2012 Lien Seminar Materials – Balance Billing

2012 Lien Seminar Materials – Balance Billing

FROM: Scott I. Palumbo, Esq.
SUBJECT: Balance Billing: Who Would Have Thought This Would Be The Easy Part of the Liens Seminar?
DATE: January 27, 2012
I. WINTERS et al. v. BANNER HEALTH INC., et al.
AHCCCS payment to a medical provider constitutes “payment in full” and preempts A.R.S. § 33-931, et seq., liens. Lizer v. Eagle Air Med Corp., 308 F.Supp.2d 1006 (D.Ariz. 2004) (holding that, Medicaid statute (i.e., AHCCCS) and related regulation providing that acceptance of Medicaid payments constitutes “payment in full,” preempted state healthcare provider lien statute to extent state law permitted a healthcare provider to recoup the balance of its customary charges after provider had already accepted Medicaid payment); 42 U.S.C. § 1396a(a)(25)(C).
Given the prohibition against balance billing after receipt of AHCCCS payment, Geoff Trachtenberg and Lance Entrekin, recently filed a federal court class action entitled Winters, et al. v. Banner Health Inc., et al., 2-11-CV-01537-SRB, seeking declaratory judgment and injunctive relief, legal and equitable relief, breach of contract and unjust enrichment against many of the Arizona hospital corporations that have asserted, and collected, balance billing liens after accepting AHCCCS payment.
In July 2004, I published an article in the Advocate entitled Balance Billing = HIPAA Violation. The article is attached and represents my original thoughts on the subject. Basically, I was confused how a medical provider could legally file a document with a county recorder, that is then available anywhere in the world to anybody with an internet connection, without violating the patient’s privacy rights. My conclusion was that the lien was an absolute violation of State and Federal privacy rights.
I briefly litigated the privacy violation issue with Gammage & Burnham in late 2007, but was unable to maintain the claim after Gammage & Burnham successfully moved to dismiss it. The issue became dormant until a few months ago when Gammage & Burnham asserted in the Winters litigation that HIPAA prevented it from releasing certain balance billing liens during discovery – even though the liens had previously been released to the public when they were filed with the county recorders.
Gammage & Burnham’s current position seems to acknowledge the protected nature of patient protected health information contained in balance billing liens. This should give rise to a new challenge to the legality of such liens. Should you be so inclined to attack the validity of the liens, here are some arguments that can get you started (taken from my response to Gammage & Burnham’s 2007 motion to dismiss):
The defendant medical provider violated the plaintiff’s privacy rights when it publicly disclosed the plaintiff’s protected health information by filing two A.R.S. § 33-931, et seq. “balance billing” liens with the Maricopa County Recorder.
The allegation that the defendant’s liens violate patient privacy rights is a complex legal issue requiring a deep understanding of the purposes and principles behind the Federal and State laws that regulate the disclosure and dissemination of patient medical information. The issue cannot be dealt with on a cursory level as the defendant has done in its motion. As shown below, there are sufficient grounds upon which the plaintiff’s privacy right allegations can be granted. Thus, the motion to dismiss should be denied.
The defendant maintains that its liens “disclose no protected information.” Motion at 4. This is incorrect. The defendant’s attorney, Richard Burnham, admits that balance billing liens are part of a hospital’s “payment activities.” See Burnham letter, attached as Exhibit B. A.R.S. § 12-2291(6) defines “payment records” as “Payment records” means all communications related to payment for a patient’s health care that contain individually identifiable information.
As the two liens at issue in this matter contain many portions of the plaintiff’s individually identifiable information, including: (1) the patient’s name and address, (2) dates of medical service, (3) location of medical service, (4) the name of the medical provider, and (5) the amount charged for the medical services, the liens constitute a “payment record” under A.R.S. § 12-2291.
A.R.S. § 12-2292 protects a patient’s privacy rights by making “payment records” privileged and confidential:
A. Unless otherwise provided by law, all medical records and payment records, and the information contained in medical records and payment records, are privileged and confidential. Therefore, by filing the liens, the defendant has violated A.R.S. § 12-2292 and the plaintiff’s privacy rights.
The defendant’s argument that the “otherwise provided by law” provision found in A.R.S. § 12-2292 allows it to violate its patients’ privacy rights is contrary to logic. The “otherwise provided by law” provision refers to instances where a medical provider is required to disclose privileged health information, i.e. child abuse, adult abuse, HIV, child births, social security admissions, etc. Medical providers are not required by law to file balance billing liens. Instead, once the medical provider exercises its option to file a balance billing lien, it is required to follow the guidelines outlined in A.R.S. § 33-932(A). To read the “otherwise provided by law” provision in A.R.S. § 12-2292 as bestowing medical providers with unbridled and unilateral authority to disclose protected health information would violate the spirit for which the privacy protection was enacted. City of Phoenix v. Superior Court In and For Maricopa County, 101 Ariz. 265, 267, 419 P.2d 49, 51 (1966) (“It is the well settled law of this state that in construing a statute the spirit of the enactment must be considered and, if possible, the statute will be construed consistent therewith. . . . When the literal language of a statute will result in an absurdity, an impossibility, or a meaning which is clearly at variance with the legislative intent, courts may and well alter, modify, or supply words to the statute in order to give effect to the manifest intention of the Legislature.’)
Finally, although the plaintiff does not ask for a declaratory ruling that the liens violate the Health Insurance Privacy and Accountability Act (“HIPAA”), the Hospital’s argument that the “otherwise provided by law” provision allows it to freely violate its patients’ privacy rights is further frustrated by the constraints HIPAA places on debt collections. HIPAA was enacted on April 13, 2004. HIPAA precludes health care providers from disclosing “individually identifiable health information.” 42 U.S.C. § 1320d(6). “Individually identifiable health information” is that which combines the identity of a patient with “information . . . created or received by a health care provider . . . [that] relates to the past, present, or future physical or mental health or condition of an individual, the provision of health care to an individual, or the past, present, or future payment for the provision of health care to an individual.” Id. HIPAA provides a Federal floor of privacy protections for individuals’ individually identifiable health information where that information is held by a covered entity or by a business associate of the covered entity. 45 C.F.R. § 160.202. States are preempted from enacting laws that lower HIPAA’s privacy protections, but are allowed to create laws that provide “more stringent” privacy protections. Id. Subsequent to the enactment of HIPAA, the Arizona legislature did just that by amending A.R.S. § 12-2291, et seq. to make “payment records” privileged and confidential. See Laws 2004, Ch. 191, § 2. Thus, even if one were to assume, for purposes of this motion only, that HIPAA allows the hospital to release protected health information under its “payment activity” provision, the only permissible interpretation of the Arizona’s legislature’s subsequent decision to make HIPAA more stringent is that it intended to provide more protection to patients’ privacy expectations, not only when receiving care, but also during the medical providers’ attempts to collect payment for the care. The defendant’s position would render the legislature’s addition of “payment records” as privileged and confidential meaningless.




