                                IN THE

    SUPREME COURT OF THE STATE OF ARIZONA

                        WALTER ANSLEY, ET AL.,
                  Plaintiffs/Appellees/Cross-Appellants,

                                    v.

                  BANNER HEALTH NETWORK, ET AL.,
                 Defendants/Appellants/Cross-Appellees.


                          No. CV-19-0077-PR
                          Filed March 9, 2020


          Appeal from the Superior Court in Maricopa County
               The Honorable Dawn M. Bergin, Judge
                         No. CV2012-007665
                            AFFIRMED

             Opinion of the Court of Appeals, Division One
                       246 Ariz. 240 (App. 2019)
                              VACATED


COUNSEL:

Geoffrey M. Trachtenberg, Justin Henry, Levenbaum Trachtenberg, P.L.C.,
Phoenix; B. Lance Entrekin (argued), The Entrekin Law Firm, Phoenix,
Attorneys for Walter Ansley, et al.

Richard B. Burnham, Cameron C. Artigue (argued), Christopher L. Hering,
Gammage & Burnham, P.L.C., Phoenix, Attorneys for Banner Health
Network, et al.

Stanley G. Feldman, Miller, Pitt, Feldman & McAnally, P.C., Tucson;
Lincoln Combs, Gallagher & Kennedy, P.A., Phoenix; David L. Abney,
    WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                      Opinion of the Court


Ahwatukee Legal Office, P.C., Phoenix, Attorneys for Amicus Curiae
Arizona Association for Justice/Arizona Trial Lawyers Association

                             ________________

JUSTICE BOLICK authored the opinion of the Court, in which CHIEF
JUSTICE BRUTINEL, VICE CHIEF JUSTICE TIMMER, and JUSTICES
GOULD, LOPEZ, MONTGOMERY, and PELANDER (RETIRED) * joined.
                       _______________

JUSTICE BOLICK, opinion of the Court:

¶1             The questions this case poses are whether Medicaid patients
may sue to challenge Arizona statutes authorizing the recording of liens
against third-party tortfeasors for hospitals to recover health care costs
exceeding their Medicaid reimbursement; and if so, whether federal law
preempts the lien statutes. We hold that the patients have a private right of
action, and that A.R.S. §§ 33-931(A) and 36-2903.01(G)(4) are preempted to
the extent hospitals utilize them against third-party tortfeasors for “balance
billing” to recover costs exceeding Medicaid reimbursement.

                              BACKGROUND

¶2              Plaintiffs are patients who were treated at defendant hospitals
under the Arizona Health Care Cost Containment System (“AHCCCS”),
which is the state’s contract provider for the federal Medicaid program and
negotiates reimbursement rates with hospitals. The hospitals recorded
liens against the third-party tortfeasors who caused the patients’ injuries to
recover the remainder of their customary fees beyond Medicaid
reimbursement. Arizona Revised Statutes § 33-931(A) allows medical
providers to secure “a lien for the care and treatment . . . of an injured
person” in an amount equal to their “customary charges for care.” Section
36-2903.01(G)(4) provides that a “hospital may collect any unpaid portion
of its bill from other third-party payors.”

* Justice James P. Beene has recused himself from this case. Pursuant to
article 6, section 3 of the Arizona Constitution, Justice John Pelander
(retired), was designated to sit in this matter.


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   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


¶3            The patients filed this class action challenging the liens,
contending that the authorizing statutes violate federal Medicaid law,
specifically 42 U.S.C. § 1396a(a)(25)(C) and 42 C.F.R. § 447.15. The
regulation, which implements the statute, provides that state Medicaid
plans must limit participation to “providers who accept, as payment in full,
the amounts paid by the agency plus any deductible, coinsurance or
copayment required by the plan to be paid by the individual.”

¶4             Some of the patients settled with the hospitals, agreeing to
pay negotiated amounts in exchange for the hospitals releasing their liens
and allowing the patients to receive their full personal injury awards. The
settling patients then sued to set aside the agreements, arguing that
Arizona’s lien statutes are preempted by federal law and thus
unenforceable. In Abbott v. Banner Health Network, this Court upheld the
trial court’s dismissal of those claims. 239 Ariz. 409 (2016). Although the
Court assumed, without deciding, that the lien statutes were preempted by
federal law, id. at 411 ¶ 2, we determined that “at the time of the accord and
satisfaction agreements here, no Arizona appellate court had addressed the
enforceability of Arizona’s medical lien statutes against third-party
settlements obtained by Medicaid patients,” id. at 414 ¶ 17, and thus the
settlements were valid under Arizona law. Id. ¶ 18.

