Last year, a patient with excellent out-of-network benefits underwent a routine arthroscopic procedure at my practice. When the insurer reimbursed me just $800 for a service that hospitals in the same ZIP code received $5,000 to $7,000 for, I assumed it was a mistake. I appealed, only to receive a denial citing their "internal fee schedule" — a euphemism for "take it or leave it."
Exhausted by the endless cycle of appeals, I decided to try something unconventional: I filed a claim in small claims court. Two weeks later, the judge ruled in my favor, ordering the insurer to pay the fair market rate of $4,900 plus court fees. It wasn’t just a victory. It was a revelation.
My case wasn’t unique. Insurers have long relied on the fact that most physicians lack the time or resources to challenge underpayments. The system is designed for physician fatigue. While hospitals negotiate aggressively, private practitioners — especially those out-of-network — are often stuck with Medicare-level reimbursements, which can be one-third to one-seventh of what insurers pay hospitals for identical services.
The barriers to fighting back are steep. Legal fees often dwarf potential recoveries for small claims, balance billing restrictions (like the No Surprises Act) prevent shifting costs to patients, and appeals are so time-consuming that most billers prioritize new claims over fighting old ones. Yet the law is clear: Insurers must pay "reasonable and customary" rates and adhere to Affordable Care Act-mandated out-of-network payment standards. The problem isn’t the law — it’s enforcement.
Frustrated by the system, I began filing small claims cases against insurers. I did this not as a lawyer, but as a physician armed with benchmark data. The results were staggering: a 95% win rate and more than $250,000 recovered annually. Small claims court works because insurers can’t send their legal teams; they rely on unprepared reps who often fail to justify their underpayments. Hearings are quick (15–30 minutes) and inexpensive (fees under $100), and transparency tools (like Fair Health or Turquoise Health) make it easy to prove market rates, exposing insurer lowballing.
Of course, this approach isn’t without challenges. State laws vary, and some specialties face unique hurdles. Surgeons with higher-cost procedures may hit small claims monetary limits, while primary care clinicians might find the effort less scalable. But for many, it’s a viable tool to reclaim lost revenue, and more importantly, to demand accountability.
Small claims court isn’t a magic bullet, but it’s a powerful option for physicians tired of leaving money on the table. The key is to document everything: save EOBs, contracts, and benchmark data. File selectively, focusing on egregious underpayments where the gap is undeniable. And leverage community resources — some nonprofits can offer guidance for physicians navigating this process. The goal isn’t to vilify insurers but to demand fairness. When insurers see physicians holding them accountable, behavior changes. After losing a few cases, one major carrier began paying my claims correctly — without a fight.
This isn’t just about reimbursement. It’s about refusing to accept a system that profits from physician silence. And sometimes, all it takes is $100 and the courage to ask a judge for a fair shake.
Dr. Jonathan Nissanoff is an orthopaedic surgeon based in Beverly Hills, CA, with subspecialties in orthopaedic sports medicine, orthopaedic trauma, and shoulder surgery. He completed his medical education at the State University of New York Downstate Medical Center College of Medicine, followed by residency in orthoapedic surgery at Montefiore Medical Center/Albert Einstein College of Medicine, and further training in sports medicine and orthopaedic trauma. Dr. Nissanoff has been practicing as an orthopaedic surgeon at Cedars-Sinai Medical Center and Providence St Johns. His experience spans sports medicine, minimally invasive spine surgery, hand surgery, and shoulder and elbow sports medicine. He has been teaching physicians how to fight back the insurance carriers over the past 10 years in small claims court in Southern California as part of his mission of helping revive private practice.
Illustration by Diana Connolly
