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Case Study: Counselor breaches professional boundaries by entering landlord/tenant arrangement with client

Counselors and Medical Malpractice Case Study with Risk Management Strategies
Presented by HPSO and CNA
Medical malpractice claims may be asserted against any healthcare provider, including counselors. This case study involves a marriage and family counselor working in private practice. Allegations in this case included:
  • Failure to maintain appropriate boundaries (ACA Code of Ethics Section A.6);
  • Extending Counseling Boundaries (ACA Code of Ethics Section A.6.b.);
  • Failure to maintain a client’s confidentiality and privacy (ACA Code of Ethics Section B1.)


The client was undergoing bankruptcy proceedings due to her compulsive spending habits and, after five years of marriage, her husband filed for divorce. Both the bankruptcy and divorce proceedings increased the client’s anxiety and depression causing her to become emotionally detached and withdrawn. The client sought counseling for her anxiety and depression.
Prior to her divorce, the client and her husband had attended a few counseling sessions with their church minister. When the client’s husband filed for divorce and refused to continue the counseling sessions, the minister encouraged the client to see a marriage and family counselor. The minister referred the client to a fellow church member who was a marriage and family counselor and, soon thereafter, the client scheduled an appointment with the insured counselor. The client and the counselor attended the same church and had mutual friends. Although they had participated in the same church functions, they did not have any relationship prior to the client’s first session with the counselor.
During the first few sessions, the focus of the therapy was on the client’s emotional well-being and coping with her divorce. The client disclosed that her spending habits were the main cause of her divorce. She reported that, prior to their marriage, her now ex-husband had paid $75,000 to settle her credit card debit. Prior to the husband filing for divorce, she was again in debt for a similar amount. She stated that she was too embarrassed to tell the church minister about her debt and forbid her now ex-husband from discussing it with anyone from the church.
After the initial sessions, the client’s focus was on her “housing situation.” She explained that she and her ex-husband had moved to the area for his job. When the ex-husband filed for divorce, he accepted a position overseas. The client reported that she was facing eviction from her home due to her inability to pay the monthly mortgage and had been unable to find affordable housing. Over the next few sessions, the counselor believed that the client’s depression was worsening and became concerned that the client would become homeless. The counselor approached the minister about the possibility of the church providing some type of financial support to the client to ensure that she would not endure homelessness. While she was somewhat cautious about the information that she provided to the minister, the counselor advised the minister that the client was struggling financially and would soon be evicted from her home. 
At approximately the same time, the counselor accepted a counseling position in a different state. The counselor informed her clients that she would be leaving the area and closing her practice. She made arrangements to refer all of her clients to a therapist in the area and terminated her counseling relationship with all of her clients. Since the client and counselor had mutual friends, the client knew the counselor was not planning to sell or rent her home when she left the area. During the last session, the client became very emotional over the possibility of being homeless. She reported that she only had a few weeks before being evicted and no one locally could/would help her. Toward the end of the session, the client asked if she could rent the counselor’s home, and the counselor reluctantly agreed.
The counselor and the client executed a basic home rental agreement, and, because the client was having a hard time with her finances, the counselor agreed to let the client live rent free for two months. The agreement required the rent to be paid no later than the 15th of each month and that her first month’s rent would include the first and last month’s rent.
When the first rent payment was due, the client told the counselor, via text message, that she was unable to pay the rent as she had started a new job and had not yet received a paycheck. The counselor agreed to accept a delayed payment. Then, shortly after receiving the text, the counselor saw several social media posts showing that the client was currently on a vacation with many of their mutual friends. As a result, the counselor became angry, believing that the client had taken advantage of her generosity. The counselor and client exchanged heated, and at times threatening, text messages.
The counselor subsequently contacted the church minister to ascertain if he would schedule a meeting with her and the client. The minister agreed to help mediate the parties to a compromising resolution in order to avoid legal proceedings or legal fees.
When the meeting began, the minister made a statement that the client’s ongoing spending habits and lack of respect for people trying to help her was the cause of her housing and financial challenges. The client believed that the minister’s statements were directly related to private information she had shared with the counselor during their counseling sessions. The minister ended the meeting soon after it began due to perceived erratic and aggressive behavior by the client.