¶5            The non-settling class members, the patients here, continued
to challenge the lien statutes. Moving for summary judgment in the trial
court, the patients argued, among other things, (1) that the liens are an
attempt to recover hospital costs in excess of Medicaid reimbursement
(“balance billing”) that is preempted by federal law under the Supremacy
Clause, U.S. Const. Art. VI, cl. 2; and (2) that the hospitals’ contracts with
AHCCCS incorporate federal law (which preempts balance billing) and as
third-party beneficiaries of those contracts, the patients are entitled to
enforce those provisions, precluding the liens.

¶6             The trial court enjoined the hospitals from “filing or asserting
any lien or claim against a patient’s personal injury recovery, after having
received any payment from AHCCCS for the same patient’s care.” The
court rejected the patients’ third-party beneficiary argument, but ruled that
A.R.S. § 36-2903.01(G)(4) is preempted by federal law. The court awarded
attorney fees to the patients under the private attorney general doctrine. See
Arnold v. Ariz. Dep’t of Health Servs., 160 Ariz. 593, 609 (1989).

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    WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                      Opinion of the Court


¶7             The court of appeals affirmed but applied different reasoning.
Ansley v. Banner Health Network, 246 Ariz. 240 (App. 2019). 1 The court first
concluded that §§ 33-931(A) and 36-2903.01(G)(4) are preempted and
“invalid to the extent they allow a hospital to impose a lien on a patient’s
tort recovery for the balance between what the hospital accepted from
AHCCCS for treating the patient and what it might have charged another
patient.” Id. at 249 ¶ 22. The court then held that the patients were not
precluded from asserting a private right of action under the Medicaid Act
by Armstrong v. Exceptional Child Center, Inc., 575 U.S. 320 (2015). Ansley,
246 Ariz. at 254 ¶ 43. Additionally, the court determined that the patients
could raise the preemption argument as third-party beneficiaries for breach
of the contract between AHCCCS and the hospitals. Id. at 256 ¶ 53. The
court affirmed most of the attorney fees awarded by the trial court and
granted attorney fees the patients incurred in the court of appeals, but
predicated the awards not on the private attorney general doctrine, which
it did not reach, but on A.R.S. § 12-341.01(A), which authorizes a fee award
for the successful party in a contract action. Id. at 257, 259 ¶¶ 60, 74.

¶8             We granted the hospitals’ petition for review because whether
the lien statutes are preempted for balance billing purposes is a recurring
issue of statewide concern. We have jurisdiction pursuant to article 6,
section 5, clause 3 of the Arizona Constitution. The issues raised present
solely questions of law, which we review de novo. Conklin v. Medtronic,
Inc., 245 Ariz. 501, 504 ¶ 7 (2018).


                              DISCUSSION

                    I. PRIVATE RIGHT OF ACTION

¶9            We first address whether the patients may maintain this
action. In their arguments, the patients repeatedly blur the lines between
whether the lien statutes are preempted and whether the patients have a
cause of action to raise that claim. The two questions overlap but are
analytically distinct. Even if the lien statutes are preempted, it does not
necessarily follow that the patients have a private right of action. We

1 The decision on appeal superseded an earlier decision by the court of
appeals. Ansley v. Banner Health Network, 244 Ariz. 389 (App. 2019).
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                     Opinion of the Court


therefore initially consider whether the patients have a private right of
action to enforce the Medicaid provisions concerning balance billing.

¶10            Contrary to the patients’ repeated assertions, the United
States Supreme Court has not expressly recognized a general private right
of action to enforce rights and duties under Medicaid. Nor, contrary to the
hospitals’ contention, did the Court categorically foreclose such an action
in Armstrong. Because the patients sued hospitals, not state officials, to
prevent enforcement of the lien statutes, we are not dealing with the
familiar framework applicable to such an action as set forth in Ex Parte
Young, 209 U.S. 123 (1908), which held that courts’ inherent power to enjoin
state action in violation of federal law was not eliminated by the Eleventh
Amendment. Instead, we are dealing with a highly unusual situation
where one group of private parties, the hospitals, is invoking a state-law
procedure that may violate federal law provisions that protect another
group of private parties, the patients. Determining whether the patients
may sue to enforce federal protections against private parties who are
invoking and defending state statutes thus involves atypical parties but an
otherwise familiar legal setting.

