Opinion
No. 1 CA-CV 13-0130
01-23-2014
DEANNA M. CANCINO, an individual, Plaintiff/Appellant, v. ARIZONA HEALTH CARE COST CONTAINMENT ADMINISTRATION ("AHCCCS"), an Arizona state agency; THOMAS J. BETLACH, Director of AHCCCS; SOUTHWEST CATHOLIC HEALTH NETWORK CORPORATION dba MERCY HEALTH CARE GROUP, an Arizona corporation, Defendan ts/Appellees.
Stinson Leonard Street LLP, Phoenix By Jacob A. Hecker and Carrie M. Francis Counsel for Plaintiff/Appellant Law Offices of Timothy D. Ducar PLC, Phoenix By Kenneth M. Rudisill Counsel for Defendant/Appellee AHCCCS Fennemore Craig PC, Phoenix By Jill M. Covington, Scott L. Altes, and Theresa Dwyer-Federhar Counsel for Defendant/Appellee Southwest Catholic Health Network Corp. dba Mercy Health Care Group
NOTICE: NOT FOR PUBLICATION.
UNDER ARIZ. R. SUP. CT. 111(c), THIS DECISION DOES NOT CREATE LEGAL PRECEDENT
AND MAY NOT BE CITED EXCEPT AS AUTHORIZED.
Appeal from the Superior Court in Maricopa County
No. LC2011-000780-001
The Honorable Crane McClennen, Judge
AFFIRMED
COUNSEL
Stinson Leonard Street LLP, Phoenix
By Jacob A. Hecker and Carrie M. Francis
Counsel for Plaintiff/Appellant Law Offices of Timothy D. Ducar PLC, Phoenix
By Kenneth M. Rudisill
Counsel for Defendant/Appellee AHCCCS
Fennemore Craig PC, Phoenix
By Jill M. Covington, Scott L. Altes, and Theresa Dwyer-Federhar
Counsel for Defendant/Appellee Southwest Catholic Health Network Corp. dba
Mercy Health Care Group
MEMORANDUM DECISION
Presiding Judge Donn Kessler delivered the decision of the Court, in which Judge Patricia K. Norris and Judge Maurice Portley joined. KESSLER, Judge:
¶1 Deanna M. Cancino appeals the superior court's order affirming the decision of the Director of the Arizona Health Care Cost Containment Administration ("AHCCCS") (hereinafter "Director") denying Cancino's claim for benefits. Cancino had sought coverage from her health care payor, Mercy Healthcare Group ("MHCG"), for Remicade, which is a prescription medication in a class of medications called TNF Alpha Inhibitors, to treat Cancino's Crohn's disease and Ulcerative Colitis. Cancino's MHCG plan did not include Remicade, and both the plan and state law expressly prohibited coverage for drugs not on the MHCG formulary. The plan is not in violation of state or federal law, and Cancino is bound by the contract with MHCG. Accordingly, we affirm.
FACTUAL AND PROCEDURAL HISTORY
¶2 In 2008 and 2010, Cancino requested authorization from MHCG to pay for Remicade. MHCG, which had contracted with Cancino's employer to pay for defined health benefits, denied the requests on the basis that Remicade was not a covered medication on MHCG's prescription medication formulary. Cancino filed an administrative appeal. After a hearing, an administrative law judge ("ALJ") determined that MHCG's formulary did not include TNF Alpha Inhibitors, and thus violated Arizona Revised Statutes ("A.R.S.") section 36-2912(Q) (Supp. 2013), and that TNF Alpha Inhibitors were medically necessary for Cancino. The ALJ recommended that MHCG authorize Remicade to treat Cancino until at least one TNF Alpha Inhibitor was placed on the formulary.
We cite to the current version of applicable statutes because no revisions material to this decision have since occurred.
¶3 Through a designee, the Director rejected Cancino's argument that federal requirements with respect to Medicaid standards set a minimum level of care governing MHCG, or that she established that Remicade was "medically necessary" after exhausting other treatment options. The Director concluded that Cancino failed to meet her burden to establish that Remicade was covered under her plan or that MHCG violated a statute, regulation, or other law by denying Remicade or excluding TNF Alpha Inhibitors from the formulary. Thus, the Director upheld MHCG's denial of Remicade, and denied Cancino's appeal.
