AI Mental Health Tools Face Mounting Regulatory and Legal Pressure

By Darya Lucas

The emergence of AI-enabled mental health tools has introduced a new dimension of complexity to the digital health and regulatory landscapes. These tools, ranging from AI-powered chatbots to virtual therapists and self-guided cognitive behavioral platforms, have seen accelerated adoption over the past two years driven by unmet demand for accessible mental health care. However, recent regulatory developments, public scrutiny, and legal actions indicate that this sector is entering a period of heightened oversight.

The U.S. Food and Drug Administration (FDA) has signaled a more active role in shaping the legal framework for AI-based mental health technologies. On November 6, 2025, the FDA’s Digital Health Advisory Committee will hold a public meeting to evaluate the potential risks and benefits of these tools, as well as their appropriate regulatory classification. At the same time, multiple states have enacted legislation limiting the use of AI in therapeutic contexts, and civil litigation is beginning to test liability boundaries. As regulatory and legal positions harden, medical device companies developing or integrating AI-enabled mental health tools should anticipate increased compliance burdens, evolving liability standards, and material business risk.

Regulatory Landscape and FDA Activity

Although many AI-enabled mental health applications are currently marketed as wellness tools to avoid stricter regulatory scrutiny, that distinction may soon be challenged. The FDA has begun signaling that some of these platforms, particularly those that provide therapeutic guidance, simulate clinician interactions, or impact user behavior, may cross the line into the realm of medical devices under existing regulatory definitions.

Importantly, even general purpose AI platforms and search engines such as ChatGPT or Google, though not explicitly designed or marketed as mental health tools, can be used by individuals to seek therapeutic guidance or mental health-related support. The FDA’s forthcoming evaluation may consider the functional use of such technologies, not just their intended design, which could extend regulatory scrutiny to a broader range of AI systems that influence health behaviors or decisions.

In January 2025, the agency released draft guidance on the lifecycle management of AI-based device software outlining expectations around transparency, clinical validation, algorithm updates, and post-market monitoring. While the guidance is not specific to mental health tools, it sets a precedent for how AI technologies that influence clinical decision-making or health outcomes could be regulated even if they were initially intended or marketed as general wellness applications. This raises the possibility that AI-enabled mental health products and, potentially, general use AI systems that can be used for health-related inquiries may be subject to FDA oversight if deemed to pose risks comparable to traditional medical devices.

"AI may offer new frontiers in mental health care, but without clearer guardrails, these tools risk becoming legal, ethical, and regulatory landmines that may increase exposure for companies and create real risks for users."
Darya Lucas, Associate Attorney, Gardner Law

The upcoming FDA advisory committee meeting is expected to focus specifically on this regulatory gray area to examine whether tools that deliver therapeutic content, simulate provider-patient interaction, or offer behavioral interventions should be evaluated for safety, efficacy, and post-market risk under a modified or entirely new regulatory framework. The meeting may also explore how to regulate continuously evolving AI systems that adjust their outputs over time, which presents unique challenges to traditional regulatory models. It remains unclear whether the FDA will seek to apply its traditional device oversight model to these tools or create a modified regulatory pathway for software with behavioral health functions. However, in the absence of specific action, such tools will likely be subject to the traditional framework for market authorization.

State-Level Restrictions and Legislative Trends

Several states have moved ahead of the federal government in restricting the use of AI in mental health care. In 2025, Illinois enacted a statute prohibiting licensed mental health professionals from using AI chatbots in place of direct patient communication. The law also bans any representation of AI as a substitute for human therapy. Utah and Nevada have passed similar measures requiring affirmative disclosure that a chatbot is not a human provider and imposing strict limitations on data usage and patient interaction.

These developments suggest an emerging trend toward state-led regulation in the absence of uniform federal policy. Medical device companies should closely monitor these state-level actions to assess impacts on market access and compliance strategies.

