In the goodness of your heart you have allowed a client to not pay all that is due to you for the services that you have provided and they now have built up a balance of $500. They have dropped out of therapy, are not returning your phone calls, and while they previously responded to your emails, these are now going unopened.

            So in our consulting many clinicians ask, “Can I turn the client over to a Collection Agency or take them to Small Claims Court?” The answer, like many things in the business of practice has two answers: (a) it depends, and (b) should you?

            Let’s start with “it depends.” If in your initial disclosure papers (or as Jeff Barnett and I term it, “The Contract” between you and your client) you inform the client that you might turn them over to a Collection Agency if fees are unpaid, then you can indeed do so. The issue is “informed consent” regarding your business procedures. You have an ethical obligation to let clients know about all of your business practices that might affect them. In this way they can decide if they want to work with you as their therapist. They may prefer to work with John Doe, MSW or Jane Q. Public, PhD., who do not state they will turn an unpaid balance over to a Collection Agency. This knowledge fosters client autonomy in their decision-making regarding who they will work with in therapy.

There are many reasons why clients may not pay their bills. Jeff Barnett and I discuss these as transference reactions. That is, they may feel like they are paying “for friendship” and resent doing so. They may have an expectation of a “right to health care” and therefore they should not be responsible for payment. There may be an expectation that you should “slide your scale” to meet their income (as an aside when was the last time anyone asked a plumber to slide their scale?). Finally, there may be a belief that you are just a “rich doctor” or “rich therapist” so you won’t miss the money.

Another reason clients do not pay their bills is because of their value system. They may also not pay Nordstrom’s, Target, AT&T, Con Edison either. There are a certain percentage (fortunately a small percentage) of clients that, simply put, “will just steal from us.” We suggest you treat it as a minor annoyance (think cognitive therapy 101) and not as a major personal offense launched at you.

            Let’s move to “should you?” All risk managers for mental health practitioners will tell you not to and I agree. Take a nonpayment of fees as a lesson in how to better manage the finances of your small business. People get angry when they are sent to a Collection Agency or are taken to Small Claims Court. All it takes is one client to “act out” this anger by filing a bogus Board Complaint or malpractice suit against your professional license (i.e., your livelihood) to create havoc in your life.

            So the answer to the question is yes you can (with advance notice) turn a client over to a Collection Agency, but to protect your practice (e.g., business) I would advise against it

 

 Steven Walfish, Ph.D. is a Licensed Psychologist in Atlanta and a Partner at The Practice Institute (TPI). For more information on TPI go to www.thepracticeinstitute.com. Join our mailing list to learn more about activities and products to enhance both the clinical and business health of your practice. Dr. Walfish is Co-Editor (with Lisa Grossman) of Translating Psychological Research into Practice published by Springer Books (see http://www.springerpub.com/product/9780826109422#.U0PxdGBOVD8 for the Table of Contents)