DMHC Wins Lawsuit Against Physician

The California Department of Managed Health Care has apparently prevailed in a unique civil lawsuit the agency brought against a South Pasadena plastic surgeon in 2011 who repeatedly dunned her insured patients for additional payments.

The proposed judgment, issued on Sept. 26 by Glendale Superior Court Judge David S. Milton, would order Jeannette Y. Martello, M.D., to pay the DMHC $562,500 in civil penalties stemming from her efforts to inappropriately collect thousands of dollars from patients who had insurance policies regulated by the agency. 

The judgment would also bar Martello from making such collections now or in the future, making an injunction the DMHC successfully sought against her last year permanent.

Both a DMHC spokesperson and Martello's attorney, Michael Gonzalez of Glendale, confirmed that there would be a hearing on Nov. 15 to finalize the judgment. As Milton plans to retire from the bench at the end of November, Gonzalez said he expects no delays in issuing the final judgment. 

“We're obviously disappointed,” Gonzalez said. He added that Martello has not yet made a decision to appeal the judgment after it is finalized.

According to Milton's decision, Martello violated the Knox-Keene Act and regulations regarding balance billing, which bar providers from collecting fees from insured patients beyond their agreed-to cost-sharing arrangements with their insurers. 

Milton also repeatedly noted in his ruling that Martello was evasive when she testified, claiming repeatedly that she believed she was entitled to bill the patients because the services she rendered as a plastic surgeon were not emergency in nature – an assertion he flatly rejected.

“While under oath and outside of court proceedings, and through other statements made in connection with her collection efforts, the defendant stated what was most expedient to achieve her objective without regard to the truth,” Milton wrote.

The DMHC ordered Martello in late 2010 to cease and desist balance billing patients, then sued her after she ignored the order, court records show. Martello remains the only individual provider against which the agency has ever taken legal action.

A 2012 investigation by Payers & Providers concluded that Martello, who earned a law degree from UC Berkeley, had sued dozens of her patients in Los Angeles County courts whether they were insured or not. Records and interviews showed she often used judgments against her patients to garnish wages and obtain liens, making it difficult for them to purchase homes and refinance loans. 

In one case involving Burbank resident Julia Sipos, whom Martello treated in November 2009 at St. Joseph Medical Center after suffering severe facial injuries from a fall at home, Martello's assistant called her at work at least 20 times to try and collect more than $8,800, even though her medical group offered to boost Martello's initial payment by 65%, court records show.

The repeated phone calls led to Sipos getting in trouble with her employer, records show. Martello later sued not only Sipos but her sister Mary Beth Sipos, a prominent San Diego attorney, to collect the bill.

Julia Sipos eventually filed for bankruptcy, according to court records.

Another case involving Glendale resident Sarinea Meserkhani, who was severely injured in an October 2009 automobile accident, led to litigation against her father Seroj, an attorney, and his wife. 

The litigation created such a stress in the household that Seroj Meserkhani said his wife had to leave her job and file a disability claim. Seroj Meserkhani has since sued Martello for malicious prosecution, according to court records.

A third Martello patient, Peter Elias, had a lien kept on his house even though his insurer, Blue Shield of California, agreed to pay the entire $1,500 Martello had sought from him in Small Claims Court after treating him for injuries sustained in a skating accident. He only was able to obtain legal documentation to clear the lien earlier this year, according to the judgment. 

Elias also claimed that Martello and her assistant used a car to block the egress of his wife and himself after they left the courthouse, records show. 

Martello testified that she only stopped to admire Elias’s car, a 10-year-old model with peeling paint, according to records.

"This is a just decision," Seroj Meserkhani said in an email. "It is thorough and accurately reflects the illegal conduct of Martello regarding her balance billing and collection efforts against her patients."

Although Milton noted that Martello’s conduct toward her patients had been “egregious, abusive, shocking, and persistent; that there has been a complete lack of contrition by the defendant; and that her disobedience of lawful orders was willful,” he rejected awarding the DMHC the maximum amount under statute, which could have totaled into the millions of dollars. 

Instead, Milton took what he said was a more “tempered and measured approach” and levied judgments penalizing Martello for her conduct against four patients that ranged from $75,000 to $225,000. He levied another $75,000 penalty for disobeying lawful court orders.

Should the DMHC collect the judgment, it would be placed in funds used to encourage physicians to practice in medically underserved areas and provide insurance coverage for medically high-risk individuals, an agency spokesperson said.

The judgment comes just weeks after an administrative law judge stayed the revocation of Martello's license to practice medicine in California and placed it on five years probation after finding she had engaged in unprofessional conduct by balance billing and dunning her patients. 

In that case, the judge also questioned Martello's credibility and lack of remorse.

Martello also held a license to practice in Kentucky, but it lapsed last year, records show.

Gonzalez, who also represented Martello in the case involving the Medical Board of California, said the judgment involving the DMHC was “a case of first impression” regarding Martello. 

Gonzalez also contended Milton's interpretation of the law expanded the scope of a 2009 California Supreme Court ruling on the boundaries of balance billing. 

He cited the case of Sarinea Meserkhani specifically, noting that she was first seen by Martello in an intensive care unit, meaning she was stable and care being rendered was not emergent. 

The claim Martello filed with Health Net, Sarinea Meserkhani's insurer, said she had helped locate her family and provide some assistance to the specialists in providing her care. Milton’s judgment noted that Martello had tried to charge the Meserkhani family $2,300 for a consultation, resuscitating Sarinea Meserkhani, and even the time she spent trying to collect payments from them.

“(The judgment) should put a chill in the spine of any physician who acts as a consultant,” Gonzalez said.

Seroj Meserkhani saw it differently.

"Martello deserved to receive higher penalties but I am sure each of the patients and their families, including mine, is happy about the result," he said.