Elliot went undercover to keep his eye on Ray Schenkel, who was just released from prison on parole as a pedophile. Elliot participated in group therapy as a convicted pedophile
Therapist: ...and sine your arrest, have you been thinking about your step-daughter?
Elliot: I just remember kissing her and touching her. Just can't make those memories go away. I'm afraid...that I'd do it again
Therapist: How'd that make you feel?
Elliot: I hate myself
Therapist: What do you do with all that hate?
Elliot: I get mad and I want to hurt someone
Therapist: If you can't learn to control you temper, you'll lose everything.
In my opinion: why I included this episode? Yeah, Elliot wasn't "directly" talking about Kathy but when Elliot was 'remembering kissing and touching her, just can't make those memories go away' I do believe strongly that he was referring to Kathy. I think that Elliot did get personal until he caught himself of who he was pretending to be a pedophile. I also think the Therapist was right on about Elliot's temper and losing everything- that's what pretty much happened during that time.