¶11           Under the Supremacy Clause, federal statutes enacted
pursuant to a power conferred by the Constitution preempt conflicting state
laws. Armstrong, 575 U.S. at 324. However, the Supremacy Clause is not
the source of any rights, “and certainly does not create a cause of action. It
instructs courts what to do when state and federal law clash, but is silent
regarding who may enforce federal laws in court, and in what
circumstances they may do so.” Id. at 325.

¶12            The patients rely on 42 C.F.R. § 447.15 as the primary source
of a federally protected interest against balance billing. As we discuss infra
¶ 33, a federal regulation adopted pursuant to congressional authorization
can preempt a conflicting state law, but a regulation cannot create a private
right of action. Rather, “private rights of action to enforce federal law must
be created by Congress.” Alexander v. Sandoval, 532 U.S. 275, 286 (2001).
Thus, “it is most certainly incorrect to say that language in a regulation can
conjure up a private cause of action that has not been authorized by
Congress. Agencies may play the sorcerer’s apprentice but not the sorcerer
himself.” Id. at 291.


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   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


¶13            Our task, then, “is to interpret the statute Congress has passed
to determine whether it displays an intent to create not just a private right
but also a private remedy. Statutory intent on this latter point is
determinative.” Id. at 286 (internal citation omitted). The applicable statute
is 42 U.S.C. § 1396a(a)(25)(C), which provides in relevant part that “in the
case of an individual who is entitled to medical assistance under the [s]tate
plan with respect to a service for which a third party is liable for payment,
the person furnishing the service may not seek to collect from the individual
. . . payment of an amount for that service . . . .”

¶14            In our view, this language creates an enforceable right on the
part of Medicaid patients, specifically, that the Medicaid reimbursement
will constitute full payment of hospital bills, precluding further recovery.
Although this is not an action under 42 U.S.C. § 1983, cases applying that
statute are helpful in analyzing whether an enforceable right exists. In
Blessing v. Freestone, the Supreme Court set forth the three criteria for
determining whether a federal statutory provision confers an enforceable
right. 520 U.S. 329 (1997). First, “Congress must have intended that the
provision in question benefit the plaintiff.” Id. at 340 (citation omitted).
Second, “the plaintiff must demonstrate that the right assertedly protected
by the statute is not so ‘vague and amorphous’ that its enforcement would
strain judicial competence.” Id. at 340–41 (citation omitted). Finally, “the
statute must unambiguously impose a binding obligation on the States” in
“mandatory, rather than precatory, terms.” Id. at 341. If an enforceable
right is established, it can be defeated only if Congress explicitly foreclosed
a private right of action, or did so impliedly “by creating a comprehensive
enforcement scheme that is incompatible” with a private right of action. Id.

¶15            The first criterion is easily satisfied: the statute plainly
protects a patient against being charged for a service for which Medicaid
has paid. The hospitals respond that the liens are enforced against the
third-party tortfeasors, not against the patients, which is technically true.
See Blankenbaker v. Jonovich, 205 Ariz. 383, 387 ¶¶ 17–18 (2003) (examining
health care liens outside of the Medicaid context). However, to the extent
that balance billing results in payment to the hospital instead of the patients
from the third-party tortfeasors, it necessarily reduces the patients’ tort
recovery amount, which is exactly what § 1396a(a)(25)(C) seeks to prevent.
See, e.g., Samsel v. Allstate Ins. Co., 204 Ariz. 1, 7 ¶ 21 (2002) (depicting a tort
recovery as a property interest of the victim in a lien context); see also

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   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


Spectrum Health Continuing Care Grp. v. Anna Marie Bowling Irrevocable Tr.,
410 F.3d 304, 317 (6th Cir. 2005); Gister v. Am. Family Mut. Ins. Co., 818
N.W.2d 880, 887 ¶ 18 (Wis. 2012) (“Both case law and logic indicate that St.
Joseph’s liens must be considered an effort ‘to collect from’ the patients.”).

