuse to be intimidated into inaction by the patient. Each case and each decision must be carefully analyzed before action is taken to pursue a claim for monies owed.

Fees - Raising Fees

(January 2006 , Volume 1)

… Therapists and counselors who manage their own practices are periodically faced with the issue of raising their fees. One of the fundamental questions asked is whether or not it is appropriate to raise fees with respect to patients who are continuing in therapy and who have previously agreed with the practitioner on the fee to be charged. Among the questions that I routinely ask therapists who desire to raise fees on continuing clients is whether or not the patient was informed, either orally or in writing, of the possibility that fees might be raised during the course of the therapy, and if so, was the patient informed about how often this might occur, how much prior notice would be given, and by what percentage would the fee increase.

Usually, the answer is that the patient was not fully informed, prior to the commencement of therapy, of the fact that the fee may be raised from time to time. Even if the law or applicable ethical standards would allow the therapist to raise the fee by giving reasonable notice, I have often counseled against raising the fee. Patients can feel exploited or squeezed and the relationship can quickly deteriorate if fees are raised “midstream.” If one wanted to preserve the right to raise fees with existing clients, assuming that doing so is both legal and ethical, it would be wise to cover this subject matter in the written disclosures that are made to the patient at the outset of treatment.

Fees

(May 2005 , Volume 2)

… Here’s a useful and common case example that may save you from a complaint or lawsuit by the patient. A lot of complaints (of various kinds) stem from a dispute over fees. Suppose the patient is somewhat behind in his payments and that he owes you $750.00. He now demands, in writing, pursuant to the applicable law in your state (or HIPAA, if you are a “covered provider”), a copy of his records. My advice is usually as follows: “You should comply with the request (or resist, as may be allowed by law and as the circumstances warrant) in a timely fashion, and in the process, mention nothing to the patient about the amount owing and certainly don’t condition your compliance upon receipt of payment (partial or otherwise).” Treat them as two unrelated matters. Ethical standards typically address this issue in a similar fashion, as do some state laws.

… Another scenario involving fees that often leads to problems is where the amount owed, as it rises substantially, creates a debtor-creditor relationship, which, together with the therapist-patient relationship, may arguably constitute an unethical dual relationship. Why did the therapist allow the unpaid balance to rise so dramatically, putting financial pressure on the patient? Why didn’t the therapist refer to a low cost clinic? Why did the therapist exploit the patient financially and make her a debtor of the therapist? I once received a call from a therapist who said, “I need a good collections attorney. Can you refer me to one?” I asked her how much the patient owed her and she told me $20,000.00. I said: “In my opinion, you don’t need a collections attorney, you need a malpractice attorney.” We then chatted for a while!

Fees - Barter

(June 2005 , Volume 2)

… What about barter with a patient - is it legal? Is it ethical? The answer depends. Therapists must first be aware of individual state law and regulation to see whether or not the state has taken a public policy position on this issue. If so, the law should of course be followed. If the state has remained silent on the issue, one should determine how the ethical standards for his or her profession address this issue.

One professional association’s ethical standards provide that marriage and family therapists “ordinarily refrain” from accepting goods, services, or other non-monetary remuneration from patients in return for professional services. Another professional association for MFTs takes a more specific approach by saying, in part, that bartering for professional services may be conducted only if the client requests it, the relationship is not exploitative, and the professional relationship is not distorted. That association’s ethical standards additionally require that a clear written contract be entered into between the therapist and patient.

Be careful. This is an area where therapists have encountered difficulties. Good judgment is required here, as well as reference to law, regulation and ethical standards, and perhaps one or more consultations. There is a significant difference between paying for an hour of therapy with bushels of fruit (in a rural or farming community) approximately equaling the therapist’s fee, as opposed to having the patient work at the rate of ten dollars an hour cleaning the therapist’s house (including the two bathrooms replete with magazines of various genres)! While bartering may not be prohibited, it is also not typically enthusiastically encouraged. Care must be taken to comply with any conditions established by applicable standards, guidelines, or laws and regulations.

Fees - The Sliding Fee Scale

(August 2006 , Volume 1)

… A CPH insured and reader of this Bulletin called me to ask some questions about “sliding fee scales.” I told her that I would write about the subject in the Avoiding Liability Bulletin since the questions raised are various and sometimes troublesome for practitioners. State law may or may not directly address this issue, and if does, the law may vary from state to state and by profession. I write about this subject and express my views for the private practitioner rather than for nonprofit and charitable corporations, health facilities or similar agencies or organizations.

