Fee Arrangements

Download PDF

Avoiding Liability Bulletin – October 2008

… 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.


Richard Leslie

"At the Intersection of Law and Psychotherapy" Richard S. Leslie is an attorney who has practiced at the intersection of law and psychotherapy for the past twenty-five years. Most recently, he was a consultant to the American Association for Marriage and Family Therapy (AAMFT), where he worked with their various state divisions to develop and implement their legislative agendas. He also provided telephone consultation services to AAMFT members regarding legal and ethical issues confronting practitioners of diverse licensure nationwide. Additionally, he wrote articles regarding legal and ethical issues for their Family Therapy Magazine and presented at workshops on a variety of legal issues. Prior to his work with AAMFT, Richard was Legal Counsel to the California Association of Marriage and Family Therapists (CAMFT) for approximately twenty-two years. He was director of Government Relations for CAMFT, and as such was the architect of CAMFT’s widely regarded and successful legislative agenda. He represented CAMFT before the regulatory board (the Board of Behavioral Sciences) and was a tireless advocate for due process and fairness for licensees and applicants. He was a regular presenter at workshops and was consistently evaluated as CAMFT’s most highly rated presenter. He also sat with the CAMFT Ethics Committee and acted as their advisor on matters pertaining to the enforcement of ethical standards. Richard is an acknowledged expert on matters pertaining to the interrelationship between law and the practice of marriage and family therapy and psychotherapy. For many years, he taught Law and Ethics courses for a number of colleges and universities in their marriage and family therapy degree programs. While at CAMFT, he provided telephone consultation services with thousands of therapists in California and elsewhere for over twenty years. He is highly regarded for his judgment, his expertise, his direct style, and his clarity. Richard has been the driving force for many of the changes and additions to the laws of the State of California that affect MFTs. In 1980, he was primarily responsible for achieving passage of the "Freedom of Choice Law" that required insurance companies to pay for psychotherapy services performed by MFTs. Passage of that law allowed MFTs to earn a living, allowed them to better compete in the marketplace, and strengthened the profession in California by leading to a great increase in the number of licensees and CAMFT membership. Currently, about half of the licensed marriage and family therapists in the country are licensed in California. While at CAMFT, Richard was primarily responsible for, among other things, the successful effort to criminalize sex between a patient and a therapist. He was successful in extending the laws of psychotherapist-patient privilege to MFTs, thereby giving patients the same level of privacy protection as when seeing a psychiatrist or psychologist. He fought tirelessly and successfully for the right of MFTs to refer to themselves as "psychotherapists," to perform psychological testing services, to be appropriately reimbursed by California’s Victims of Crime Program, and to be employed in county mental health agencies throughout California. Richard was admitted to the Bar in New York (1969) and in California (1973). While practicing in New York, he served as a public defender, and later, as an Assistant District Attorney. Shortly after moving to California, he worked for the San Diego County Human Relations Commission as their Law and Justice Officer. While there, he worked successfully to achieve greater racial diversity in the criminal jury selection system and to expose and stop police abuse. For such work with that agency, he was the recipient of the Civil Libertarian of the Year Award by the San Diego Chapter of the American Civil Liberties Union.

Have Questions? click here, We’re happy to help!