¶16             The second and third criteria are met as well: the statutory
language is clear and categorical, not vague or amorphous, and it is
mandatory. Thus, although we reject the patients’ sweeping claim that the
Medicaid statute as a whole creates a private right of action, see Blessing, 520
U.S. at 342 (noting that “it is impossible to determine” whether the statute
before the Court “as an undifferentiated whole, gives rise to undefined
‘rights’”), § 1396a(a)(25)(C) provides precisely the “manageable analytical
bite[]” that allows us to discern the existence of an enforceable right. Id.; see
also Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 511–12 (1990) (private right of
action under Medicaid statute, 42 U.S.C. § 1396a(a)(13)(A), for provider
reimbursement at reasonable and adequate rates); Wright v. Roanoke Dev. &
Hous. Auth., 479 U.S. 418, 429–30 (1987) (tenants of public housing had a
private right of action under 42 U.S.C. § 1437a to have utility costs included
within rental payment that did not exceed thirty percent of income). The
statute therefore creates an enforceable right against healthcare providers
who seek to recover costs beyond those reimbursed by Medicaid.

¶17             Turning to the nature of the remedy, federal rights are
generally enforceable in equity. This is not an action challenging official
action under color of state law per 42 U.S.C. § 1983, which by its terms
restricts the types of actions that may be filed. Gonzaga Univ. v. Doe, 536
U.S. 273, 283 (2002). Nor is it an action that seeks monetary damages from
the state. Va. Office for Prot. & Advocacy v. Stewart, 563 U.S. 247, 255 (2011).
Rather, it is a suit in equity. The nature of the right—to be free from charges
beyond the Medicaid reimbursement—lends itself to equitable relief.
Courts have broadly recognized equitable actions by plaintiffs seeking
injunctive relief against state officials enforcing state regulations on federal
preemption grounds. See, e.g., Verizon Md., Inc. v. Pub. Serv. Comm’n Of Md.,
535 U.S. 635, 642 (2002); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n.14
(1983); Ute Indian Tribe v. Lawrence, 875 F.3d 539, 543 (10th Cir. 2017); Chase
Bank USA, N.A. v. City of Cleveland, 695 F.3d 548, 554 (6th Cir. 2012); Tohono
O’odham Nation v. Ducey, 130 F. Supp. 3d 1301, 1315 (D. Ariz. 2015).



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   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


¶18            That is exactly the situation presented here: while this action
is ostensibly to prevent the hospitals, who are private parties, from
imposing liens, it is in substance an action to prevent the operation of a state
law permitting liens. It is the operation of state law, not merely the private
acts of the hospitals, that the patients seek to enjoin. For this reason, while
this is not an Ex parte Young case, the logic of its holding applies. Ex parte
Young, as noted supra ¶ 10, held that courts’ inherent power to enjoin state
action in violation of federal law was not abolished by the Eleventh
Amendment. Here, where the nominal party to be enjoined is a private
actor, there is no Eleventh Amendment question, and the inherent power
of the courts to prevent state action that violates federal law remains intact.

¶19           Recognizing a suit in equity to enjoin a violation of an
enforceable federal right makes sense, given that if the hospitals were
seeking to enforce the liens, those defending the lawsuits could raise
preemption as a defense. Thus, the injunction here is “nothing more than
the pre-emptive assertion in equity of a defense that would otherwise have
been available in the [defendant’s] enforcement proceedings at law.”
Stewart, 563 U.S. at 262 (Kennedy, J., concurring).

¶20              A suit in equity to enforce a federal right is not cognizable,
however, if Congress has expressly prohibited it. Plaintiffs “cannot, by
invoking our equitable powers, circumvent Congress’s exclusion of private
enforcement” of a statutory provision. Armstrong, 575 U.S. at 328. In
Armstrong, Medicaid providers sought to challenge the state’s failure to
amend reimbursement rates as a violation of § 30(A) of the Medicaid Act,
42 U.S.C. § 1396a(a)(30)(A). The Court found that § 30(A) contained two
features that evidence congressional intent to foreclose a private right of
action. First, Congress expressly provided that the “sole remedy” for a
state’s breach of its Medicaid contract “is the withholding of Medicaid
funds by the Secretary of Health and Human Services.” Armstrong, 575 U.S.
at 328 (citing 42 U.S.C. § 1396c). While that administrative remedy “might
not, by itself, preclude the availability of equitable relief,” the Court held, “it
does so when combined with the judicially unadministrable nature of
§ 30(A)’s text.” Id. The Court found that the statute explicitly vested in the
Secretary authority to enforce the “judgment-laden standard” for
determining Medicaid funding. Id. The Court concluded that “[t]he sheer
complexity associated with enforcing § 30(A), coupled with the express


