Region doctor's fraud 'diminishes public trust and confidence in health care system,' judge says

Lizzie Kaboski, The Times, Munster, Ind.Times

HAMMOND — A former Region doctor was sentenced to eight years in federal prison Wednesday for her role in an eight-year billing scheme that swindled patients and insurers out of more than $22 million.

Dr. Bethany Cataldi, of Chesterton, was the owner of the Center for Otolaryngology and Facial Plastic Surgery in Highland before she was indicted for health care fraud in 2024. After she serves time in prison, she will serve one year on probation.

"Both patients and third-party medical insurers trust that doctors will tell them the truth and do no harm," United States District Court Judge Gretchen Lund said. "Ms. Cataldi violated that trust."

Cataldi pleaded guilty to a charge of health care fraud in June for defrauding Medicare, private insurance companies and patients. She has agreed to pay the full $22 million in restitution, approximately $3 million of which she has already forfeited through hundreds of thousands of dollars in jewelry and a multi-million dollar property in Chicago, defense attorney Jonathan Meltz said in court. Cataldi faced a maximum of 10 years in prison for her financial crimes.

Cataldi was indicted Nov. 20, 2024, on charges of health care fraud, falsifying health care statements and money laundering related to allegations she submitted more than 1,500 claims to Medicare for reimbursement on individual balloon sinuplasty and inflation devices that between March 2015 and December 2023, despite purchasing a significantly smaller number of devices during that time, according to a federal indictment.

Records from a California-based medical device manufacturer identified in documents as "Company A" shows Cataldi purchased approximately 100 of each device from their company between 2015 and 2023. Each sinuplasty device is worth $1,100 and each inflation device is worth $75, the indictment said. More than $550,000 of the funds Cataldi stole were from patients who owed co-pays through their private insurance providers, according to the plea.

Lund heard arguments from Meltz and Assistant U.S. Attorney Francis Sohn during Wednesday's hearing, which lasted about 90 minutes. In Meltz's arguments, he placed much of the blame on Cataldi's former spouse, whom he said was involved in submitting the fraudulent claims. He said the loss amount "overstates" Cataldi's role.

While he was hesitant to go into details in a public hearing, Meltz said there was significant emotional and verbal abuse present in their 30-plus-year relationship. He submitted records about the supposed trauma Cataldi experienced during the relationship and details about her state of mind when the billing scheme took place. Her ex-husband did not face criminal charges in the case.

Meltz said Cataldi has lived a law-abiding life and dedicated her life to serving her patients. He made mention of the fraud as an "event," which Lund asked him to clarify.

"This isn't a criminal event ... this happened over a period of eight years," Lund said. "So tell me how the court should view (your statement)."

Meltz said he didn't believe Cataldi woke up each morning and made the conscious choice to participate in fraud and again cited the role of her former spouse. He said what she was aware of, in terms of the amount of money involved, hasn't been proven.

Lund inquired again, asking how Cataldi could be unaware that she had millions of extra dollars in funds coming into her business and bank account. Meltz said she is a doctor, so her pay is already high. Some of the money was not deposited directly into her bank account; some of it went toward her former spouse's bank account and alleged gambling habit, he said.

Sohn said Cataldi's crimes were "thorough and indiscriminate." He said her fraud was an attempt to maintain a lifestyle she had become accustomed to living, which included luxury cars, expensive property, designer clothing and lavish jewelry.

If she had contracted an outside consultant to audit her finances as some businesses do, she could have avoided this, Sohn said.

Dozens of former patients who were affected by the fraud submitted letters to the court, but Sohn read one particular letter from a patient who fought with Cataldi and her staff to have an $8,600 bill nullified for a sinuplasty procedure she never had completed. The victim said she saw Cataldi for a couple of years for sinus pain and ear pain that radiated down her jaw. Cataldi prescribed her medication and encouraged her to swallow, chew and yawn to allow the sinuses to open. When that wasn't successful, Cataldi suggested a sinuplasty.

"I did not question her because I trusted her and what she was doing," the woman wrote in her letter.

The woman was ill on the day she was supposed to get the procedure, so Cataldi sent her home. The woman never rescheduled because the COVID-19 pandemic hit.

Then, the bill came. She tried to contest it with Cataldi and her staff, to no avail. The woman said five years have passed, and she is still in pain. She never received the sinuplasty procedure because she couldn't get insurance to cover it, as it had already paid for part of it.

"Dr. Cataldi shattered my trust in medical professionals, who are essentially strangers," the letter said.

Cataldi apologized to her patients, colleagues, insurance companies, family and the government for her actions. She said she "knows right from wrong" and sees how her personal trauma clouded her decision-making.

"I am deeply remorseful for the pain my actions have caused my victims," she said.

Before Lund imposed her sentence, she acknowledged the purported abuse Cataldi experienced was "tragic." However, she said any argument that Cataldi didn't fully understand the fraud being committed "defies logic and my own common sense."

"Her actions diminish public trust and confidence in the health care system," Lund said.