AUBURN — The state has given a local mental health agency a one-year conditional license after finding “serious deficiencies,” including hiring friends and family without training or background checks, not paying therapists and leaving client files out in the open.

The Maine Department of Health and Human Services conducted a surprise inspection at Possibilities Counseling’s offices at 1120 Center St. on Aug. 26. It found that 16 of 18 staffers had quit two days before. President Wendy Bergeron should have notified the state of that but didn’t, according to a report out Wednesday.

Possibilities has 550 affiliate therapists and case managers serving 10,000 patients all over Maine. It works as a referral agency, sending clients to affiliates and billing insurance, Medicaid and MaineCare on their behalf.

DHHS’s letter notifying Bergeron of the conditional license requires her to share monthly financial reports to let the state monitor therapists’ pay. It also requires Bergeron to spend at least 30 hours in the office each week, “a reflection of our observations about the frequency with which she’s actually in the shop,” said Catherine Cobb, director of DHHS’ Division of Licensing and Regulatory Services.

Cobb’s division licenses thousands of health and child care providers. A conditional license is given when an agency “has serious noncompliance issues but we feel that with some time they can come back into compliance with some good direction,” she said.

In Possibilities’ case, patient care was not an issue, she said.

Cobb said the state chose not to set a date by which Bergeron had to resume paying affiliates, but officials could take action if a month passes and any irregularity appears in the monthly reports.

“Janet,” a case manager in a small office that relies entirely on Possibilities’ referrals, said Wednesday that she and a partner hadn’t been paid for the past three weeks. Together, they were owed more than $8,000.

She asked that her name not be used out of concern for what speaking up could mean for her future in the field.

“Janet” said her water had been shut off at home and her furniture may be repossessed because she hadn’t been able to pay her bills.

“I’m down to my last $10 and I only have that because my son gave it to me,” she said. “There is hopelessness, helplessness.” And, some irony: As a case manager, she advocates for clients with mental illnesses, finding them help — but can’t find any for herself.

“It helps that (the state is) overseeing it, but the real help is to have a check in the mailbox,” she said.

Among the deficiencies outlined by the state:

* “The agency failed to report immediately to the (Division of Licensing and Regulatory Services) a legal proceeding arising out of circumstances related to providing mental health services.”

Cobb didn’t have additional information on what that proceeding involved.

* “On Aug. 26, 2010, there were multiple persons identified as family members, friends and friends of family members working at Possibilities Counseling for whom there were no personnel records.” Those same people hadn’t undergone background checks or had proper training.

* “On Sept. 9, 2010, on an unannounced visit, (Division of Licensing and Regulatory Services) representatives saw several racks of client files in an unsecured location. These files were available to anyone who walked by the office space.”

The state’s proposed fixes included staff training, setting up a new advisory board and regular contact with DHHS.

Messages left at the office for Bergeron weren’t returned. She has 10 days to appeal the conditional license.

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