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    WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                      Opinion of the Court


provision of an administrative remedy . . . shows that the Medicaid Act
precludes private enforcement of § 30(A) in the courts.” Id. at 329. 2

¶21            Neither of those factors indicating congressional intent to
preclude a private equitable right of action is present here. At oral
argument, counsel for the hospitals identified two administrative remedies
the patients can pursue here: they could file a grievance under A.R.S. § 36-
2903.01, or they could challenge the Center for Medicare and Medicaid
Services’ (“CMS”) approval of the state’s Medicaid contract pursuant to the
judicial review provisions of the federal Administrative Procedure Act
(“APA”), 5 U.S.C. § 701, et seq. We note at the outset that neither is the type
of express, self-contained administrative remedy that 42 U.S.C. § 1396c
provides for violations of § 30(A) of the Medicaid Act, and therefore do not
on their face evidence congressional intent to foreclose a private equitable
right of action. Nor do they provide meaningful alternative means of relief.

¶22           Arizona Revised Statutes § 36-2903.01(B)(4) empowers the
AHCCCS director to establish a grievance procedure by rule, but the statute
does not itself create such a grievance procedure. The authorized process
on its face pertains to individual benefits. An affidavit from a former
AHCCCS inspector general attests that the agency has established no
administrative process to hear balance billing objections. Nor have the
hospitals identified any statutory source of AHCCCS authority over liens. 3

2 A plurality of the Court also concluded that § 30(A) does not by its terms
create a private right of action, reasoning that providers are not intended
beneficiaries of the Medicaid agreement, that private parties do not have
standing to enforce government contracts, and that § 30(A) does not
unambiguously confer a private right of action. Armstrong, 575 U.S. at 331–
32 (plurality). We do not apply this portion of the opinion to foreclose a
private right of action here both because it pertains only to § 30(A) and it
did not command a majority of the Court.
3   An agency rule, A.A.C. R9-22-1007, requires that hospitals notify
AHCCCS upon treating a patient whose injuries arise from the liability of a
third party. However, the context of the rule indicates that requirement
exists because AHCCCS is the payor of last resort, after payment has been
made by other parties. No reference is made to balance billing on the part
of health service providers.         Similarly, the Provider Participation

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   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


¶23            Likewise, the judicial review provisions of the APA do not
prescribe the type of remedy necessary to foreclose a private right of action
here as they are not the type of remedy tailored to the deprivation of the
specific right that Armstrong contemplates. Although the general judicial
review provisions might be adequate to foreclose a private right of action
elsewhere in the Medicaid statute, here such review would be a mismatch
for what the patients seek, which is not to challenge the approval of
Arizona’s Medicaid plan but to prevent balance billing.

¶24          The hospitals argue that the patients should administratively
challenge the federal agency’s approval of AHCCCS’s plan because it
encompasses the state’s lien statutes. But it does not.

¶25            The hospitals rely on Douglas v. Independent Living Center of
Southern California, Inc., 565 U.S. 606 (2012), both for the proposition that
CMS, the agency in charge of administering Medicaid, reviews state
statutes in the process of approving state Medicaid plans, and that the
proper remedy for correcting an erroneous CMS determination is an APA
challenge. In reality, CMS reviews “the State’s plan and amendments to
determine whether they comply with the statutory and regulatory
requirements governing the Medicaid program.” Id. at 610 (emphasis
added). It reviews statutes only when they result in an amendment to the
plan, as in Douglas. Id. at 613; see also 42 C.F.R. § 430.12(c)(1)(ii) (state must
file a plan amendment to reflect “[m]aterial changes in State law,
organization, or policy, or in the State’s operation of the Medicaid
program”). The patients corroborated this understanding with an affidavit
from a former CMS general counsel, who attests that the Arizona plan
approved by CMS does not encompass balance billing by hospitals and
that, in his view, “CMS would not have approved such a plan if it did.”
Indeed, he recounts that California applied for a waiver to engage in the
exact same practice and it was denied. Nothing in Arizona’s plan would
alert CMS to the lien statutes or their possible use for balance billing. To
the contrary, AHCCCS’s own regulations forbid balance billing. A.A.C. R9-
22-702(B) (“Registered providers must accept payment from the
Administration or a contractor as payment in full.”).


