Professional News
Payment-Related Lawsuits Can Often Be Averted
Psychiatric News
Volume 40 Number 2 page 20-20

When patients will not or cannot pay for treatment, psychiatrists should be aware that there are liability risks associated with the decision to pursue an outstanding balance.

One risk is that a patient will retaliate by filing a lawsuit claiming that his or her psychiatrist engaged in some type of unprofessional conduct, according to risk management experts with Professional Risk Management Services Inc. (PRMS), which manages the APA-endorsed liability insurance program, known as the Psychiatrists' Professional Liability Insurance Program.


"The most common type of lawsuit to result from pursuing a collection is a counter-claim from the patient alleging that the services were not provided at all or that the patient was so dissatisfied with the level of service that no fee should be charged or collected," said Denny Rodriguez, J.D., a litigation specialist with PRMS.

It is far more common for a patient to retaliate by filing a complaint with the psychiatrist's state licensure board or professional membership organization, which is better known as an administrative action, according to Rodriguez.

Complaints are also sometimes lodged with health care organizations and managed care companies with which the physician is affiliated, Rodriguez pointed out.

In an administrative action, patients may allege that the physician conducted himself or herself unprofessionally and should be sanctioned for that behavior, said Marynell Hinton, M.A., a senior risk manager with PRMS.

Hinton noted that administrative actions are relatively easy for patients to initiate. Since many professional membership organizations, for instance, have a greater goal of serving patients, they "are likely to have complaint forms readily available for patients to fill out and procedures in place for reviewing a member's standing within the organization," she said.

She also noted that administrative actions "are not designed to be fair in a way that lawsuits are designed to be fair" and that physicians are automatically at a disadvantage in such a proceeding because "the patient does not have to prove negligence and damages" in an administrative action as he or she would in a malpractice lawsuit.

Until the patient's allegations underlying an administrative action are proved false, the costs to the psychiatrist are many and may include money and time spent fighting the claims, as well as sleepless nights, Hinton remarked.

She pointed out that health care organizations often have specific rules and procedures with regard to collection proceedings taken against patients, and psychiatrists should consult those guidelines before attempting to collect overdue bills.

For instance, the American Hospital Association in 2003 released a set of guidelines on collection practices for hospitals. The guidelines address patients' need for financial counseling and assistance, among other issues.


Hinton and Rodriguez offered some tips to psychiatrists, which though seemingly obvious, are not always considered by psychiatrists who decide to pursue outstanding bills. The information appears in the Fall 2004 "Rx for Risk" newsletter from PRMS.

Among them are the following:

The American Hospital Association's 2003 guidelines, "Hospital Billing and Collection Practices," are posted online at<www.hospitalconnect.com/aha/key_issues/bcp/content/guidelinesfinalweb.pdf>.

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