Psychotherapy vs. Coaching: What’s the Legal Distinction? - GoodTherapy.org Therapy Blog (2024)

by Connor D. Jackson, JD

Connor D. Jackson is a healthcare attorney based in Chicago who serves independent practices in several states. Visit his firm’s website here.

Therapists have the education, license, and clinical training required to prepare them for their day-to-day work with clients. But those things also come with restrictions: licenses are usually state-specific, and each state’s laws set forth a therapist’s legal responsibilities (like mandatory reporting). This leaves some therapists eyeing the “coaching” industry and profession with envy and asking, “Why don’t the same rules apply?”

Therapy and coaching are very different things.

Or at least they should be very different things! Therapists are healthcare providers, while coaches are not. While every state requires therapists to be licensed, no state regulates or licenses coaches. Due to the lack of license requirements, coaches do not necessarily have

• Appropriate training or education
• Oversight by a regulatory body
• Obligation to comply with HIPAA
• Mandatory reporting requirements
• Clinical experience

A coach is not a healthcare professional and cannot do work that infringes on a therapist’s legal scope of practice. Under the law, coaches cannot do any of the following:

• Bill their services to health insurance companies.
• Offer the breadth of care and services provided by therapists.
• Diagnose or treat mental health conditions.
• Describe their services using any of the terms that the law protects for licensed professionals.

Any coach who delivers services that mirror the scope of practice of a licensed psychotherapist risks felony charges.

In Illinois, for example, regulatory authorities have sanctioned unlicensed persons who step into the realm of licensed mental health care. The following examples are from disciplinary reports from IDFPF (Illinois Department of Financial and Professional Regulation):

• An unlicensed person was penalized for practicing medicine without a license because she owned a business that offered psychiatry services — even though she performed only administrative duties.
• An unlicensed person practiced licensed clinical social work for a decade and billed his services to insurance under a licensed provider’s credentials.
• An unlicensed person who used the term “social worker” was fined and sanctioned for engaging in the unlicensed practice of social work.
• A therapist who billed an unlicensed person’s services to insurance was sanctioned for aiding and abetting the unlicensed practice of social work.

Other states have been similarly strict. For instance, Oregon found that a woman’s “coaching” services were professional counseling services and sanctioned her.

Protected Language

In many states, licensed providers have protected language. In other words, people who do not hold that same license are not legally allowed to use certain words to promote or describe their services.

In California, for example, LMFTs’ practice act says:

“No person may engage in the practice of marriage and family therapy… unless he or she holds a valid license as a marriage and family therapist… nor may any person advertise himself or herself as performing the services of a marriage, family, child, domestic, or marital consultant, or in any way use these or any similar titles, including the letters “L.M.F.T.” “M.F.T,” or “M.F.C.C,” or other name, word initial, or symbol in connection with or following his or her name to imply that he or she performs these services without a license as provided by this chapter.” (BPC § 4980(b))

Coaches who use protected words or abbreviations can be penalized for practicing the licensed profession without a license. So even if she’s never seen a single client, “Carrie Coach, MFT” is illegally holding herself out to the public as a marriage and family therapist.

Licenses vs. Certificates

For patients, a string of letters after a professional’s name can signal credentials and qualifications. But in healthcare, letters mean something specific.

As an example, consider a life coach who works with couples, Jane Jones, CPC, CSC, CHLC. Jane’s credentials? She’s a Certified Professional Coach, Certified Sex Coach, and a Certified Health & Life Coach. She obtained all of these certificates from nonaccredited, for-profit businesses, and some of them were non-interactive, online-only programs.

In healthcare, some of the acronyms that Jane is using also mean other things. A CSC may be a licensed nurse who has completed additional training to earn a cardiac surgery certification. And a healthcare practice may require that their administrator be a CPC—or a certified professional coder trained in medical billing.

Imagine that a couple experiencing marital strain rooted in a traumatic event is searching for help. They find a listing for Jane, who has glowing online reviews from those who claim she saved their marriage.

The couple compares Jane’s online profile with that of Tara Thomas, LCP. Tara is a licensed clinical psychologist with no reviews, as soliciting them from patients violates her practice act. Tara holds a Ph.D. in psychology from an accredited university, and she has significant clinical experience. She has completed all of the requirements to obtain her state license, and she bills her services to insurance. She can also diagnose one partner’s PTSD, and she protects her records per HIPAA.

Jane Jones and Tara Thomas have starkly different experience and qualifications, yet they’re sometimes “competing” for the same clientele. However, it’s crucial to note that a coach whose work too closely mirrors Tara’s is likely practicing psychology without a license — a criminal offense in many states!

Psychotherapists Who Practice as “Coaches”

Licensed psychotherapists may view the grass as greener in the coaching industry. However, while it may be tempting for therapists to call themselves coaches to avoid regulatory oversight, doing so can create more (not fewer) headaches.

Coaches are subject to the same legal regulations as therapists — they just have a much harder time satisfying them! Therapists have the credentials, practice acts, and legally articulated role in population health. Meanwhile, coaches’ conduct isn’t regulated by any state’s law, but if they step into any of the areas within the scope of therapists’ practice, they, too, will face legal consequences.

In the end, there are no shortcuts to becoming a healthcare provider.

This article is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between Jackson LLP Healthcare Attorneys and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.

One key benefit of psychotherapy regulation is fundamentally protective. Both mental health providers and the public benefit from a clear definition of roles and responsibilities in the practice of psychotherapy. A regulatory body can to step in and discipline a therapist who is acting outside their scope of practice; nothing like that exists in the world of coaching. Check out our classic article “50 Warning Signs of Questionable Therapy and Counseling” to learn more about behaviors to avoid as a therapist, both regulated and unregulated.