News broke last month that Katherine was having trouble coming to a negotiation with ABC over her contract. Entertainment Weekly claims that Ellen Pompeo, Patrick Dempsey, Sandra Oh and Isaiah Washington were given substantially higher raises than the rest of the show's cast. A source told People magazine at the time, "Katie is disappointed and hurt that [producer] Touchstone doesn't value her as much as her other costars, especially Sandra Oh and Isaiah Washington." An insider for the Enquirer echoed that thought, saying, "When Katherine felt the raise offered to her was less than other cast members, she threatened to bolt."

That was when ABC went public and called Katherine's bluff. They made a statement reading, "Katherine is an integral part of Grey's Anatomy and its success. Fortunately, we have a longterm contract to ensure she'll be with the show for several years to come. In recognition of her tremendous talent and value to the show, we recently approached Katherine with an offer to raise her compensation significantly above the terms of her current contract. We were surprised to see this gesture reported negatively in the press, and want to reassure fans that she will continue as Izzie Stevens."

Next Heigl fired back at ABC in a statement reading, "I am embarrassed that this has become a public matter and disappointed that Touchstone felt it necessary to divulge private employment information. I had hoped I would be able to deal with this issue confidentially with my bosses. I dropped out of the renegotiation simply because I wanted to treat myself with the respect I was not getting from them."

All the hubbub over Heigl's salary negotiations rubbed her fellow castmates the wrong way, reports the Enquirer. One actress particularly miffed over the situation was Kate Walsh, claimed the tabloid, which says the two are no longer speaking. But if Walsh is angry with Heigl, she hasn't shown that in the press. She told People magazine, "She's a super-talented girl…I literally just worked with Katherine the other night. We just go to work. I don't know – I don't really get into all the stuff. Everybody is doing their own thing with negotiations