Agreement (“PPA”) establishes that the provider may bill AHCCCS “only
after a potential third-party payer has been billed.” It does not, contrary to
the hospitals’ assertion, authorize balance billing by the provider.
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                     Opinion of the Court


¶26           For that same reason, the APA remedy is not relevant as the
patients are not challenging the AHCCCS plan as approved by CMS.
Rather, they are challenging application of statutes that permit liens against
third-party tortfeasors, which is not a part of the plan.

¶27            Finally, a private right of action under § 1396a(a)(25)(C) is not
“judicially unadministrable.” Armstrong, 575 U.S. at 328. Unlike the
“judgment-laden standard” requiring administrative expertise at issue in
Armstrong, the statutory provision and implementing regulation at issue
here present a straightforward rule, and whether the statute and rule
preempt state statutes is an issue quintessentially subject to judicial review.
See, e.g., Pharm. Research & Mfrs. of Am. v. Walsh, 538 U.S. 644 (2003).

¶28            For all of these reasons, we conclude a private right of action
exists under § 1396a(a)(25)(C) for patients to seek equitable relief
precluding the application of state lien statutes.              We note that
notwithstanding Armstrong’s holding that § 30(A) of the Medicaid Act does
not furnish such a right, other courts have concluded that certain provisions
of the Act do provide private rights of action. See, e.g., Planned Parenthood
of Kan. v. Andersen, 882 F.3d 1205, 1224 (10th Cir. 2018); BT Bourbonnais Care,
LLC v. Norwood, 866 F.3d 815, 824 (7th Cir. 2017), and cases cited therein, id.
at 820–21; Planned Parenthood of Gulf Coast, Inc. v. Gee, 862 F.3d 445, 461 (5th
Cir. 2017); S.R. v. Penn. Dep’t of Human Servs., 309 F. Supp. 3d 250, 258–59
(M.D. Penn. 2018); J.E. v. Wong, 125 F. Supp. 3d 1099, 1105–06 (D. Haw.
2015).

¶29           We briefly address two alternative bases for relief cited by the
patients. First, the patients seek relief as third-party beneficiaries of the
contract between AHCCCS and the hospitals, which they contend prohibits
balance billing by incorporating federal law. The court of appeals held that
“the Hospitals breached a duty owed to the Patients under the PPAs when
they imposed the liens at issue here because those liens were invalid under
federal law.” Ansley, 246 Ariz. at 256 ¶ 54.

¶30           Whether or not the patients are third-party beneficiaries
under the contract, the hospitals did not breach the contract because a
promise to comply with the law is not the same as a promise to correctly
forecast future court decisions on preemption, which had not yet occurred
when the contracts here were signed. See Abbott, 239 Ariz. at 415 ¶ 18.

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                     Opinion of the Court


Moreover, the Supreme Court has held that an action to enforce a contract
that incorporates federal statutory obligations cannot substitute for a
private right of action where it “is in essence a suit to enforce the statute
itself.” Astra USA v. Santa Clara Cty., 563 U.S. 110, 118 (2010). Accordingly,
we reject the court of appeals’ holding that the patients could sue to enforce
the contract between AHCCCS and the hospitals against the liens.

¶31           The patients also argue that the Declaratory Judgment Act,
A.R.S. § 12-1831, provides a cause of action to challenge the lien statutes.
The hospitals contend that the patients failed to make this argument in the
courts below and therefore waived it, and indeed the court of appeals did
not separately address this issue. Regardless, although the Act provides a
procedural mechanism to mount a preemption challenge, it cannot create a
private right of action to do so. See, e.g., Snyder v. HSBC Bank, 913 F. Supp.
2d 755, 770 (D. Ariz. 2012) (stating declaratory judgment action must have
an underlying cause of action). Only Congress may do that. See, e.g.,
Sandoval, 532 U.S. at 286 (“[P]rivate rights of action to enforce federal law
must be created by Congress.”). Declaratory relief is available and
applicable here because Congress created an enforceable private right, but
the Act does not independently create the cause of action.


