Counseling Board Complaint Case Study: Failing to Maintain Minimum Practice Standards as it Relates to Documentation, Financial, and Billing

A regulatory board complaint may be filed against a counselor by a client, colleague, employer, and/or other regulatory agency, such as the State Board of Licensed Professional Counselors, Department of Health, or the Department of Family and Children Services. Complaints are subsequently investigated by the regulatory board in order to ensure that licensed/certified counselors are practicing safely, professionally, and ethically. Regulatory board investigations may lead to outcomes ranging from no action against the counselor to revocation of the counselor’s license/certification to practice. This case study involves a licensed professional counselor (LPC) who had been licensed to practice as a solo practitioner for over 15 years at the time of this incident.

Background

A Licensed Professional Counselor (LPC) had been treating an adult male client for over seven years when the client made a formal complaint to the State Board of Licensed Professional Counselors (Board). The LPC had been working with the client to help him manage and overcome emotional and physical trauma he had suffered during his childhood. The childhood trauma had a negative effect on the client’s personal relationships and professional career. As an adult, the client suffered with severe trust issues, impulsivity and bouts of anxiety, paranoia, and depression.

Over the seven years of treatment, the client had been married three times, two of which ended in divorce. The client was married to his current wife (third marriage) for three months when the LPC requested that the spouse attend the client’s therapy sessions as a collateral participant. The spouse attended more than 20 counseling sessions over a five-month period as a collateral participant. However, at some point during that five-month period, the LPC began seeing the spouse on an individual basis both in-person and via telebehavioral sessions.

During counseling sessions,  the spouse informed the LPC that her marriage  was a mistake and that she had started the divorce process. The LPC persuaded the spouse to pause the divorce proceedings and take the next few weeks to reconsider her decision as the couple had an upcoming two-week vacation to Europe planned.

While on vacation, the spouse and client were separately texting the LPC about concerns with the relationship. The client reported concerns that his spouse was having an affair and felt his life was spiraling out of control. The client gained access to his wife’s phone in an attempt to find out if she was being unfaithful. The client saw that his spouse and LPC had been communicating via text messages and phone calls while they were on vacation. He saw messages regarding his spouse’s plan to proceed with a divorce once they returned home. The client and spouse ended their trip early, and the spouse filed for a divorce shortly after arriving home.

The client felt betrayed by his spouse as well as feeling   deceived and hurt by the actions of the LPC. When the client arrived home, he cancelled all upcoming therapy sessions with the LPC and filed a complaint with the Board. In his complaint, the client asserted that the LPC acted in an unethical, reckless and potentially harmful manner. He believed that the LPC had inappropriately influenced his spouse to initiate divorce proceedings in order to pursue a personal relationship with her.

After the divorce, , the spouse continued therapy with the LPC for the next several months without any complaints or issues.

Board Investigation

The complaint the Board received from the client was over twenty pages and contained  content that appeared indicative of manic symptoms.. The Board made the following determinations:

1. The LPC provided individual behavioral health services to the client’s spouse.
2. Consent for treatment was for the client for individual services.
3. The spouse participated in the client’s sessions as a collateral participant for 20 counseling sessions over a five-month period.
4. While the LPC reported that the spouse’s role as a collateral participant was explained to her in an informed consent form:
   1. The Board did not find an informed consent form or collateral agreement for the spouse for the 20 counseling sessions.
   2. The Board did not find any documentation that the LPC explained the spouse’s role in the 20 counseling sessions.
5. The LPC began providing individual counseling services to the spouse while attending the client’s sessions as a collateral participant.
6. Despite the client’s consent for individual therapy, the LPC’s progress notes for the client and the spouse included both couples and individual sessions.
7. The LPC counseled with the client and the spouse regularly via text messaging with no corresponding documentation in the healthcare information records.
8. Neither the client nor the spouse was presented with or signed an informed consent explaining their right to refuse services related to the change from individual to couples counseling.
9. The healthcare information records of the client and the spouse were found to be deficient in several key areas, including but not limited to the following:      
   1. Lack of informed consent documentation.
   2. Treatment plans did not contain dated signatures.
   3. LPC did not review and reassess the treatment plans annually, despite the client being under the LPC’s care for seven (7) years.
   4. On 20 occasions, the LPC submitted billing to the client and his health insurance company for services rendered, yet there was no corresponding clinical documentation to substantiate those claims.
10. Due to the deficiencies within the client’s healthcare information record, the Board subpoenaed five (5) other random client records of the LPC and found the following:
    1. All five (5) healthcare information records were missing several elements relating to  consent for treatment.
    2. Three (3) of the client healthcare information records were missing required elements for  telebehavioral counseling.
    3. All five (5) healthcare information records were missing several dates of corresponding billing records.

