State v. Zeitner

246 Ariz. 161

436 P.3d 484

STATE of Arizona, Appellee,

v.Chalice Renee ZEITNER, Appellant.

No. CR-18-0076-PR

Supreme Court of Arizona.

Filed March 18, 2019

Mark Brnovich, Arizona Attorney General, Dominic Draye, Solicitor General, Joseph T. Maziarz, Chief Counsel, Criminal Appeals Section, Michael T. O'Toole (argued), Assistant Attorney General, Phoenix, Attorneys for State of Arizona

James J. Haas, Maricopa County Public Defender, Mikel Steinfeld (argued), Deputy Public Defender, Phoenix, Attorneys for Chalice Renee Zeitner

Randy McDonald, Perkins Coie, LLP, Phoenix, Attorneys for Amicus Curiae Arizona Attorneys for Criminal Justice

JUSTICE LOPEZ authored the opinion of the Court, in which CHIEF JUSTICE BALES, VICE CHIEF JUSTICE BRUTINEL, and JUSTICES PELANDER (Retired), TIMMER, and BOLICK, and JUDGE BREARCLIFFE^* joined.

JUSTICE LOPEZ, opinion of the Court:

¶1 The issue in this case is whether the Arizona Health Care Cost Containment System ("AHCCCS") statutory scheme, A.R.S. §§ 36-2901 to -2999.57, abrogates, or creates an exception to, Arizona’s statutory physician-patient privilege, A.R.S. § 13-4062(4), in cases of suspected AHCCCS fraud. We hold that it does in two ways. First, the Arizona legislature’s grant of broad authority to AHCCCS to investigate suspected fraud necessarily implies an exception to the privilege for internal AHCCCS investigations and proceedings. And, second, the AHCCCS statutes implicitly abrogate the privilege in the criminal investigation and prosecution of suspected AHCCCS fraud because the disclosure requirements in the AHCCCS statutes and the legislature’s clear intent to support criminal prosecution of AHCCCS fraud preclude harmonizing the physician-patient privilege with the AHCCCS statutes.

I.

¶2 Chalice Zeitner visited a Phoenix obstetrician for an abortion in early March 2010, claiming she had discovered she was pregnant after recently undergoing extensive radiation and chemotherapy treatments for cancer. The obstetrician referred her to a specialist, whom Zeitner told she had been diagnosed with a malignant uterine tumor and was undergoing chemotherapy. In late March 2010, Zeitner successfully applied for AHCCCS benefits, stating on her application that she had a serious chronic illness and her pregnancy was high-risk and life-threatening.

¶3 On March 31, the obstetrician received an email seemingly following up on a procedure the obstetrician had proposed to Zeitner. The email, signed by "Al Zeitner," emphasized the urgency of the procedure, claiming Zeitner would resume cancer treatments on April 9 and needed to have her tumor removed within four weeks. A few days later, Zeitner provided the obstetrician a letter purportedly written by a doctor at the out-of-state hospital Zeitner claimed had treated her for cancer. The letter recommended that Zeitner "receive an urgent [abortion] ... to relieve third term life-threatening certainties to the patient." The obstetrician, relying on this information, concluded that an abortion was necessary to protect Zeitner’s health. Based on his opinion, AHCCCS authorized payment for the procedure, and the obstetrician performed the abortion on April 9.

¶4 While performing a caesarean section on Zeitner for another pregnancy nearly a year later, the obstetrician found no physical evidence to support Zeitner’s previous claims of uterine cancer. Upon further investigation, he discovered the letter delivered by Zeitner in early April was not authored by the doctor whose name appeared on the letter. The obstetrician reported his suspicions about Zeitner to her health plan, which forwarded the matter to AHCCCS for investigation.

¶5 A grand jury eventually indicted Zeitner on eleven counts, including charges for defrauding AHCCCS, which generally does not cover abortions except when necessary to save a woman’s life or to protect a woman’s health. See A.R.S. § 35-196.02(A)–(B). The State alleged that Zeitner lied about having cancer so her abortion would fall within the exception to that rule. The State also alleged Zeitner committed identity theft and forgery by impersonating a doctor recommending that she receive her abortion. Zeitner pleaded not guilty to every charge and moved to preclude all information her physicians obtained from her, including records of her communications with the physicians and their examinations of her, arguing they were protected under Arizona’s physician-patient privilege. The State opposed the motions, arguing the privilege was abrogated by statute, and the trial court denied the motions before trial. After an eleven-day trial, in which the court admitted Zeitner’s medical records and allowed her physicians to testify, the jury convicted Zeitner on all charges.

¶6 Zeitner’s sole argument on appeal was that the superior court erred by admitting her medical records and allowing her physicians to testify against her. The court of appeals affirmed, holding that the AHCCCS statutes abrogated "the [physician-patient] privilege ... in cases of suspected AHCCCS fraud."