                               II. PREEMPTION

¶32            Because the patients have a private right of action to enforce
§ 1396a(a)(25)(C), we next address whether federal law preempts Arizona’s
lien statutes as applied to secure payment from third-party tortfeasors for
the difference between Medicaid reimbursement and the hospitals’ actual
costs. We agree with the court of appeals that the lien statutes as applied
are preempted. Ansley, 246 Ariz. at 246–54 ¶¶ 9–43.

¶33           This case presents an issue of “conflict preemption,” that is,
where state law stands as an obstacle to the achievement of a federal
statute’s purpose, or when compliance with both federal and state laws is
impossible. See, e.g., Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 699 (1984).
On this question, our inquiry broadens to encompass not only federal
statutes, but also regulations. Although it cannot independently create a
private right of action, supra ¶ 12, a regulation validly implementing a


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                     Opinion of the Court


federal statute has the same preemptive effect. Wyeth v. Levine, 555 U.S. 555,
576 (2009).

¶34            In Abbott, we assumed without deciding that federal law
preempts the lien statutes, 239 Ariz. at 411 ¶ 2, declaring that “federal
Medicaid law explicitly prohibits balance billing.” Id. at 412 ¶ 9. Section
1396a(a)(25)(C) states that when a person receives Medicaid assistance for
which a third party is liable, a provider “may not seek to collect from the
individual . . . payment of an amount for that service.” From the statute’s
plain language prohibiting direct balance billing of the patient, we could
infer that it prohibits indirect balance billing in the form of a lien that
diminishes the patient’s recovery from the liable third party. See Spectrum,
410 F.3d at 317 (noting the entirety of a recovery settlement belongs to the
injured party and that a provider lien “is merely an encumbrance upon that
property”).

¶35             But we need not draw such an inference because 42 C.F.R.
§ 447.15 expressly provides that “[a] State plan must provide that the
Medicaid agency must limit participation in the Medicaid program to
providers who accept, as payment in full, the amounts paid by the agency
plus any deductible, coinsurance or copayment required by the plan to be
paid by the individual.” As we noted in Abbott, this amounts to a
categorical prohibition against balance billing. 239 Ariz. at 412 ¶ 9. “All
the courts which have considered the issue of whether a service provider,
who has already accepted a Medicaid payment, may recover additional
sums after a patient has received damages in a personal injury lawsuit have
denied the provider’s claim.” Spectrum, 410 F.3d at 314; id. at 314–18 (listing
cases); Lizer v. Eagle Air Med Corp., 308 F. Supp. 2d 1006, 1010 (D. Ariz. 2004)
(listing cases); Smith v. Mahoney, 150 A.3d 1200, 1206 (Del. 2016); Gist v. Atlas
Staffing, Inc., 910 N.W.2d 24, 32 n.7 (Minn. 2018); Mulberry Square Elder Care
& Rehab. Ctr. v. Dep’t of Human Servs., 191 A.3d 953, 965 (Pa. Commw. Ct.
2018).

¶36            The hospitals’ liens are designed to secure payment from
third parties in excess of the Medicaid reimbursement. Such use of the lien
statutes cannot coexist with the federal prohibition against balance billing,
and therefore the statutes so applied are preempted. Accord Lizer, 308 F.
Supp. 2d at 1010 (“[T]he ultimate purpose and objective of the federal
Medicaid provisions regarding balance billing is to protect individuals

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    WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                      Opinion of the Court


covered by Medicaid from having to pay any more for medical services
than the amount paid by Medicaid. . . . [T]he Arizona health-care provider
lien statute is an obstacle to that purpose being accomplished [and]
[t]herefore is preempted.”). We therefore conclude that the lien statutes,
A.R.S. §§ 33-931(A) and 36-2903.01(G)(4), are unconstitutional as applied.


                            III. ATTORNEY FEES

¶37          The court of appeals awarded attorney fees to the patients
under A.R.S. § 12-341.01(A), which provides that fees may be awarded to
successful parties in actions arising out of contract. Ansley, 246 Ariz. at 257
¶ 60. As the patients have not prevailed on this claim, supra ¶¶ 29–30, we
do not uphold the court’s award of attorney fees under the statute.