Civil Litigation and Liability Exposure

The legal risks associated with AI-enabled mental health tools are no longer hypothetical. In a notable case currently pending, the parents of a minor who died by suicide have filed suit against the developers of a chatbot platform alleging that the tool's responses may have contributed to the teen’s death (Raine v. OpenAI, filed Aug. 23, 2025, Cal. Super. Ct.). The case is expected to test foundational questions around duty of care, proximate cause, and the standard of liability for AI tools offering health-related advice.

More broadly, courts are likely to confront whether these platforms constitute “products” under strict liability doctrine or whether developers can be held to the same negligence standards as licensed healthcare professionals. Legal exposure may extend to platform providers, device manufacturers, software developers, and clinicians who integrate AI tools into their practice. General purpose AI platforms that can be used for mental health advice, even if not formally classified as medical devices or wellness tools, could be entangled in this evolving legal landscape, particularly if their outputs are interpreted as health guidance. Companies should proactively document safety measures, training data sources, clinical validation protocols, and crisis-response mechanisms to ensure that adequate disclaimers, safeguards, and escalation pathways are in place.

Clinical and Ethical Considerations

Beyond legal and regulatory issues, growing concern within clinical and academic communities focuses on the safety and ethical implications of AI mental health tools. Recent studies suggest that certain chatbot behaviors such as excessive agreeableness or failure to recognize crisis language may inadvertently reinforce harmful thought patterns or delay users from seeking professional help. Researchers have also warned of “performance drift” in AI systems that are not continuously validated post-deployment.

These findings are likely to inform future regulatory decisions and may influence the legal standard of care applied to these technologies. Medical device companies should invest in rigorous clinical validation, post-market surveillance, and human-in-the-loop safeguards to mitigate potential harms and demonstrate regulatory compliance.

Strategic Considerations for Medical Device Companies

In this evolving landscape, device manufacturers, investors, and health systems should closely monitor both regulatory and litigation trends. Developers should assess whether their AI-enabled mental health tools fall within the FDA’s jurisdiction under current or forthcoming guidance and evaluate how state-level restrictions will affect market access.

Legal counsel should prioritize risk allocation in commercial contracts including indemnification for content providers, platform operators, and clinicians involved in deployment of services. Investor diligence should incorporate regulatory exposure analysis and vendor management reviews, particularly in areas involving data privacy and product classification risks.

As lawsuits and enforcement actions increase, companies should also carefully review insurance policies covering product liability and professional services to assess whether AI-related risks are adequately covered. Many policies may contain exclusions, limitations, or outdated definitions that do not reflect the rapidly evolving, unique risks posed by AI-enabled technologies.

Looking Ahead

Regulation of AI-enabled mental health tools is expected to intensify over the next 12 to 24 months. The FDA’s upcoming advisory committee meeting may serve as a catalyst for more formal oversight while state legislatures continue pursuing restrictions aimed at protecting vulnerable populations. Concurrently, court decisions will begin to shape the contours of liability and the standard of care for AI tools operating in therapeutic contexts.

Companies offering AI tools that can be used for mental health services should not assume regulatory forbearance will continue. Rather, the trajectory points toward a more defined and potentially more restrictive legal environment. Proactive compliance planning, robust documentation, and strategic legal positioning will be essential to navigating what is quickly becoming one of the most consequential and scrutinized frontiers in digital health.

Contact Us for Guidance

As regulatory scrutiny intensifies and legal risks evolve, it is critical for medical device companies developing or deploying AI-enabled tools to stay ahead of compliance challenges. The growing legal patchwork at the state level may create operational hurdles for companies with national reach and increase the risk of disputes or compliance failures.

The FDA’s Digital Health Advisory Committee meeting on November 6, 2025 will offer important insights into how the Agency is likely to classify and regulate AI systems that provide mental health support, potentially including those not originally designed as clinical tools. This discussion could have far-reaching implications for both dedicated mental health platforms and general purpose technologies such as large language models and search engines that users may rely on for mental health-related content.

Reach out to Gardner Law for expert counsel on navigating the complex regulatory landscape, managing liability exposure, and implementing effective risk mitigation strategies. We’re here to help you build resilient, compliant solutions in this rapidly changing digital health frontier.