My view is that a ”sliding fee scale” is unnecessary, unwise and problematic. Most sliding fee scales used by nonprofits and other entities base the fee on the financial condition of the patient. In order to properly implement such a policy, entities must ask for certain information and perhaps supporting documentation, like tax returns. Most private practitioners do not want to get into that kind of detail in their practices. Psychotherapists usually establish fees that they are comfortable charging and stay with those fees until they decide to raise their fees. Physicians and other practitioners likewise establish a “usual and customary fee” and typically do not change their fee for different patients. If the patient can’t afford the fee, he or she can be referred elsewhere.

It is important to have a usual and customary fee for a number of reasons. First, patients of a particular therapist may know one another and may compare notes. If one patient is being charged more than the other, this can cause problems. Having a set fee lets patients know what you think your time and ability are worth. Also, when dealing with insurers and other payers, a set fee provides consistency to your “profile.” It is said that insurers keep profiles on providers as to fees charged and other aspects of practice, and it is not unheard of for an insurer to raise a question with a provider as to why his or her fee appears to be higher than normal. This is an area where therapists and counselors get in trouble.

I have spoken with therapists who have raised their fees when they find out that the patients are covered by insurance. In fact, some have implemented an informal policy that sets the fee at, for instance, $80 per hour, but if there is third party reimbursement, the fee becomes $120. In my view, this is a risky and dangerous practice, and it may constitute insurance fraud. To those who have insisted upon using a “sliding fee scale” I have said – “make sure you always slide down – not up!” The therapist’s fee should not, in my view, be set with insurance coverage in mind, but rather, the therapist should decide upon the fee that he or she requires regardless of the source of payment. This latter approach seems to this writer to be much cleaner.

For those who do establish a set fee, this does not mean that exceptions can’t be made. Some practitioners decide to set aside a certain portion of their practice for low fee clients or perhaps will decide to see one or more clients for no fee – that is, “pro bono.” This kind of simple approach is encouraged in many professions and is easier to manage than the “sliding fee scale” approach. Once the lower fee (or no fee) is established and implemented, it is in my view and experience wise to not raise the agreed upon fee (or the no fee arrangement) upon a change in circumstances. To do so invites disputes and difficulties.

Fees

(October 2008 , Volume 1)

… Once in a while, therapists or counselors ask about the propriety of charging a lump sum fee, to be paid in advance, which is to be used by the client over some period of time in the future. As an example, perhaps the therapist or counselor asks the client to pay $1500 in advance and agrees to provide a fixed number of sessions over the course of the next month or more. When asked about the propriety or legality of this kind of arrangement, I have consistently expressed opposition to it and have counseled therapists away from such arrangements for a variety of reasons, whether initially suggested by the practitioner or the client.

With respect to the legality of such an arrangement, I would recommend that anyone who wants to consider such a fee arrangement with clients should first consult with an attorney. While I have not researched the question, I have concerns that in some states such an arrangement might run afoul of insurance or pre-paid health care laws that might regulate such arrangements. Additionally, there may be other state laws that would limit or prohibit such a fee arrangement. I have not researched the question in any particular state because I believe there are other reasons that such a fee arrangement represents an invitation for trouble.

If such an arrangement were to be entered into, it would seem that a written contract would be necessary so that the terms and conditions of the arrangement are clear to both parties. If not a written contract, some form of disclosure discussing the fee, or the basis upon which the fee is to be determined, would likely be necessary. State laws usually specify disclosure requirements related to the fee that the practitioner charges. When one begins to think of the many questions that arise with such fee arrangements, it should become apparent that they are problematic. The content of the contract or the disclosure form would have to be carefully considered and drafted, and would need to be thorough in order to address the many questions that arise. Some of the questions and issues raised by such a fee arrangement follow. They are illustrative rather than exhaustive.

What period of time will the client have to use the services? Will interest be paid to the client on the balance not yet used? What if the client does not need all of the services contracted for - will the client feel compelled to continue with the therapy? Will the therapist or counselor be inclined to recommend termination and return the unused portion of the fees? Could this arrangement be viewed by the licensing board or others as exploitive? What happens after the contracted for services are rendered – is there a renewal clause? Are there any options for the patient? What other health care practitioners bill in this manner? How will insurance reimbursement be handled under such an arrangement? What is the reason for such a fee arrangement and who proposed it? Is there a clinical reason why this fee arrangement is being used, or only a business or economic reason? Does the client get the benefit of a reduced hourly fee for paying in advance? These questions, and others, convince me that such fee arrangements should be avoided. Why complicate your professional life? As indicated above, state laws may prohibit (or regulate, in some manner) such arrangements.