¶38            However, we affirm the trial court’s award of attorney fees
under the private attorney general doctrine. Courts may award such fees
in certain cases vindicating important constitutional or statutory rights. See
Arnold, 160 Ariz. at 609. 4 Although whether the doctrine applies is a legal
question we review de novo, we review the trial court’s award for an abuse
of discretion. State ex rel. Corbin v. Tocco, 173 Ariz. 587, 595 (App. 1992); see
State v. Boykin, 112 Ariz. 109, 114 (1975).

¶39          Fees are permissible under the private attorney general
doctrine for a party who has vindicated a right that (1) benefits a large
number of people, (2) requires private enforcement, and (3) is of societal
importance. Arnold, 160 Ariz. at 609. Those criteria are satisfied here.

¶40           This case unquestionably benefits a large number of people;
not only class members, but future Medicaid patients whose recovery for
damages from third-party tortfeasors would also face reduction by virtue
of enforcement of hospital liens. Ordinarily, class action lawsuits seek
monetary damages, and attorneys prosecuting such actions will receive

4 In Arnold, the Court erroneously stated that the private attorney general
doctrine is “also known as the ‘substantial benefits doctrine.’” Id. at 608–
09. In fact, they represent separate and distinct bases for the award of
attorney fees. See Arizona Attorneys’ Fees Manual § 6.4.6 (Bruce E. Meyerson
& Patricia K. Norris eds., 6th ed. 2017).
                                       14
   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


compensation from any recovery. Under those circumstances, class actions
would not be eligible for fees under the private attorney general doctrine.
Here, by contrast, the class seeks declaratory and injunctive relief, not
damages. As Medicaid recipients, the patients are highly unlikely to have
the means to hire private attorneys, and private attorneys are unlikely to
take on such complex litigation without some prospect of remuneration.
Given the purpose of the private attorney general doctrine to promote
vindication of important public rights, see id., fees are appropriate here.

¶41           As this case involves a challenge to state statutes, private
enforcement is necessary. See, e.g., Ariz. Ctr. for Law in the Pub. Interest v.
Hassell, 172 Ariz. 356, 371 (App. 1991).

¶42           Finally, the enforcement of federal Medicaid provisions,
particularly the full measure of benefits, is unquestionably of great societal
importance.

¶43           The hospitals make two arguments as to why the private
attorney general doctrine should not apply. First, the right vindicated here
is under federal law, and federal courts do not recognize the private
attorney general doctrine. See Alyeska Pipeline Serv. Co. v. Wilderness Soc’y,
421 U.S. 240, 264–68 (1975). But Alyeska was based on a lack of statutory
authority for federal courts to award fees in that case, id. at 247, whereas
this Court has recognized the private attorney general doctrine in cases that
satisfy the Arnold criteria, as this case does. Second, the hospitals argue that
the private attorney general doctrine should apply only against the state,
not private parties. Although ordinarily the doctrine applies to state actors
and not private parties, our courts have applied it to private parties in
limited circumstances. See Defenders of Wildlife v. Hull, 199 Ariz. 411, 428
(2001) (awarding fees against private intervenor); Hassell, 172 Ariz. at 371
(finding fee award against private defendant appropriate where defendant
sought to promote his own interests). The private attorney general doctrine
applies because the hospitals here invoked and defended the lien statutes
that thwart the patients’ rights. Thus, the trial court did not abuse its
discretion by ruling that the hospitals should bear the costs of the patients’
successful challenge.

¶44          For those reasons, we conclude that the trial court did not
abuse its discretion by awarding fees to the patients under the private

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   WALTER ANSLEY, ET AL. V. BANNER HEALTH NETWORK, ET AL.
                     Opinion of the Court


attorney general doctrine, and we exercise our discretion to award attorney
fees the patients incurred in this Court on that same basis. Although the
court of appeals ordered attorney fees under a different, unsustainable
basis, we affirm those fees under the private attorney general doctrine.


                             DISPOSITION

¶45           We vacate the court of appeals’ opinion and affirm the trial
court’s judgment enjoining the application of the lien statutes to allow the
hospitals to recover the costs of medical care for the patients beyond the
amounts provided by Medicaid.




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