Fees – Reminders

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Avoiding Liability Bulletin – April 2019

Mental health practitioners confront a variety of issues dealing with fees over the course of their careers. Some practitioners struggle, especially as they enter the profession or start a new business, perhaps online, with the setting of fees for a variety of professional services. Those who advertise their fees must be sure that they do not violate any laws or regulations that deal with false, fraudulent, deceptive or misleading advertising by health professionals. Practitioners must be familiar with the laws and regulations that require specific disclosures regarding fees (and more). Circumstances may prompt a practitioner to think about suing the patient for fees owed, or referring the matter to collections, or abandoning efforts to obtain unpaid fees. Ethical and legal questions may arise for those who use “sliding fee scales.” Should patients be informed before the commencement of treatment that the practitioner may terminate treatment if fees are not (or cannot be) paid? Is it improper to maintain a relationship with a patient who is allowed to delay payment of fees owed, and could this be interpreted as the establishment of an unlawful or unethical relationship? Is a practitioner allowed to pay another for referrals?

The issues and questions described above might arise unexpectedly or can be the result of intentional or deliberate conduct on the part of the practitioner. I have written about many of these issues in prior articles in this publication, and some brief comments follow.


Setting Fees

When starting a private practice, much thought may be given to the kind of practice and the kind of clientele the practitioner wishes to pursue. A license to practice allows the practitioner to establish a usual and customary fee of $50 per hour or $150 per hour, or some other amount, at the start of doing business. Do you anticipate raising fees in the future? Will you raise fees for existing clients or only for new clients? Will there be a fee charged for missed sessions, and will there be circumstances where such a fee will not be charged? What should you disclose regarding these questions?

Remember, you (private practitioner) are or will be competing with other practitioners of like licensure and you will not, due to antitrust concerns, participate in formal or informal agreements with your competitors to fix or set fees at a certain level.


False or Misleading Advertising

State laws must be reviewed in order to determine whether there are any words or phrases that are expressly prohibited for advertising by state licensed mental health practitioners. In California, for example, words or phrases such as “lowest prices,” “and up,” and “as low as” are prohibited. When fees are advertised, other than a standard consultation fee or a range of fees for specific types of services, California law requires practitioners to “fully and specifically disclose all variables and other material factors.”


Required Disclosures

What are the required disclosures related to fees, and when must they be made, for practitioners of your licensure in your state? In California, one statute makes it unprofessional conduct if the practitioner fails to disclose, prior to the commencement of treatment, the fee to be charged for the professional services, or the basis upon which that fee will be computed. Practitioners may want to disclose more than what is required, whether related to fees or otherwise, perhaps encouraged by ethical standards, or perhaps due to one’s general concerns about legal liability. State laws change – so be sure to keep abreast of everything related to required disclosures.


Suing the Patient

Some practitioners find themselves in a position to sue their patients for monies owed. While this is somewhat rare, there are circumstances that can arise that will result in at least a smalls claims court action for monies owed. In such circumstances, practitioners must be sure to respect the duty of confidentiality inherent in the therapist-patient relationship and to not allow their emotions to cause them to reveal more than they need to – whether with respect to written materials or to testimony. The “fact of the relationship” between psychotherapist and patient is typically revealed in the lawsuit since it is not privileged information, but the diagnosis or other aspects relating to treatment are privileged and are not to be revealed (and they are unnecessary to establish a contractual relationship and a debt).


Referring to Collections

It is generally unwise for practitioners to refer matters to a collection agency or business, but circumstances could arise (hopefully rare) where that becomes a possibility. If a practitioner were to pursue such a course, it would be important for the practitioner to have documentation showing, at a minimum, that several requests for payment had first been made and that the patient was informed of the potential for the matter to be turned over to collections if the debt remained unpaid. Additionally, prudence must be exercised in selecting a collection agency.

One might want to select a firm that regularly provides services to health care practitioners or health facilities rather than auto dealerships! A former patient can easily claim that he or she was harassed by the collection agency and that the practitioner was negligent in selecting the agency. Moreover, the claim may be that harassment by the collection agency allegedly caused emotional harm, and that the possibility of using a collection agency was not disclosed at the commencement of treatment.


Waiving Fees Owed

Even though a patient may owe money to the practitioner, and even though it may seem important to stand on principle or teach the patient a lesson, it is sometimes best to not pursue the patient for monies owed and to make sure that your practices with regard to fees are tightened. Even if a practitioner obtains a monetary judgment against a patient in court, enforcement of the judgment (getting the money) may be difficult and time consuming. Fee disputes sometimes get ugly or nasty, and may result in false or exaggerated claims of wrongdoing against the practitioner.


Sliding Fee Scale

Practitioners have latitude when it comes to setting fees, but sliding fee scales can be troublesome if not properly administered. Generally, non-profit agencies may use a sliding fee scale, but private practitioners generally do not – rather, they have a set fee for their professional services. Fees can be reduced or waived for special circumstances, but a sliding fee scale can be awkward or cumbersome to implement in a private practice. I have cautioned practitioners for years of the following – “make sure that you are not sliding your fee up when you discover that there is insurance coverage for mental health/psychotherapy services.”


Termination If Fees Not Paid?

Practitioners may find it helpful to disclose to the patient, among other things, that the patient has the right to terminate treatment at any time, and that the practitioner may terminate for one or more specified reasons, including, but not limited to, when the patient is unable to pay the fees for the services to be rendered. Such a disclosure may include the fact that one or more referrals will be made and that the termination, depending upon the circumstances, may consist of more than one session. In the event that the termination process requires more than one session, practitioners of course have the option to provide such session(s) on a pro bono basis.


Debtor – Creditor Relationship Created as Unpaid Fees Mount?

If unpaid fees are allowed to mount, the patient may wind up owing so much money that a court or a licensing board might take the position that the practitioner improperly allowed the debt to mount and that a debtor-creditor relationship was thereby established at the same time as the therapist-patient relationship. In such a situation, a court might rule for the patient and a board might consider pursuing disciplinary action. One court held that the therapist forfeited the right to be paid because the therapist allowed the fee to rise to such a significant level as to have inappropriately created a debtor-creditor relationship at the same time as being in a practitioner-patient relationship.


Fee Splitting and Paying for Referrals

It is typically unlawful for a health practitioner to pay for referrals or to give a portion of his or her fee to an unlicensed person who made the referral or to someone who is licensed but has performed no service other than making the referral. Laws in the various states may differ in fine nuance, but this general principle is well accepted. Some states have enacted laws that regulate, in some manner and to some degree, businesses or entities that act as referral services for licensed practitioners. Such a law may prohibit participating practitioners from paying a referral fee that is dependent upon the number of referrals or the dollar amount of fees paid by the patient to the practitioner.


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.

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