Risk Management Concerns

Shortly thereafter, the client filed a lawsuit against the counselor. Allegations against the counselor included:
  • Failure to maintain a client’s privacy and confidentiality
  • Failure to manage and maintain professional boundaries
  • Inappropriate engagement of a counseling relationship with a friend
  • Failure to perform an informed consent protocol with the client when the counselor’s professional boundaries extended beyond conventional counselor/client parameters
  • Failure to document any discussions on the risks, benefits, and anticipated consequences of extending the counselor/client relationship beyond conventional parameters
The client remained in the counselor’s home for several months without paying rent. The counselor ultimately had to initiate eviction proceedings to have the client removed from the home. Once evicted, the counselor spent thousands of dollars on home repairs due to damage inflicted by the client.
The client asserted that, due to the counselor’s eviction actions, as well as breaching the confidential information shared during therapy, her depression and anxiety had worsened, and she was unable to trust anyone. The client asserted that this growing mistrust caused her to lose her job and struggle to be gainfully employed.  
During the counselor’s deposition, she admitted to renting her home to the client, but she did not view the rental as a boundary violation because she terminated the client/counselor relationship prior to entering into the rental agreement. She testified that she felt morally obligated and pressured to rent her home to the client.
In addition to the professional liability lawsuit, the client also filed a complaint against the counselor with the state board of marriage and family counseling.


Defense experts had mixed opinions of the counselor’s actions related to the professional liability claim. The counselor had limited documentation of the therapy sessions with the client, no documentation regarding the termination of the client/counselor relationship or of the transfer of the client to another therapist. However, the defense attorney believed that the client’s excessive social media posts prior to the lawsuit being filed, as well as shortly thereafter, discredited her claimed injuries of depression, anxiety, and inability to maintain employment. The client also did not present well at her deposition. During her deposition, the client began arguing with her own attorney and left without completing the deposition.
The defense of the professional liability lawsuit continued for three years before the client’s/plaintiff’s attorney dismissed all claims against the insured counselor. The cause of the dismissal was not completely understood, but the defense attorney speculated it may be related to how the client presented at her deposition.
Although the professional liability claim was dismissed, the state board of marriage and family counseling found that the insured violated multiple state laws and regulations that govern counselors’ practice. In response to the complaint, the counselor agreed to a five-year suspension of her marriage and family licensure.
Legal Expenses Incurred for the Defense Against the Professional Liability Claim: $44,000
Legal Expenses Incurred for the Defense Against the Professional Licensing Board Matter: $18,000
(Monetary amounts represent the payments made solely on behalf of the insured counselor.)

Risk Control Recommendations

  • Understand all laws or regulations that govern client interactions. Ignorance of the law, employer policy or professional ethics does not absolve the counselor of the responsibility to act within established clinical, ethical and regulatory guidelines.
  • Review the ACA Code of Ethics at least annually, and recognize the professional obligations to uphold the code.
  • Practice in accordance with the standard of care, limits of one’s license/certification, and all regulations and ethical guidelines. Seek peer review and/or clinical supervision, as needed, and actively participate in continuing education programs related to evolving ethical issues. 
  • Respect and maintain a client’s confidentiality and privacy. Protect the confidential information of prospective, current and former clients. Only disclose client protected information when an appropriate consent has been obtained or with sound legal or ethical justification.
  • Avoid multiple relationships with clients. This protocol may involve declining invitations to participate in business/social/personal/family activities with the client or others outside of the treatment setting. Document all such invitations in the client’s clinical healthcare information record, as well as the response given and consequent communication. Occasionally, participation in such events may be beneficial to the client. Refer to the ACA Code of Ethics for guidance. If the decision is made to participate, document the potential benefit to the client, the clinical decision-making process and the client’s response.
  • Terminating the client does not create an exemption from the prohibition against extending the counseling relationship. Cease written and verbal contact with the client upon termination and document any client communication attempts.
  • Behave in an ethical and legal manner. Counselors should be aware that client welfare and trust in the profession depend upon a high level of professional conduct (2014 ACA Code of Ethics, Section I).
For more information on the ACA Code of Ethics, ethical decision making, and other counseling resources, visit the ACA’s Knowledge Center:
American Counseling Association (ACA). (2014). ACA Code of Ethics.
These are illustrations of actual claims that were managed by the CNA insurance companies. However, every claim arises out of its own unique set of facts which must be considered within the context of applicable state and federal laws, as well as the specific terms, conditions and exclusions of each insurance policy, their forms, and optional coverages. The information contained herein is not intended to establish any standard of care, serve as professional advice or address the circumstances of any specific entity. These statements do not constitute a risk management directive from CNA. No organization or individual should act upon this information without appropriate professional advice, including advice of legal counsel, given after a thorough examination of the individual situation, encompassing a review of relevant facts, laws and regulations. CNA assumes no responsibility for the consequences of the use or nonuse of this information.
This publication is intended to inform Affinity Insurance Services, Inc., customers of potential liability in their practice. This information is provided for general informational purposes only and is not intended to provide individualized guidance. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy. Any references to non-Aon, AIS, NSO, HPSO websites are provided solely for convenience, and Aon, AIS, NSO and HPSO disclaims any responsibility with respect to such websites. This information is not intended to offer legal advice or to establish appropriate or acceptable standards of professional conduct. Readers should consult with a lawyer if they have specific concerns. Neither Affinity Insurance Services, Inc., HPSO, nor CNA assumes any liability for how this information is applied in practice or for the accuracy of this information.

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