¶4 Cancino sought judicial review and, after briefing and oral argument, the court affirmed the Director. Cancino timely appealed, and we have jurisdiction pursuant to A.R.S. § 12-913 (2003).
STANDARD OF REVIEW
¶5 The superior court "shall affirm the agency action unless after reviewing the administrative record and supplementing evidence presented at the evidentiary hearing the court concludes that the action is not supported by substantial evidence, is contrary to law, is arbitrary and capricious or is an abuse of discretion." A.R.S. § 12-910(E) (Supp. 2013).
¶6 This Court reviews "the superior court's ruling to determine whether the record contains evidence to support the judgment, and in doing so, we reach the underlying issue of whether the administrative action was illegal, arbitrary, capricious or involved an abuse of discretion." Siler v. Ariz. Dep't of Real Estate, 193 Ariz. 374, 378, ¶ 14, 972 P.2d 1010, 1014 (App. 1998) (internal quotation marks and citations omitted); see Ritland v. Ariz. St. Bd. of Med. Exam'rs, 213 Ariz. 187, 189, ¶ 7, 140 P.3d 970, 972 (App. 2006) ("We review the agency's application of law de novo."). An abuse of discretion occurs when an agency "misapplies the law or fails to consider the relevant facts." Rios Moreno v. Ariz. Dep't of Econ. Sec., 178 Ariz. 365, 367, 873 P.2d 703, 705 (App. 1994).
DISCUSSION
¶7 Cancino asserts: (1) the MHCG prescription drug formulary is discriminatory in violation of A.R.S. §§ 36-2912(q), (CC)(8), and (X) (Supp. 2013), because it does not contain at least one TNF Alpha Inhibitor, and provides no exception for medically necessary medications; (2) the formulary violates federal law setting healthcare standards for Medicaid programs; and (3) the formulary violates her equal protection rights guaranteed by the Arizona Constitution because exclusion of the TNF Alpha Inhibitor class of medication arbitrarily excludes treatment for an entire group of people based on the their medical status and severity of illness. Cancino concedes that MHCG is not operating a federally-subsidized Medicaid program, and it is undisputed that MHCG's formulary does not include TNF Alpha Inhibitors. We conclude the exclusion of the TNF Alpha Inhibitor class of medication from MHCG's formulary without an exception does not violate applicable Arizona or federal statutes or Arizona's constitutional equal protection clause.
Cancino and MHCG spend a good portion of their briefing arguing whether she had shown her need for TNF Alpha Inhibitors was medically necessary and to whom we should defer on such a finding—the ALJ or the Director. We do not discuss that argument because the MHCG formulary does not include a medical necessity exception and Cancino has not shown that contrary federal requirements apply to her MHCG plan. See infra ¶¶ 16, 31. Thus, Cancino's argument urging a medical necessity exception, and the parties' dispute on appeal as to whom we should defer in weighing credibility and medical need, are not relevant to the legal issues before us.
I. Distinctions between HCGs and AHCCCS.
¶8 To understand Cancino's arguments, it is essential to distinguish between AHCCCS programs governing Medicaid and the HCG program. This is especially important because Cancino argues that federal Medicaid law applies to her plan even though she concedes MHCG is not a Medicaid program. Before Arizona created AHCCCS in 1981 as an alternative to the federal Medicaid program, Arizona did not have a program to provide medical care for indigent citizens. Bruce Babbitt and Jonathan Rose, Building a Better Mousetrap: Health Care Reform and the Arizona Program, 3 Yale J. on Reg. 243, 245, 263 (Spring 1986); Matheny v. Gila Cnty., 147 Ariz. 359, 362, 710 P.2d 469, 472 (App. 1985). "Arizona administers AHCCCS, the state's Medicaid program, pursuant to Title XIX of the Social Security Act, 42 U.S.C. sections 1396 to 1396v (1988 & Supp. V 1993). . . . [and] must provide medical benefits to members of certain defined groups of low income people [who are defined as] 'categorically eligible' to receive medical benefits." Mercy Healthcare Arizona, Inc. v. AHCCCS, 181 Ariz. 95, 97, 887 P.2d 625, 627 (App. 1994); Salgado v. Kirschner, 179 Ariz. 301, 303, 878 P.2d 659, 661 (1994) (explaining that "Arizona chose to participate in Medicaid . . . a joint state-federal funding program for medical care for the needy. . . . [through AHCCCS]"); see Harris v. McRae, 448 U.S. 297, 308 (1980) ("The cornerstone of Medicaid is financial contribution by both the Federal Government and the participating State.").
