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What obligation has a person who has an attrny for a personal injury case to pay the hospital bill. this bill was by AHCCCS

Phoenix, AZ |

The hospital bell was paid by AHCCCS and there is not a balance, can the hospital come back to the client to repay the portion that was not covered by AHCCCS?

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Attorney answers 4


Arizona lien rights are fairly complex and I would strongly advise that your attorney, who knows the facts in detail, answer this for you. However, under arizona law hospitals liens have priority and can include the balance amounts. AHCCCS also has lien rights to settlements from third parties. Just because AHCCCS paid initially doesn't mean the person doesn't owe it money from the settlement. Most liens, however, can also be negotiated for lesser amounts.


Medical providers have a right to collect the balance of any bill not paid by the negligent party or its insurer. It is a lien filed in the name of the injured party/patient. This is why settlement agreements/releases with insurers almost always contain a requirement that the injured party agree to pay the "balance-billing" lien. In fact, there will be a requirement that the injured party agree to indemnify the negligent party and its insurer from such claims. So at the settlement, the obligation to satisfy a balance-billing lien has been effectively transferred to the injured party through the settlement agreement's terms. This is because the injured party is being paid medical bills as part of the settlement. In turn, the injured party's lawyer negotiates those liens down as much as possible to get the client the maximum settlement.


Arizona personal injury lien law is a minefield and I strongly encourage you to consult an Arizona attorney specializing in personal injury. There are two issues raised by your question. First, whether the hospital can "balance bill" for the difference between the AHCCCS payment and the total charge. Second, what are an injured persons obligations to repay AHCCCS for payments made for injury related treatment.

As to the first issue, please consult an attorney familiar with Lizer v. Air Eagle Medical, 308 F.Supp.2d 1006 (D. Ariz., 2004), which states the following:

". . . the pertinent regulation clearly mandates that states must require providers to accept Medicaid payments as payment in full. See 42 C.F.R. § 447.15. This language prevents providers from billing any entity for the difference between their customary charge and the amount paid by Medicaid. Providers are not merely prevented from balance billing patients themselves. Furthermore, this case demonstrates the necessity of the payment in full provision in order to carry out the full spirit of 42 U.S.C. § 1396a(a)(25)(c). Permitting providers to charge the balance of their bill to entities which are liable to the patient ultimately results in the patient recovering less from the liable entity. Congress passed the balance billing prohibition in order to protect eligible patients from having to pay additional sums for services already compensated by Medicaid. The accompanying regulation was passed in order to ensure that this purpose was carried out by preventing providers from intercepting funds on the way to a patient."

As to the second issue, AHCCCS has lien rights against the injured party's recovery that are not easy to define but cannot be ignored. An attorney experienced in this area can assist an injured party in obtaining a fair compromise of the AHCCCS lien. Again, please consult an attorney because there are many pitfalls if the AHCCCS lien is not properly resolved.

Legal Disclaimer: The foregoing does not create an attorney-client relationship. The information above is intended for general use only and does not constitute legal advice. In order to obtain a legal opinion as to your question, consult an attorney licensed in Arizona who can answer your question only upon obtaining a full understanding of the facts and law implicated.


First you need to be clear on the distinction between a debt that you owe personally and a claim against your settlement money that is established by caselaw or statute. Outside of a personal injury claim, when AHCCCS pays your bill, the bill has been paid in full and you owe nothing to either the provider or AHCCCS.

In Arizona, statutes give medical providers the right to file liens in an effort to recover the unpaid portions of their bills. When a health insurance plan has paid a portion of the bill, we call this practice “balance billing”. In order to have an enforceable claim, the provider must file a lien within the statutory timeframe. If a lien has not been timely filed, there is no enforceable “balance billing” claim against the settlement. However, if the patient actually owes the provider a copay, deductible or coinsurance amount, the patient is still personally liable for the amount he actually owes, regardless of the lien issue.

These statutory liens apply only to third-party(defendant) settlements – so if you have an uninsured motorist claim, you needn’t even get to the question of whether the hospital lien is precluded by AHCCCS payment. As well, if you have both defendant money and underinsured motorist benefits, the provider’s lien applies to only the defendant portion of the money.

AHCCCS is a Medicaid plan. Medicaid regulations prohibit “balance billing” once the provider has received payment by the Medicaid plan. This is a settled issue in the courts of several states, in three Federal Circuits and in the Federal Districts of Arizona and Florida. In Arizona, the Federal District Court case known as Lizer has the effect that the rights of all medical providers to assert balance billing liens are cut off once they receive payment from AHCCCS – except for hospitals.

Some hospitals continue to assert balance billing liens after receiving payment from AHCCCS on the basis that 1. Arizona has an additional statute giving hospitals the right to balance bill that does not exist in other states and that was not addressed by the Lizer court, and 2. As an Arizona Federal District Court case, the holding in Lizer does not control the actions of the Arizona State courts.

The hospitals’ argument above is not completely without merit, so their lien claims must be addressed. However, because the argument is a weak one, the hospitals are generally willing to negotiate and agree to substantial discounts off the amounts of these liens.

As to whether you must repay AHCCCS: Within the context of a personal injury claim, the answer is generally yes, except possibly not if AHCCCS failed to file a lien and your claim is against uninsured motorist coverage. This is because two statutes give AHCCCS a right to repayment – one that applies specifically to AHCCCS, applies to all settlements, and requires a lien to be filed – and one that applies because medical bills were paid with state money, applies only to third-party(defendant) settlements and does not require a lien to be filed.

Here is another irritating point: When we discuss statutory liens that hospitals and others file without your consent, this is different from a consensual lien, such as you might sign to obtain medical treatment if you have no health insurance. When you sign a consensual lien, you are essentially agreeing to pay the provider his full bill from whatever money you recover. Beware that if you sign such a lien and you do have health insurance, you may be giving up important rights for no reason.

Disclaimer: Lien questions are complex and fact-specific. As you can see, the state of the law is not settled and it continues to change constantly – the result being that lawyers rarely agree as to what the correct answers are and, to the degree an answer is correct today, it is usually incorrect tomorrow. Do not act in reliance on any of what you just read; it is for informational purposes only and is not legal advice. Let your own lawyer advise you.

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