State suing doctor over billing tactics

When Bill Buck accidentally cut off the tip of his finger at his Duarte cabinet workshop two years ago, he headed to Huntington Memorial Hospital’s emergency room.

He assumed his insurance company would sort out the $12,630 bill from the plastic surgeon, Jeannette Martello.

But Martello wasn’t satisfied with the $3,500 insurance reimbursement, so she returned the check and filed a lawsuit against Buck, his wife and his business for the full amount, according to the state attorney general’s office. She also began a process to force the sale of Buck’s home to collect the money, records show.

Martello’s use of aggressive tactics to collect fees from emergency room patients like Buck — including lawsuits, taking out liens on their homes and damaging their credit — prompted an unprecedented court case by state health officials and a judge’s order for Martello to cease the practices.

The underlying issue is familiar: many physicians don’t believe they are getting paid enough for their services. Doctors bill insurance firms and frequently get a fraction of their full fees.

Under managed care plans, out-of-network doctors are supposed to receive the “reasonable and customary” value of the service. “As you can imagine, there is a wide gulf between what the health plans think is reasonable and customary and what the doctor thinks is reasonable and customary,” said Carol Lucas, a healthcare attorney not involved in any of Martello’s cases.

The state’s lawsuit against Martello, however, is the first of its kind, according to Marta Green, California Department of Managed Health Care spokeswoman. State officials allege in court papers that Martello collected or attempted to collect more from patients than insurance companies paid, a practice known as balance billing.

Protections against balance billing are strongest in emergency cases because patients have less control over who treats them, experts note.

Martello’s attorney, Andrew Selesnick, acknowledged his client was “very persistent” about collecting bills but said she was lawfully pursuing her rights to recoup fees for her services. With a private practice in South Pasadena, Martello has treated patients bitten by dogs or injured in falls, car crashes or construction accidents. Through her attorney, Martello declined to comment.

In a statement, Huntington Memorial Hospital told The Times that Martello was no longer under contract to provide on-call emergency services there.

The state’s managed health care department, which tried more than once in recent years to halt Martello’s bill collection practices, said there were at least 10 court cases in which the doctor allegedly violated the law by seeking payments from patients covered by managed care. It’s not clear how many patients overall may have been affected, but Los Angeles County Superior Court records list Martello as a plaintiff in more than 50 civil cases since 2010, many of them breach of contract claims.

Under state law, patients like Buck with managed care plans are entitled to have their emergency care covered, experts said. Disputes over payments — for patients with certain plans — are supposed to be resolved between the doctor and the health plan under a 2009 California Supreme Court decision, experts said.

“The Supreme Court was very clear,” Lucas said. “If the doctor is unhappy with what they are getting paid by the managed care plan, they need to fight it out with the health plan and leave the patient out of it.”

But Selesnick, Martello’s attorney, said the emergency room patients his client billed were in stable condition at the time of treatment. Because she was not providing emergency services, he said, she was allowed to bill them for what the insurance companies wouldn’t cover.

“The question is, ‘Were these emergencies or not?’” he said. “We don’t believe that they were emergencies. The issue is not black and white. It is very gray.”

Selesnick said the patients didn’t want an emergency room doctor to stitch them up, so they waited for a plastic surgeon. “They wanted a professional,” he said. He added, “No one is complaining that Dr. Martello did a bad job.”

Selesnick argued that the state’s case against his client underscores a larger problem: no one wants to pay for medical services. “Dr. Martello is definitely passionate about being a physician,” he said. “She is equally as passionate about getting paid for the work that she did.”

California’s managed healthcare regulators investigated Martello after receiving complaints. Then, in 2010, they issued a cease-and-desist order against her. When that didn’t stop her, the department sued her in Los Angeles County Superior Court — the first time the state has taken such an action against an individual doctor, officials said. The case alleged Martello’s actions posed a “substantial, irreparable, and unjustified threat to the financial livelihood” of the patients. Officials said that didn’t stop her either.

In May, the judge in the case issued a preliminary injunction ordering her to stop collecting — or trying to collect — bills from certain managed care enrollees for emergency services. State officials want the judge to dismiss all of the balance-billing cases Martello filed against her patients and to award them restitution, according to the Department of Managed Health Care. Many of Martello’s cases involving her patients have been stayed pending the outcome of the state’s lawsuit, court records show.

Meanwhile, the California Medical Board, which licenses doctors, has filed a separate accusation against Martello, alleging that she was illegally balance billing. In its petition to revoke her medical license, the board also accused her of engaging in unprofessional conduct by requiring patients visiting emergency rooms to sign agreements to pay her costs if their insurance companies didn’t.

Martello, a 1988 UCLA School of Medicine graduate, also has published a plastic surgery magazine and offered a line of skin care products. She attended law school at UC Berkeley, though she is not licensed to practice law in California, according to the State Bar of California.

Ron Shinkman, who wrote about Martello and her tactics in the trade publication Payers & Providers, said he had never seen a more litigious doctor in 19 years of healthcare reporting.

Nancy Hauser, whose teenage daughter was treated by Martello at Huntington Hospital in 2009 after falling at a friend’s house and cutting her head, said she was still dealing with the financial fallout of the physician’s billing practices.

“You go to a doctor with an understanding that the person has your interests at heart,” Hauser said. “That understanding is just totally violated by this woman in every way.”

Hauser said she regretted letting Martello near her daughter, Margo Thornhill, who was 19 at the time of the accident. After treating Thornhill, Martello billed Hauser for $2,750, records show. The insurance company paid almost $485, and Hauser’s insurance said she was responsible for just over $200.

Martello filed a small claims case, but the judge ruled in Hauser’s favor, determining that she was responsible for about $200, according to court papers. Hauser paid that bill, but Martello filed a lien on Hauser’s home to collect “post-judgment costs.” A court ruled that Martello wasn’t entitled to those costs either, according to records.

Hauser said her life has been consumed by the ongoing legal fight, getting liens removed from her home and clearing up both her and her daughter’s credit.

“I have been to court so many times,” she said. “It’s just a huge effort and time. It’s hugely frustrating.”

Buck, the cabinetmaker, said he told investigators that he believed Martello used her position to take advantage of him. He and his wife are still fighting the case.

“If there is anything that gives you instant credibility it’s being a doctor,” he said in an interview. “She uses this to suck you in and trap you.”

Buck also blames Huntington Hospital for having used Martello as an on-call specialist and exposing patients to her collection tactics.

anna.gorman@latimes.com