"In 1974, the Arizona Legislature passed a bill authorizing the state to join the federal Medicaid program, but failed to provide funding to implement that law. The counties therefore remained responsible for indigent health care." Bruce Babbitt and Jonathan Rose, Building a Better Mousetrap: Health Care Reform and the Arizona Program, 3 Yale J. on Reg. 243, 263 n.126 (Spring 1986). AHCCCS created uniform state-wide standards for indigent health care eligibility and services that replaced the separate rules, qualifications, and benefits offered by the various counties. Id. at 269.
¶9 In 1985, the Arizona Legislature created a separate program called HCG, which is a prepaid guaranteed issue health care coverage program administered by AHCCCS for eligible employees of small businesses and political subdivisions in Arizona. Babbitt, supra ¶ 8, at 280 (explaining that another "expansion of AHCCCS under consideration would use the AHCCCS model for the development of a reasonably priced health insurance system for the working uninsured. . . . to provide affordable health care insurance to those otherwise unable to afford commercial insurance"). Through the HCG program, A.R.S. § 36-2912(K) provides that AHCCCS "shall offer a health benefit plan on a guaranteed issuance basis to small employers as required by this section" and "shall accept any small employer that applies and meets the eligibility requirements." See Ariz. Senate Research Staff, Ariz. State Senate Issue Brief: Small Business Health Insurance, at 4 (June 22, 2010); Ariz. Senate Fact Sheet, 2004 Reg. Sess., S.B. 1166 (June 9, 2004); Ariz. Senate Fact Sheet, 2002 Reg. Sess., H.B. 2709 (May 22, 2002); Op. Ariz. Att'y Gen. I86-113, 1986 WL 81361 (Nov. 7, 1986).
In 2013, the Arizona Legislature repealed the statutes creating and governing the HCG program, effective January 1, 2014. 2013 Ariz. Sess. Laws, ch. 10, § 8 (1st Spec. Sess.). After briefing on this appeal was completed, MHCG suggested that such repeal moots this appeal. Cancino claims the appeal is not moot because she could seek reimbursement for her out-of-pocket costs for Remicade, and MHCG has asserted that the fund created to pay claims under the HCG program is still in place to pay pending claims. We decline to address the mootness issue.
¶10 Unlike commercial insurance governed by Title 20 of the Arizona Revised Statutes, HCGs are governed by Title 36, see A.R.S. §§ 36-2901 et seq., specifically A.R.S. § 36-2912. Eligible employers may contract with AHCCCS for an HCG plan. A.R.S. § 36-2912(B), (CC)(13); see Ariz. Admin. Code ("A.A.C.") R9-27-101(B) (defining "HCG Plan"). Their employees may participate in the HCG plan by virtue of their employment. See A.R.S. § 36-2901(6)(b)-(e) (Supp. 2013). Eligibility criteria for an HCG plan is conditioned on employment and prescribed by A.R.S. § 36-2901(6) in subsections (b) through (e).
¶11 Employment eligibility for HCGs is unlike eligibility criteria for AHCCCS in A.R.S. § 36-2901(6)(a), (f), and (g), which depends on income and relates to separate programs that embody traditional federal Medicaid requirements. In other words, although HCG is an AHCCCS-administered program, it is not income-contingent, nor federally subsidized. See 42 U.S.C. § 1396a(a)(2); 42 U.S.C. § 1396a(a)(10)(A) (participating states are required to cover the categorically needy and may extend coverage to the medically needy); Mercy Healthcare, 181 Ariz. at 97, 887 P.2d at 627 ("The federal government does not require a state to extend coverage to people other than those who are categorically eligible. If a state chooses to extend treatment to other groups, the state assumes the cost of health care for those 'non-categorical' individuals."). Nor is it part of Arizona's optional expansion of medical benefits to persons not deemed categorically eligible for Medicaid benefits based on income. Mercy Healthcare, 181 Ariz. at 97, 887 P.2d at 627 (explaining that at one point Arizona extended coverage to three non-categorical groups: those deemed medically needy or medically indigent under an income and financial resources test, eligible low income children, and eligible assisted children). Rather, "premiums paid by small employers and eligible employees" comprise the HCG fund that AHCCCS administers. A.R.S. § 36-2912.01(A)(1) (2009).