Resolution

The Board found the counselor’s conduct and circumstances violated minimum practice standards as it relates to:

• Consent for Treatment
• Treatment Plans
• Client Records
• Financial and Billing Records
• Telebehavioral Health

The Board placed the LPC on a 12-month probationary period and stipulated that the LPC could not return to practice unless fully compliant with all of the following terms and conditions:

• Clinical Supervision:
  • Must be clinically supervised at all times during the 12 -month probationary period, by a supervisor that has been pre-approved by the Board.
  • The clinical supervisor must hold at least a master’s degree  and be licensed by the State Board of Licensed Professional Counselors at the independent level.
  • The clinical supervisor must meet in person with the LPC on an individual basis for a minimum of one hour, twice monthly for six months, Thereafter, the frequency of meetings shall be determined by the clinical supervisor’s recommendation but must occur no less than once per month.
• Reports:
  • The clinical supervisor must submit a letter to the Board that includes the following items:
    • Disclosure of any prior relationship with the LPC.
    • A statement of qualifications for supervision.
    • Acknowledgement of having reviewed the  consent agreement along with a proposed supervision plan..
  • The clinical supervisor is required to submit quarterly reports to the Board on the LPC’s work performance. If the LPC fails to comply with minimal practice standards  or appears unable to practice with reasonable skill and safety, the clinical supervisor must notify the Board immediately.
  • The LPC must provide any and all employers during the probation period with copies of the Board’s consent order.
  • The LPC must ensure that all employers submit a quarterly report to the Board.
• Changes of Employment or Supervision:
  • The LPC must report all employment or supervisor changes to the Board within 30 days of change.
  • The LPC must make all new employers aware of the Board required reports and provide a copy of the consent order.
  • If the clinical supervisor is unable to continue during the LPC’s probation, they must notify the Board within 10 days of ending supervision and submit an interim final report. The LPC shall follow the Board’s requirements in designating a  new supervisor,.
•  Continuing Education Credits (CEUs):
  • Within 12 months of the effective date of the consent order, the LPC must successfully complete three semester credit hour graduate level behavioral health ethics courses from a regionally accredited college or university, pre-approved by the Board.

The SBON matter took almost a year to resolve, and expenses incurred to defend the insured nurse in this matter exceeded $14,000.

Risk Management Recommendations

Documentation and Clinical Records: Counselors are expected to create, safeguard, and maintain documentation necessary for the rendering of professional services. Accurate documentation is a critical component of client care. Inaccurate or inadequate documentation can lead to claims of negligence and malpractice. Proper documentation is a key element in avoiding adverse legal action and licensing board complaints. In legal proceedings or licensing board investigations, your documentation may be the only evidence available and can serve as the key factor distinguishing your account from the client’s. The following measures can serve to mitigate these exposures:

1. Provide accurate, complete and current documentation, to enhance continuity of client treatment by another authorized counselor or healthcare provider. Documentation should support the treatment plan and satisfy board regulatory and third-party billing requirements.
2. If a documentation error occurs, the clinical record must be amended contemporaneously, accurately noting the amendment or correction as such. Do not alter entries once legal or regulatory action is initiated.
3. Know and comply with documentation requirements in accordance with state-specific practice acts, laws, and regulations, as well as prevailing standards of care and the policies of licensing bodies and employers or group practices. When more than one requirement applies, adhere to the most stringent policy.
4. Include the date and time of client assessment, the specific findings and the length of time such findings are valid. For example, when assessing potential adoptive or foster parents, include both the approval and expiration date, to ensure timely reassessment, if necessary.
5. As a complete and accurate healthcare information  record presents the strongest defense against any legal or licensing board action, ensure the following is documented, at a minimum:
   • The clinical decision-making process, as well as the client’s diagnosis, treatment plan, response to treatment, results of diagnostic testing and/or consultation findings, and assessments of the client’s risk of being a danger to self or others.
   • Session notes, including review and revision of problems and/or treatment plan, the client’s response, and any change in diagnosis.
   • Telephone encounters (including after-hours calls), documenting the name of the person contacted, advice provided, and actions taken.
   • Dated and signed receipts of test results, referrals, and consultations, including a description of subsequent actions taken.
   • Referrals for medical assessment and/or for the prescribing and monitoring of psycho-active medications.
   • Educational materials, resources, or references provided to the client.
   • The client’s informed consent for proposed treatment and testing.
   • Signs of non-adherence to the agreed-upon treatment plan, including missed appointments, refusal to provide information, or rejection of treatment recommendations. Document all efforts to follow up with the client and efforts to educate the client about the risks of non-cooperation or non-participation with the agreed-upon treatment.
   • Discussions of privacy, confidentiality of personal information and possible exceptions to those protections.
   • Signed and dated consent forms for release of information, if necessary, to client-authorized parties, child welfare organizations in the case of suspected child abuse, law enforcement personnel if the client is deemed to be a risk to self or others, and a court of law in response to an official court order or subpoena.

Counseling Plans: Counselors and their clients should work jointly in devising counseling treatment plans that offer reasonable goals and are consistent with the abilities, temperament, developmental level, and circumstances of clients. Counselors and clients should regularly review and revise counseling plans to assess their continued viability and effectiveness, respecting clients’ freedom of choice.

