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LT Prevails in the Court of Appeals Against “Medical Lien” Company Violating State and Federal Law

LT received a favorable decision yesterday from Division One in Puch v. Key Health Medical Solutions. The case represents a years-long battle on behalf of an indigent client who was being ruthlessly and unlawfully pursued by “Key Health Medical Solutions,” a company that buys medical receivables from actual medical providers.

The case confirms that (a) a registered AHCCCS healthcare provider (i.e., a provider that has signed a Program Participation Agreement (“PPA”) with AHCCCS) may not bill, collect or “demand payment” from an AHCCCS eligible patient or person claiming to be eligible and (b) that this prohibition applies to third-party companies who buy medical receivables from AHCCCS registered providers.

The case concerned Gregory Puch who was seriously injured in an accident and qualified for AHCCCS, which is a federal-state program that is limited to those who have income at or below the federal poverty threshold.

As part of his treatment, Puch was sent to Insight-Biltmore for radiology studies. While at Insight-Biltmore he presented his AHCCCS card and was given a one-page form to sign entitled “Assignment of Proceeds / Lien” that incorrectly said Puch did not have “government insurance” and that he agreed to pay Key Health — the assignee of the radiology center — for the medical treatment he received. That is, the document Puch signed purported to make Puch “personally liable” for these expenses to Key Health even though he had AHCCCS available to pay for his care.

The document Puch was asked to sign was unenforceable because federal law, state regulations, and the applicable PPA prohibit AHCCCS registered providers from billing, collecting or “demanding payment” from AHCCCS eligible patients. Insight-Biltmore could not demand money from Puch and neither could anyone else, including Key Health.

Sometime later, Puch recovered the policy limits — $15,000 — from the person who injured him. Though Puch’s case was worth much more, this was all the available insurance.

Key Health demanded $4,435.90 from this recovery. On behalf of Puch, LT explained that, under the PPA Section 15 (which is standard in all AHCCCS PPAs) and AHCCCS regulation R9-22-702(A), Key Health stood in the shoes of Insight-Biltmore and, because Insight-Biltmore was not legally allowed to bill Puch, Key Health had bought a “pig in a poke.” That is, that Key Health was not allowed to collect from Puch either.

Key Health refused to back down and after particularly nasty litigation and briefing by Key Health, whose attorneys threatened sanctions and even a bar complaint against LT, the trial judge found for Puch and awarded him $23,455 in attorneys’ fees plus additional sanctions of $1,339.92 against Key Health.

Key Health appealed. The Court of Appeals agreed with the trial court, citing ACC R9-22-702 that states that “Registered providers must accept payment from the [AHCCCS] Administration or contractor as payment in full.” And once again, Puch was awarded his attorneys’ fees.

This case highlights LT’s expertise in lien-related matters and its commitment to help clients who are being unlawfully pursued by third-party lien claimants, a problem that is exceedingly common and widespread.