¶12 Not only are HCGs governed by a discrete statute within the overall AHCCCS scheme, but the A.A.C. regulations governing HCGs are also in a separate section not geared to Medicaid requirements. See A.A.C. Title 9, Chapter 27; see also A.R.S. § 36-2912(G)(6) (1995) (requiring the director to promulgate separate rules for HCGs that do not reference rules adopted for members eligible based on income and federally mandated Medicaid considerations); Ariz. State Senate Minutes of Comm. on Health, 1995 Reg. Sess. S.B. 1309 (Feb. 14, 1995) (explanation by legislative analyst that the proposed amendment "clarifies that AHCCCS can promulgate rules on behalf of HCG, however the rules must stand alone and not reference AHCCCS Medicaid-only health plan rules"); cf. A.R.S. § 36-2912(H)(5) (2002) (amending statute to remove language about separate rules for HCGs and mandating Director "[a]dopt rules"). Thus, we have described an HCG as "an AHCCCS-administered private employer group health plan." J.L.F. v. AHCCCS, 208 Ariz. 159, 160, ¶ 2, 91 P.3d 1002, 1003 (App. 2004). Accordingly, Cancino's HCG plan is governed by A.R.S. Title 36 and A.A.C. Title 9, Chapter 27 and not federal Medicaid law.
II. MHCG's formulary did not violate state statutes and regulations for HCGs.
¶13 Cancino's primary argument on appeal is fluid. In her opening brief, she argues that the MHCG formulary's exclusion of TNF Alpha Inhibitors violates the anti-discrimination provisions of A.R.S. § 36-2912(Q) because the exclusion is based on "health-status related factors." In her reply brief, Cancino changes course, arguing that the Group Service Agreement ("GSA"), applicable to all HCGs, includes a "medically necessary" definition. Cancino argues that this definition, in conjunction with an HCG regulation, requires MHCG to provide medically necessary drugs and, thus, MHCG's formulary violates § 36-2912(Q). In other words, we understand Cancino to argue that the interplay between the GSA, MHCG's contract with her employer, and state regulations provide an implicit exception to require medically necessary drugs, and that any prohibition of such drugs under the formulary would violate § 36-2912(Q). We disagree.
Cancino also asserts that "MHCG's position that it cannot deviate from its [Formulary] . . . differs from its historical treatment of requests for medications not identified on its [Formulary]. For example, a review of MHCG's Formulary dated February 20, 2007, shows that [it] previously . . . allowed for requested exceptions." However, as discussed infra ¶ 17, the legislature amended A.R.S. § 36-2912(Q) in 2008, prohibiting HCGs from authorizing medications not on a formulary or offering benefits outside the scope of the group's service agreement. The March 5, 2010 revised formulary alerted Cancino that MHCG would not cover any drugs not included in the formulary, and the GSA effective September 1, 2010 explained that state law enacted in 2008 prohibited a HCG from offering any benefit or coverage not part of the contract. Cancino requested Remicade in November 2010. Cancino provides no record that post-2007 formularies had a procedure for obtaining coverage for drugs not listed in the formulary.
¶14 For purposes of HCGs, the A.A.C. defines "scope of services" as "the covered, limited, and excluded services listed in [A.A.C. Title 9, Chapter 27] Article 2 . . ., the GSA, and the [Healthcare Group of Arizona Administration ("HCGA")] member handbook." A.A.C. R9-27-101(B). Article 2 defines covered services, exclusions, and limitations of HCG plans. See A.A.C. R9-27-202 to -203. The regulations reinforce the statutory language by stating that "an HCG Plan shall not cover" services that are not covered benefit options or excluded as specified in the GSA and member handbook. A.A.C. R9-27-203(A); see A.R.S. § 36-2912(Q) ("A health benefit plan shall not provide or offer . . . .").
The HCGA is the entity within AHCCCS that directs and regulates the HCG program. A.A.C. R9-27-101(B). A member handbook is "the written description that HCGA provides . . . on enrollment, of the rights and responsibilities of members, as well as a list of covered services, limitations, [and] exclusions." Id. The GSA is "a contract between an employer and HCGA." Id.
