Doctor gets jail time, $562,500 penalty in improper-billing case

<i>This post has been updated, as indicated below</i>

In a rare case, a California judge has ordered a South Pasadena plastic surgeon to spend five days in jail and pay $562,500 in penalties for improper billing of emergency-room patients.

California healthcare regulators said they sued Jeannette Martello in 2011 to stop her from illegally billing insured patients for emergency-room care. Officials said Martello collected or tried to collect more from patients beyond the discounted rates their insurance companies had already paid, a practice known as balance billing.

Martello aggressively pursued payment from patients by filing numerous lawsuits and taking out liens on their homes.


“The court’s ruling will finally put an end to Dr. Martello’s illegal attempts to make patients pay her money they don’t owe,” said Shelley Rouillard, director of California’s Department of Managed Health Care.

[Updated 2:45 p.m. PST Dec. 6: Martello has appealed the jail sentence, and may also appeal the rest of the court ruling, according to her attorney, Michael Gonzalez.

Gonzalez said the Department of Managed Health Care’s case against Martello is a “huge expansion” of its legal authority by trying to apply balance billing rules to specialists as well as emergency-room physicians.

“Dr. Martello was aggressive about getting paid. But that’s not against the law,” Gonzalez said. “This could have a chilling effect on specialists who are called into emergency rooms.”

In court filings, Martello argued that the patients were in stable condition at the time of treatment so she was allowed to recoup what insurers wouldn’t cover.]

California regulators said the Martello case marked the first time it had sued an individual doctor over abusive billing practices. State investigators said Martello had balance billed multiple patients who received emergency care at Huntington Memorial Hospital in Pasadena and Providence St. Joseph Medical Center in Burbank.

In his Nov. 15 ruling, Los Angeles Superior Court Judge David Milton granted a permanent injunction against Martello to prevent her from balance billing patients.

Milton ordered her to serve five days in jail for violating a preliminary injunction in the case. The judge also ordered Martello to drop all legal actions against patients she illegally billed.

Insurers and medical providers often disagree over whether reimbursement is reasonable. But California law prohibits providers in emergency cases from attempting to collect disputed balances from health plan members.

Consumer protections against balance billing are particularly strong in emergency cases because patients have less control over who treats them.

Balance billing complaints arise in other situations as well. Patients will pick an in-network hospital, but the anesthesiologist or other doctors involved will be out-of-network providers.

In some cases, those doctors will balk at the insurance company’s partial payment of a claim and pursue the balance of the bill from the patient. Consumer advocates advise patients to let their insurer handle the dispute with the doctor first before paying any bill they receive.


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