State v. Zeitner , 244 Ariz. 217, 219 ¶ 1, 224 ¶ 28, 418 P.3d 990, 992, 997 (App. 2018). The court reasoned that while no common-law exception to the physician-patient privilege applies in Arizona, the legislature has created exceptions to the privilege. Id. at 222 ¶ 22, 418 P.3d at 995. The court noted that the AHCCCS statutes require health-care providers to report suspected fraud to AHCCCS, A.R.S. § 36-2918.01(A), and to turn over patient records to fraud investigators, A.R.S. § 36-2903(I). Id. at 222–23 ¶ 23, 418 P.3d at 995–96. Therefore, the court concluded, the AHCCCS statutes "abrogate the privilege by implication when fraud is suspected by imposing disclosure obligations on physicians that are entirely inconsistent with the privilege." Id. at 223 ¶ 24, 418 P.3d at 996.

¶7 We granted review because whether the AHCCCS statutory scheme abrogates Arizona’s physician-patient privilege presents an issue of statewide importance. We have jurisdiction under article 6, section 5(3) of the Arizona Constitution.

II.

¶8 We review issues of statutory interpretation de novo. In re Estate of Wyatt , 235 Ariz. 138, 139 ¶ 5, 329 P.3d 1040, 1041 (2014). We likewise review de novo whether and to what extent a privilege applies. Twin City Fire Ins. Co. v. Burke , 204 Ariz. 251, 253–54 ¶ 10, 63 P.3d 282, 284–85 (2003).

¶9 In 1965, Congress established the federal Medicaid program to provide medical care to qualified low-income individuals. See 42 U.S.C. §§ 1396 to 1396w–5. States may voluntarily participate in the program and acquire federal funding by developing a medical-assistance plan, but state plans must satisfy the requirements established by the federal statutory scheme and accompanying administrative regulations. See id. § 1396a; 42 C.F.R. §§ 431.1 to 431.1010. A state’s failure to comply with an approved Medicaid plan may result in a loss of federal funding. See 45 C.F.R. § 201.6(a). Arizona’s AHCCCS program administers this state’s Medicaid plan. See Sw. Fiduciary, Inc. v. Ariz. Health Care Cost Containment Sys. Admin. , 226 Ariz. 404, 406 ¶ 8, 249 P.3d 1104, 1106 (App. 2011).

¶10 Federal law, both by statute and regulation, requires state Medicaid plans to include specific procedures to ensure disclosure of patient records during fraud investigations. Pursuant to 42 U.S.C. § 1396a(27), a state plan must provide for agreements with service providers to keep records of services provided and to furnish those records to the state Medicaid agency upon request. Although a state plan must provide safeguards "that restrict the use or disclosure of information concerning applicants and beneficiaries" to specific purposes, 42 C.F.R. § 431.301, those purposes include "[c]onducting or assisting an investigation, prosecution, or civil or criminal proceeding related to the administration of the plan," 42 C.F.R. § 431.302(d).

¶11 Federal law also requires state Medicaid agencies to support independent prosecutorial entities in their investigation and prosecution of fraud. Under 42 U.S.C. § 1396a(61), states must operate fraud control units, independent of their Medicaid agencies, to prosecute fraud. See also 42 U.S.C. § 1396b(q) (establishing the requirements and duties of states' fraud control units regarding fraud prosecutions). Furthermore, state Medicaid agencies must conduct internal investigations of any report of fraud, 42 C.F.R. § 455.14, and must refer suspected provider or beneficiary fraud to the state’s fraud control unit or "appropriate law enforcement agency," respectively, 42 C.F.R. § 455.15. A state’s fraud control unit must have "[a]ccess to ... any records or information kept by the agency or its contractors ... [or] by providers to which the agency is authorized access." 42 C.F.R. § 455.21(a)(2)(i), (iii). It must also "make available to [f]ederal investigators or prosecutors all information in its possession concerning fraud in the provision or administration of medical assistance under the [s]tate plan." 42 C.F.R. § 1007.11(e).

¶12 As evinced by these federal laws, the disclosure of patient information relevant to a law enforcement investigation and prosecution of fraud against a state’s Medicaid agency is closely tied to the administration of a state’s plan. See generally In re Grand Jury Investigation , 441 A.2d 525, 531 (R.I. 1982)("The federal policy requiring disclosure of patient records for fraud investigations is very necessary to the continued viability of the Medicaid program.").

¶13 Arizona statutes and AHCCCS rules have implemented the same investigation and disclosure requirements mandated by federal law. Section 36-2903(H)"require[s] as a condition of a contract with any contractor that all records relating to contract compliance are available for inspection by [AHCCCS]." AHCCCS must "prescribe by rule the types of information that are confidential and circumstances under which such information may be used or released, including requirements for...