§ 6.2 — Priority of Healthcare Provider Liens
The Healthcare Provider Lien statute has a single provision concerning modifying priority of healthcare provider liens. Pursuant to A.R.S. § 33-931 (D), "[l]iens perfected pursuant to [the Healthcare Provider Lien statute] by a hopital have priority for payment over all other liens authorised by this article." A.R.S. § 33-931(D) (emphasis added).
In other words, the Healthcare Provider Lien statute gives preference to "hospital liens" over any other healthcare provider liens regardless of when hospitals perfect their liens. This, of course, only extends to other healthcare provider liens and is not typically where disputes arise.
a. Preemption of Healthcare Provider Liens
Disputes typically arise regarding healthcare provider liens versus other species of third-party interests claiming priority—such as AHCCCS or ERISA claims. But the problem with these types of disputes is they skip over essential preliminary questions.
First, may the healthcare provider enforce a healthcare provider lien in these circumstances or is it unlawful balance billing? In almost every instance, the answer will be that the healthcare provider is unlawfully balance billing and, therefore, the lien is invalid and unenforceable for a number of different reasons (some of which may include preemption).34 See supra § 5.2(e).
Second, if not already part of the first inquiry, does federal law preempt the healthcare provider lien? ERISA, for example, preempts all state laws insofar as they "relate to any employee benefit plan." 29 U.S.C. § 1144(a). As noted earlier, supra § 5.11(a)(ii), the ERISA preemption clause is "conspicuous for its breadth" and "establishes as an area of exclusive federal concern the subject of every state law that 'relate[s] to' an employee benefit plan is governed by ERISA." FMC Corp. v. Holliday, 498 U.S. 52, 58 (1990).
"State laws" are broadly defined as "all laws, decisions, rules, regulations, or other State action having the effect of law, of any State." 29 U.S.C. § 1144(c)(1). The ERISA preemption "principle is intended to apply in its broadest sense to all actions of State or local governments, or any instrumentality thereof, which have the force or effect of law." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97 (1983) (noting remarks of Sen. Williams). Enforcing liens under the Healthcare Provider Lien statute, therefore, constitutes an instrumentality of state law subject to preemption. Cf. Lugar v. Edmondson Oil Co., 457 U.S. 922, 933 (1982) (holding private use of state law attachment procedures constitutes state action).
The issue, then, is whether enforcing a healthcare provider lien "relates to" an ERISA plan. See Shaw, 463 U.S. at 96-97 ("A law 'relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection with or reference to such a plan."). Although some state law claims are not preempted where they are "too tenuous, remote, or peripheral" to warrant a finding that they relate to a plan, e.g., Liberty Corp. v. NCNB Nat. Bank of S. Carolina, 984 F.2d 1383, 1388 (4th Cir. 1993), the supreme court summarized the law as follows:
[T]he Court's case law to date has described two categories of state laws that ERISA pre-empts. First, ERISA pre-empts a state law if it has a '"reference to'" ERISA plans. To be more precise, "[w]here a State's law acts immediately and exclusively upon ERISA plans . . . or where the existence of ERISA plans is essential to the law's operation . . . ., that 'reference' will result in pre-emption." Second, ERISA pre-empts a state law that has an impermissible "connection with" ERISA plans, meaning a state law that "governs . ....
