Medical Bills You Shouldn't Pay

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Neurosurgeon McKalip says doctors can be trusted not to gouge the poor Ben Van Hook

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Even routine office visits can lead to balance billing. In Illinois, federal prosecutors say Dr. Janet Despot and Rickey Weir, her husband and office manager at the Cardinal Respiratory medical practice in Springfield, overbilled Medicare, private insurers, and patients by more than $800,000 from 1997 through 2007. Despot, 50, pleaded guilty to a misdemeanor charge of balance-billing Medicare patients in February. She didn't receive jail time, but has paid a $10,000 fine and forfeited $2.5 million that will be used for restitution and additional fines. Federal officials are considering barring her from the Medicare program; the Illinois medical board separately is seeking to discipline her. For now she remains in business.

William Gass, a 41-year-old recycling coordinator, successfully took Despot to small-claims court in 1999 to get $300 in improper bills erased from his credit report. "It's unconscionable to me she can still practice medicine," Gass says.

Despot says her husband, Weir, from whom she is getting divorced, handled all billing. She claims she wasn't aware that patients were being hounded for money they didn't owe. A Medicare ban "would end my career," she says. "I didn't understand medical billing." Weir has pleaded not guilty to fraud charges and awaits trial in November. He declined to comment.

Regulators in most states have been slow to take action in billing disputes. But in July, California officials sued Prime Healthcare Services, seeking to force the 12-hospital chain based in Victorville, Calif., to stop balance billing. Last September, Thomas Lai was rushed to the emergency room at Prime's Huntington Beach Hospital because of severe chest pain. The 51-year-old musician stayed for four days, but doctors didn't find anything seriously wrong.

His wife, Tess, says she asked the hospital staff to transfer Thomas to a hospital covered by his Kaiser Permanente network—but to no avail. She had taken him to the hospital closest to home, which Kaiser advised her to do. Kaiser paid a discounted rate for the hospitalization, and the Lais thought that was the end of it.

They were shocked to receive a bill from Prime in May for more than $16,000. A collection firm threatened to report them to credit agencies. "I'm concerned about our credit report with this huge bill hanging over us," Tess says. Kaiser instructed the Lais not to pay anything while the state case unfolds.

Asked about the state action, Prime said: "This frivolous suit is not about the actions of one provider but the failure of the [state] to do its job to regulate HMOs and provide assistance to providers who have the right to be reimbursed properly for emergency services rendered to HMO enrollees." Prime didn't comment on the Lais.

Cindy Ehnes, the director of California's managed-care department, says her agency isn't taking sides between providers and insurers. It holds insurers accountable for paying promptly, she says. Medical providers should use proper channels to press their claims, such as an independent dispute-resolution system crafted by the state, she adds. "Patients are having their credit destroyed at a time when they are already sick and vulnerable."

Terhune is a senior writer for BusinessWeek based in Florida.