New Legal Development in Medicaid Billing - Western Asset Protection
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New Legal Development in Medicaid Billing

Medicaid patients in Arizona have scored a victory against balance billing. The Arizona Court of Appeals has made an import ruling in a case involving the Arizona Health Care Cost Containment system (AHCCCS) and tort liens from Banner Health Network and several other hospitals. Per the ruling, hospitals will not be able to enforce tort liens against patients after AHCCCS payment has already been accepted.


Multiple hospitals including Banner Health Network contracted with AHCCCS. Under these contracts, the hospitals agree to accept payment from AHCCCS that is below the hospitals’ regular rates. The hospitals also agree not to bill the AHCCCS patients for the balance.

The disagreement concerned patients who received settlements or damage awards for injuries.

The hospitals sought to enforce liens on the tort recoveries for the difference between the hospitals’ standard charges and the payments made by AHCCCS. This decision was based on two Arizona lien statutes.

The patients argued that federal Medicaid law prohibited the tort liens, a form of balance billing. These patients formed a class action lawsuit, Walter Ansely v. Banner Health Network.


The Arizona Court of Appeals ruled in the patients’ favor, declaring that federal Medicaid law means that hospitals cannot enforce tort liens after they have already accepted payment from AHCCCS. This affirmed the previous ruling.

Another issue concerned whether the hospitals breached their contracts when they imposed tort liens. A previous ruling found that no breach of contract had occurred. The Arizona Court of Appeals, however, reversed this ruling.


This ruling has important implications for Medicaid patients and hospitals.

  • After Medicaid payment is accept by the hospital, the patient owes no money to the hospital.
  • Where state law and federal Medicaid law diverge, federal Medicaid law must be followed.