¶15 Here, both the GSA and the member handbook make clear that drugs not listed on MHCG's formulary will not be covered. Thus, the GSA's section of "covered services" explains that the HCG plan has an approved formulary and "[o]nly drugs contained on the Health Plan Formulary will be covered." The GSA further states that "[n]o exception for drugs not on the Health Plan Formulary will be made," and that HCGA is "prohibited by [A.R.S. § 36-2912(Q)] to pay for [a] service [benefit, or coverage that is not contained in the benefit plan] regardless of medical necessity or [a person's] condition." In addition, the GSA's section on exclusions and limitations states that drugs or medication not on the formulary are excluded without the possibility of exception. Like the GSA, the member handbook also states that drugs not on the formulary are not covered and are excluded without the possibility of any exception.
According to the GSA here, "'Benefit exception': means an exception to a covered benefit determination by the HCG Medical Director that determines a service should be provided even though it is not a covered benefit" or is excluded.
¶16 Cancino argues that because the GSA "specifically defines 'medically necessary' services" and A.A.C. R9-27-203(8) "indicates coverage is excluded for '[s]ervices that HCGA, through its Medical Director, deems not to be medically necessary," there is a medical necessity exception applicable to her circumstances. Cancino misreads the GSA. The GSA defines "Formulary" as "approved pharmaceutical drugs . . . to be prescribed to Members when medically necessary." A "benefit exception" is defined by the GSA as "an exception to a covered benefit" to provide a service "even though it is not a covered benefit" or is an excluded benefit. These provisions do not create an implied medical necessity exception to the MHCG formulary, particularly in light of the explicit exclusions without exception in the GSA as discussed above. There is no medical necessity exception applicable to Cancino's claim.
¶17 Cancino also argues that MHCG had to provide coverage for Remicade pursuant to § 36-2912(Q). As originally written, that statute prohibited discrimination in the offering or providing for coverage or benefits. However, in 2008, the legislature amended the statue to add a second sentence barring HCGs from paying for uncovered services. The statute now reads:
[A] health benefit plan may not deny, limit or condition the coverage or benefits based on a person's health status-related factors or a lack of evidence of insurability. A health benefit plan shall not provide or offer any service,A.R.S. § 36-2912(Q). These applicable statutory requirements supplement any HCG contract. See Banner Health v. Med. Sav. Ins. Co., 216 Ariz. 146, 150, ¶ 15, 163 P.3d 1096, 1100 (App. 2007).
benefit or coverage that is not part of the health benefit plan contract.
¶18 Remicade is not on the MHCG formulary and not a covered benefit under Cancino's MHCG plan. Therefore, pursuant to the second sentence of § 36-2912(Q), MHCG did not have discretion and was required to deny Remicade. Likewise, the Director did not have discretion to approve Remicade or another TNF Alpha Inhibitor for Cancino.
¶19 To avoid this result, Cancino maintains that exclusion of TNF Alpha Inhibitors from the formulary violates the first sentence of § 36-2912(Q), which prohibits discrimination based on a person's health status-related factor. We disagree.
A "health status-related factor" is "any factor in relation to the health of the individual" which is further defined to include: health status; medical condition, including physical and mental illness; claims experience; receipt of health care; medical history; genetic information; evidence of insurability; or the existence of a physical or mental disability. A.R.S. § 36-2912(CC)(8).
¶20 Cancino cites no authority to support her argument. Rather, the origins and purpose of the anti-discrimination provision belie her argument that the statute has been violated. The provision prohibiting discrimination first appeared in § 36-2912(Q) in 1997 following the passage of the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). HIPAA anti-discrimination provisions are applicable to group health insurance, see 42 U.S.C. § 300gg-1; 29 U.S.C. § 1182, and thus, the Arizona statute reflects the federal requirements. See Ariz. Senate Fact Sheet, 2000 Reg. Sess., S.B. 1032 (Apr. 26, 2000) (explaining after the passage of HIPAA the Arizona Legislature conformed state law to the federal requirements); see T. David Cowart, A New Twist on Portability, ALI-ABA Continuing Legal Education, SB51 ALI-ABA 805, 811 (Feb. 17, 1997) (stating "all group health plans must adhere").
