Is it possible for someone to have munchausen syndrome by proxy but instead of phyically causing damage, menally causing it?

Yes: An evaluation by a competent mental health professional would be a really good idea.

Proxy Munchausen: This is a factitious emotional illness where someone falsifies or even induces illness in another to get emotional satisfaction. They may also enjoy deceiving individuals they perceive as more important/powerful. Typically during preschool years, the adult care provider or parent (mother 90%) presents that they have witnessed the symptoms of the illness. Evaluate child, parents, family dynamics.