FEES – “No Shows”

(October 2010 , Volume 1)

… A reader raised some questions related to the amount charged to a client or patient who does not show for the scheduled appointment (or who cancels) and who fails to give the therapist or counselor the amount or kind of notice that the practitioner has asked for in his or her disclosure or office policy statement. The reader asked about the propriety of charging different amounts for such “no shows” (missed sessions) for those patients who have insurance coverage and those who do not. This latter question reminds me of the somewhat broader question often asked about whether it is “okay” to charge patients who have insurance a higher fee than is charged patients who do not have insurance and thus pay “out of pocket.”

With respect to charging for missed sessions, practitioners must decide, among other things, how much prior notice they will require in order to excuse payment for the missed session, and whether there are any exceptions to the office policy that will require payment for missed or canceled sessions. Additionally, the amount charged the patient or client for the missed session must be determined. The client must, of course, be informed of the policy and should be informed of the rationale for the policy. Since this policy concerns fees, and since it is likely to bother some who are affected by it, the information regarding the policy should be given to the client in writing (a writing may be required by state law). This information is typically conveyed in the disclosure or informed consent statement that the therapist or counselor gives to the patient at the outset of treatment.

In terms of the enforceability of such a policy, I am aware that there are some small claims court judges who will not allow recovery in a lawsuit concerning charges imposed for a missed session. The judges’ position has been that the consumer is paying for professional health care services, and when those services are not rendered, the practitioner should not be entitled to a fee. While such results do occur, it is also true that many judges will allow recovery, provided that the policy is fair and reasonable, and provided that the patient has been adequately informed of the policy prior to being charged for the missed session.

Billing an insurance company and seeking reimbursement for a missed session must be approached with great care. It is generally considered fraudulent to bill an insurer and to therein represent that an hour of psychotherapy occurred on the date of the “no show.” Some patients have asked their therapists to do such billing, and some of those therapists, perhaps feeling a wee bit guilty for the effects of their policy on “no shows,” have agreed to cooperate with their patients. Such an agreement is a big mistake and will usually end poorly for the therapist, who will likely be charged with insurance fraud when the patient later complains against him or her. Some patients know that the billing constitutes fraud, and they know that they can use this information against the therapist if the need arises at a later time. Beware!

The practitioner referred to in the first paragraph revealed that with respect to clients who have insurance coverage, he bills the client for the amount of the client’s copayment for a first violation of the “no show” policy. Thereafter, he charges the client the amount that the insurance company would have paid him had a claim been submitted for the fifty minute session. For clients who pay out of pocket, they are charged his full hourly rate, which is greater than the rates paid by most if not all insurance companies. The rationale for the disparity, he explains, is that the fee structure is an attempt to be financially fair to the clients who rely on their insurance. My comment on this scenario is that I don’t like it – for a number of reasons.

First, I don’t understand why there would be the disparity in missed session fees between clients who have insurance coverage and those who do not. Why would there be a desire to be financially fair to clients who have coverage, but not to those who don’t have coverage? Why should the latter be expected to pay more for a missed session? I would want to be fair to both those who have insurance and those who do not. I also don’t understand the logic behind charging only the co-pay for the first “no show” and then a greater amount for the second and subsequent “no shows.” How would this be put into a written policy statement? Would there be separate and distinct written policy statements for those who have insurance and those who do not? Additionally, this practitioner will be getting paid varying amounts for a missed session by those who have insurance coverage, since the amount of the copayment will vary from policy to policy, as will the amount that the insurer would pay for the session. This all seems to be rather awkward and unnecessary, at best.

I would think that generally, the fee for the missed session would be the same for each patient and that it would mirror the fee paid for a session that is held. The lesson that this fee policy is usually intended to teach is that the practitioner’s time is valuable, and that the value is established as, for example, $100 per hour. Why should a patient who has insurance coverage pay only the amount of a co-payment, and the client without coverage pay perhaps two or three times more? Could it not be argued that the practitioner is exploiting the client who is without insurance coverage? Again, this method of billing seems awkward at best. Perhaps there are arguments why this manner of billing is appropriate, fair, and non-problematic, but I am not convinced!

My general advice is that mental health practitioners, as with physicians and other professionals, should decide upon their usual and customary fee, and should not have different fees for those who pay “out of pocket” vs. those who have insurance coverage. This does not preclude a therapist or counselor from reducing the fee or providing pro bono services as an exception to the general rule – usually for patients who have demonstrated a financial need for a reduced fee. However, when the fee is lowered, the insurance company should also get the benefit of the reduced fee. For example, if the practitioner lowers her fee from $100 to $50 because a patient is financially needy, the amount billed to the insurance company should be $50. It might be considered fraudulent for a practitioner, upon finding out that there is insurance coverage, to raise his/her fee. I have found this action to be all too prevalent. For those who may offer a sliding fee scale, and as I have previously written (the Avoiding Liability Bulletin – August 2006), make sure you slide down – not up!