Title 20 governing commercial insurance was also amended to include the federally mandated anti-discrimination provision. See A.R.S. §§ 20-1051(8) (2010), -2310(A) (2013). However, pursuant to Title 20 a prescription drug formulary is required to have a process by which authorization of medically necessary non-formulary prescription drugs may be requested. See A.R.S. §§ 20-841.05(B)(2) (2010), -1057.02(B)(2) (2010).
¶21 HIPAA prohibits discrimination to a particular insured based on "health status-related factors." See Cowart, supra ¶ 20, at 811 (discussing changes to group health insurance resulting from new HIPAA law and stating that "[f]or the first time since 1986, all group health plans must adhere to . . . rules that prohibit discrimination based on health status-related factors"). However, the intent was to prohibit the knowing exclusion of individuals; "a plan cannot be knowingly designed to exclude individuals and . . . cannot single out an individual . . . for denial of a benefit otherwise provided other individuals covered under the plan." Id. at 828 (internal quotations and citation omitted). Thus, for instance, plans that exclude coverage for certain conditions are "permitted as long as they are not directed at individual sick employees." Id.
¶22 That this anti-discrimination provision does not apply to the situation here is illustrated by Example Six in the Code of Federal Regulations, 45 C.F.R. § 146.121, relating to requirements for the group health insurance market. Example Six discusses a group health plan that limits prescription drug benefits to only those drugs on a formulary. It expressly provides that as long as the benefits and exclusions are "applied uniformly to all similarly situated individuals and [are] not directed at individual participants," the plan does not violate the prohibition on discrimination based on a health status-related factor. See also 45 C.F.R. § 146.121(b)(2)(B) ("[t]hus, for example, a plan . . . may limit or exclude benefits . . . for certain types of treatments or drugs . . . but only if the benefit limitation or exclusion applies uniformly").
¶23 Cancino has failed to establish that the uniform and mandatory denial of Remicade based on the HCG plan here violates A.R.S. § 36-2912(Q). The fact that neither the statute nor the GSA permit discretion to make an exception based on medical necessity supports our view that Cancino has not been singled out for discrimination based on a health status-related factor in violation of subsection (Q). The MHCG plan, prohibited by statute from providing benefits for non-formulary medication, does not violate the discrimination prohibition in § 36-2912(Q) by uniformly denying non-formulary medication.
¶24 To avoid this result, Cancino argues that § 36-2912(X) incorporates other federal requirements. Section 36-2912(X) requires that HCGs "shall comply with all applicable federal requirements," such as the HIPAA requirements discussed above. However, as we explain, she has not established the applicability of the federal Medicaid or Medicare formulary requirements she urges here.
III. Federal Medicaid and Medicare standards for prescription drug formularies.
¶25 Although Cancino concedes MHCG is not operating a federal program, she asserts MHCG's formulary is legally deficient "because it does not comport with similar federal health care programs (which set the national medical standards for such healthcare group programs)." Cancino maintains that "Medicare/Medicaid programs in essence detail and dictate what is the basic level of acceptable coverage for a health insurance program." To support her argument, Cancino cites provisions of the United States Code, contained in a subchapter of social security law governing "Grants to States for Medical Assistance Programs" as the definition of a legally sufficient formulary. See 42 U.S.C. §§ 1396r-8(d)(4), -1395w-104(b)(3)(C)(i). She asserts that "Medicare requires that all participating plans cover at least two drugs in each" class of medication on a prescription formulary and "MHCG concedes this national standard formulary requirement in its recent provider newsletter dated Spring 2011."
¶26 We disagree with Cancino. First, the newsletter does not purport to represent that the Medicare "national standard formulary requirement" pertains to the MHCG plan or formulary. Rather, the newsletter discusses other non-HCG plans governed by Medicaid.
¶27 Second, Cancino does not cite apposite legal authority to develop her argument that federal standards for determining the "basic level of acceptable coverage" for Medicaid or Medicare programs apply to HCGs in Arizona. Cancino cites 42 U.S.C. § 1396r-8 wherein subsection (d)(4)(C) permits exclusion of a "covered outpatient drug . . . only if . . . [the] drug does not have a significant, clinically meaningful therapeutic advantage." The statute also requires that a state formulary must "permit[] coverage of a drug excluded from the formulary . . . pursuant to a prior authorization program." 42 U.S.C. § 1396r-8(d)(4)(D).
