This article has been published in “The Advocate”, a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, July-August 2016 issue, @2016 by Steven J. Bruzonsky, Esq.
July/August 2016 Lien Updates
Abbott v. Banner Health Network– The Arizona Supreme Court Issues Its Decision in This AHCCCS Hospital Balance Billing Controversy:
This litigation originated in Maricopa County Superior Court,Winters v. Banner Health Network, CV 2012-007665. The subject of this litigation is the hospitals balance billing against personal injury and medical malpractice settlements for their unpaid charges over and above the contractual amounts paid by AHCCCS, pursuant to the healthcare provider lien statutes, A.R.S. §§33-931 to 934, and A.R.S. §36-2903.01(G)(4), which states that the hospital is allowed “to collect any unpaid portion of its bill from other third-party payers or in situations covered by title 33, chapter 7, article 3”. In this case, there are two classes of plaintiffs: (1) “Open-Lien Plaintiffs” – those with outstanding A.R.S. §33-931 hospital balance billing liens which had not been settled and for which a Lien Release had not been filed; and (2) “Closed-Lien Plaintiffs – those who had paid the hospital money and settled their hospital AHCCCS balance billing liens with the hospitals filing Lien Releases.
Judge Gama issued a Minute Entry, dated September 27, 2012, holding that the Closed-Lien Plaintiffs had entered into an “accord and satisfaction”, that the settlements were final and binding, and that these claims were dismissed. Judge Gama issued a Final Judgment, dated November 7, 2014, holding in regard to the Open-Lien Plaintiffs that the federal Medicaid statute and regulations, at 42 U.S.C. § 1396a(a)(25)(C) and 42 C.F.R. §447.15, preempt all conflicting Arizona statutes, including A.R.S. §33-931 and §36-2903.01(G)(4); that such AHCCCS hospital balance billing liens are unlawful, void and unenforceable; and that the hospitals are permanently enjoined from filing or asserting such liens after having received any payment from AHCCCS for the patient’s care; that the hospitals are ordered to release and discharge all Open Liens on which the hospital has had contact with a patient, attorney or insurance carrier adjuster within ten calendar days of this Judgment; and that the hospitals are ordered to release and discharge all Open Liens within five calendar days of this Judgment after oral or written request; However, Judge Gama stated that the Court is not making a determination at this time whether the hospitals are required to bill AHCCCS where a patient is eligible or enrolled in the AHCCCS program.
In Abbott v. Banner Health Network, 341 P.3d 478, 236 Ariz. 436 (Ariz.App. 2014), Division One reversed and remanded in regard to the Closed-Lien Plaintiffs, holding that federal law preempts state law, which purports to allow AHCCCS hospital balance billing , and that "[s]ince the liens themselves are void under federal law, the accord and satisfaction agreements are also unenforceable."
On May 23, 2016, the Arizona Supreme Court published its decision in regard to the Closed-Lien Plaintiffs in Abbott v. Banner Health Network. In regard to the Closed-Lien Plaintiffs (the fifteen plaintiffs who had settled their hospital AHCCCS balance billing liens with the hospitals filing Lien Releases), the Court held that at the time of these accord and satisfaction agreements, there was a bona fide dispute concerning the enforceability of the liens, the settlement agreements were supported by adequate consideration, and therefore the agreements are valid and not void for illegality (reversing Division One, Arizona Court of Appeals, in this regard). The Arizona Supreme Court assumed without deciding that federal law preempts hospital AHCCCS balance billing under A.R.S. §33-931 and A.R.S. §36-2903.01(G)(4). Therefore, the trial court’s injunction is still in force; and the case involving the Open-Lien Plaintiffs will now continue in the trial court, with anticipated further litigation concerning the legality of hospital AHCCCS balance billing and related issues.