The brain trust in the Arizona Legislature is at it again. The Fiftieth Legislature is expected to introduce a bill to amend Title 12, Chapter 7, Article 2 of the Arizona Revised Statutes to add 12-824, relating to actions against public entities where the claimant asserts the right to recover medical expenses incurred as a result of bodily injury. The new law would limit the right of anyone injured by a public entity to recover more than the “amount actually paid in full satisfaction of the services.” It is rumored that the brain trust is considering expanding this new law to all bodily injury claims, not just claims against public entities.
If either of these laws are enacted, it would wipe out decades of Arizona common law allowing injured plaintiffs to claim billed charges. It would also drastically affect or eliminate balance billing because if the injured party is only able to recover the amount actually paid, then equitably there would be nothing for the medical provider to balance bill against. Hopefully Geoff Trachtenberg’s best friends at Gammage & Burnham are on top of this issue and will help us fight it.


Oftentimes balance billing liens are not properly perfected. The statute makes clear that such liens “are invalid and may not be enforced.” When liens are not filed properly, don’t just give in and compromise the lien, but consider sending a letter such as this:
Dear _________:



We represent _________for injuries she sustained in a March 10, 2010 car crash. Upon searching the Maricopa County Recorder, we noticed that you filed a A.R.S. § 33-931, et seq., balance billing lien against _________ on May 27, 2010. This letter is to request that the lien be immediately released from the Maricopa County Recorder because it is invalid and may not be enforced.



_________ first received treatment from Arrowhead Health on March 11, 2010. A.R.S. § 33-932 requires balance billing liens to be recorded “before or within thirty days after the patient has received any services relating to the injuries.” The failure to record a lien within thirty days makes the lien void as a matter of law – “If a health care provider other than a hospital or ambulance service does not record the claim, lien or assignment as provided in this section, the claim, lien or assignment is invalid and may not be enforced by the cause of action provided in section 33-934.” As Arrowhead Health did not file the lien against _________ until May 27, 2010, more than 60 days after it first provided treatment, the lien is not valid and must be withdrawn.



Please file a lien release with the Maricopa County Recorder and provide us with those releases by October 26, 2011.



Thank you.



If the provider does not release the lien, file a declaratory judgment action and seek your costs and fees. A form complaint for declaratory judgment is attached.



The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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