This article has been published in "The Advocate", a monthly publication of the Arizona Association for Justice/Arizona Trial Lawyers Association, April 2006 issue, @2006 by Steven J. Bruzonsky, Esq.
Can a hospital or healthcare provider balance bill over and above what they are paid by AHCCCS?
The Ninth Circuit has held that an air ambulance provider, which filed a timely ARS 33-931 statutory lien, can't balance bill against the patient's injury settlement, because the Arizona lien statute is preempted by Federal Medicaid law. Lizer v. Eagle Air Med Corporation, 308 F. Supp. 2d 1006 (Ariz. 2004). Its absolutely clear from Lizer that non-hospitals who are paid by AHCCCS are limited to the AHCCCS payment and that they can't balance bill against your client's personal injury settlement.
What about hospitals? Can they balance bill against your client's personal injury settlement? ARS 36-2903.01(G)(5) expressly allows a hospital to "collect any unpaid portion of its bill from other third party payers or in situations covered by [ARS. 33-931 et seq.]". In Labombard v. Samaritan Health System, 195 Ariz. 543, 991 P.2d 246 (App. 1998), the Court of Appeals held that the hospital could AHCCCS balance bill under the Arizona statute, subject to a required pro-rated reduction of the balance billing lien for attorney's fees and costs. Lizer didn't specifically consider whether ARS 36-2903.01(G)(5) is preempted by Federal Medicaid law. However, if Federal Medicaid law preempts ARS 33-931, then why wouldn't it also preempt ARS 36-2903.01(G)(5)?
A number of AzTLA members, myself included, have been successful in persuading hospitals and their attorneys to forgo hospital AHCCCS balance billing, and to file Releases of their ARS 33-931 statutory hospital liens, because we were going to file Declaratory Judgment actions in Federal District Court, on the basis that the Federal Courts would agree with us that Federal Medicaid law preempts ARS 36-2903.01(G)(5) and prohibits hospital AHCCCS balance billing.
Should you negotiate or just flat our file a Declaratory Judgment action if necessary? I always recommend in lien situations, where the law is not 100% clear, that you discuss the pros and cons, risks and benefits, with your client, and that you obtain your client's informed written consent for whatever course of action deemed apropriate.
More recently, I understand that there are several Declaratory Judgment Actions filed in Federal District Court regarding hospital AHCCCS balance billing, and attorney Richard Burnham, Gammage and Burnham, has indicated that he will moving to consolidate them. Daniel M. Rosenfelt, of Rosenfelt, Barlow and Borg, P.A. is handling one against Flagstaff Medical Center. If you are filing such a Declaratory Judgment action, be sure to notify JoJene Mills, firstname.lastname@example.org, so that AzTLA may be involved as appropriate.