Financial and Billing Records: Counselors should follow strict documentation practices to avoid any healthcare fraud claims. Mental health billing requires detailed documentation for every session, including client’s condition and symptoms, treatment and progress goals made, and time spent during the counseling sessions and therapeutic techniques used. Failure to meet these requirements can result in claim denials, audits by insurance carriers and accusations of healthcare fraud. Use electronic health record (EHR) systems with built-in templates for progress notes. Train clinicians on proper documentation standards to ensure compliance.

Telebehavioral Health: Telebehavioral health is the practice of electronically connecting geographically discrete clients and providers. Telebehavioral health is a tool that enables counselors to provide cost-effective healthcare to underserved populations and to work collaboratively with the community to improve access to quality care. While it encompasses numerous methods and technologies, it can also create liability exposure for counselors. Consider the following recommendations to limit risk exposures related to telebehavioral health:

1. Gain the necessary skills before initiating telebehavioral health by taking focused courses or attending workshops. Research available programs and retain documentation of successful completion of education.
2. Understand all laws and ethical guidelines governing client interactions, and practice in accordance with the standard of care, the limits of one’s license/certification, and all regulations and ethical guidelines. Counselors providing telebehavioral health must adhere to the same practice standards they follow when providing traditional in-person counseling services.
3. Check state and third-party requirements related to telebehavioral health, licensure, and credentialing, and, if unsure, contact the licensing board for additional information. The ACA recommends that counselors ensure they are appropriately licensed in the state where the client is located during the distance counseling services.
4. Check regulatory board requirements, or if using a third-party for reimbursement of telebehavioral health services, review contractual requirements for client assessment, coding, and claims submission. For example, some third parties may require an in-person assessment prior to initiating telebehavioral health services.
5. Recognize potential issues regarding confidentiality, privacy, cyberstalking, and identity theft. Use a secure, encrypted platform for communicating with clients. Regularly review, upgrade or replace equipment or software, as necessary, to meet evolving technology needs and privacy standards.
6. Review relevant regulatory requirements, including Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health Information Technology for Economic and Clinical Health (HITECH) Act, which govern privacy and security of protected health information, including electronic transmission. Some states may have higher standards than Federal compliance regulations and statutes; be sure to follow whichever regulation is more stringent.
7. Follow encryption standards when communicating with clients online, and when consulting with other practitioners. These standards include the selection of a secure platform and a vendor that will sign a Business Associate Agreement as required by HIPAA laws and regulations, confirming that the company will adhere to federal privacy requirements.
8. Evaluate whether distance counseling is appropriate for a client. Consider factors such as the client’s ability to effectively use the necessary technology, whether their insurance plan covers telebehavioral health services, their cognitive and emotional suitability for remote interactions and any history of self-harm.

References

• American Counseling Association (ACA). (2014). 2014 ACA Code of Ethics. https://www.counseling.org/resources/aca-code-of-ethics.pdf
• Bray, B. (2021, September). Assessment, diagnosis, and treatment planning: A map for the journey ahead. www.counseling.org. Assessment, diagnosis and treatment planning: A map for the journey ahead
• Chowdhury, F. (2025, April). 10 Common insurance challenges for mental health providers. 10 Common Insurance Challenges for Mental Health Providers
• Cook, G. (2025, May). Transform your note-taking. www.counseling.org. https://www.counseling.org/publications/counseling-today-magazine/article-archive/article/counseling-today-may-2025/transform-your-note-taking

Disclaimer
The information, examples and suggestions presented in this material have been developed from sources believed to be reliable as of the date they are cited, but they should not be construed as legal or other professional advice. CNA, Aon, Affinity Insurance Services, Inc., NSO, or HPSO accepts no responsibility for the accuracy or completeness of this material and recommends the consultation with competent legal counsel and/or other professional advisors before applying this material in any particular factual situations. This material is for illustrative purposes and is not intended to constitute a contract. Please remember that only the relevant insurance policy can provide the actual terms, coverages, amounts, conditions and exclusions for an insured. All products and services may not be available in all states and may be subject to change without notice.  Certain coverages may be provided by a surplus lines insurer. Surplus lines insurers do not generally participate in state guaranty funds, and insureds are therefore not protected by such funds.  The claims examples are hypothetical situations based on actual matters.  Settlement amounts are approximations. Certain facts and identifying characteristics were changed to protect confidentiality and privacy. Any references to non-CNA, non-Aon, AIS, NSO, and HPSO websites are provided solely for convenience, and CNA, Aon, AIS, NSO and HPSO disclaim any responsibility with respect to such websites. “CNA” is a registered trademark of CNA Financial Corporation. Certain CNA Financial Corporation subsidiaries use the “CNA” trademark in connection with insurance underwriting and claims activities.  This material is not for further distribution without the express consent of CNA.   Copyright © 2025 CNA. All rights reserved.