¶28 However, as mentioned above, § 1396 is contained within subchapter XIX of the federal code which is entitled "Grants to States for Medical Assistance Programs" and involves federal subsidies. It applies only to programs in which federal funding is available. 42 U.S.C. § 1396r- 8(d)(5). Cancino points to no authority that such funding is available for the HCG program. Here, the services and drugs are paid for by premiums paid by the employers enrolled in the HCG program. A.R.S. § 36-2912.01(A)(1). The federal government does not subsidize Cancino's HCG plan and thus § 1396 is inapplicable here. See 42 U.S.C. § 1396b ("the Secretary . . . shall pay to each State which has a plan approved under this subchapter . . . .").
¶29 In her reply brief, Cancino cites 42 U.S.C. § 1395w-104(b)(3)(C)(i), in support of her argument that a formulary must contain a drug in every class. Section 1395w-104(b)(3)(C)(i) requires that a "formulary must include drugs within each therapeutic category and class of covered part D drugs, although not necessarily all drugs within such categories and classes." Section 1395 is contained within subchapter XVIII of the federal code which is entitled "Health Insurance for Aged and Disabled." The historical notes in the subchapter indicate that at least the 2005 "amendment . . . shall take effect as if included in the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Public Law 108-173) . . . ." Editor's and Revisor's Notes to U.S.C. § 1395w-102 (citing QI, TMA, and Abstinence Programs Extension and Hurricane Katrina Unemployment Relief Act of 2005, Pub. L. No. 109-91, § 103, 119 Stat. 2091, 2092). On its face, this statute does not apply to Cancino's Arizona HCG plan, and Cancino cites nothing to support her claim otherwise. Her assertion is also belied by the provision that a "formulary must include drugs within each therapeutic category and class of covered part D drugs," § 1395w-104(b)(3)(C)(i) (emphasis added), coupled with her lack of analysis showing that Remicade is even in such a category or class for federal Medicare purposes.
¶30 Citing to a variety of state and federal cases interpreting federal Medicaid requirements, Cancino argues that "[n]umerous courts have invalidated denials of coverage, like in this case, finding such bans are inconsistent with regulations prohibiting discrimination based on diagnosis." Her authorities appear to be taken from a string citation in Visser v. Taylor, 756 F. Supp. 501, 506-07 (D. Ka. 1990). In Visser, the court first stated that to participate in Medicaid, states must cover certain mandatory services and "a state must provide service of sufficient scope to achieve the purpose of the item in the scheme of the federal program." 756 F. Supp. at 506. The court then cited nearly the same string citation provided by Cancino here to support the determination that "several courts have held that a prescription drug program which is not designed to make medically necessary drugs available to eligible recipients in a speedy and efficient manner is not sufficient . . . to reasonably achieve its purpose." Id. at 506-07.
¶31 The cited cases address optional medical benefits provided by states pursuant to state-administered Medicaid/Medicare programs. However, Medicaid/Medicare requirements are not at issue here, much less optional services provided in accordance with Medicaid/Medicare requirements. Cancino overlooks that these cases involve the manner in which a state makes optional services available to Medicaid/Medicare eligible persons, and she does not engage in any analysis to demonstrate that these cases or the provisions discussed therein are relevant to our analysis here. Notably, all of the cases were decided before 1991 and predate HIPAA, and some of these cases were decided before the creation of HCGs in Arizona or even AHCCCS.
¶32 As we have previously stated, "[t]he federal government does not require a state to extend coverage to people other than those who are categorically eligible." Mercy Healthcare, 181 Ariz. at 97, 887 P.2d at 627; see 42 U.S.C. § 1396a(a)(10)(A)(ii). "If a state chooses to extend treatment to other groups, the state assumes the cost of health care for those 'non-categorical' individuals." Mercy Healthcare, 181 Ariz. at 97, 887 P.2d at 627; see Sharpe v. AHCCCS, 220 Ariz. 488, 493, ¶ 13, 207 P.3d 741, 746 (App. 2009) (noting in case involving coverage for dentures under non-HCG AHCCCS plan, "that the entire provision of dentures by the legislature is optional and not required under federal law," and citing 42 C.F.R §§ 440.225, 440.100, and 440.120); Callen v. Rogers, 216 Ariz. 499, 50203, ¶ 12, 168 P.3d 907, 910-11 (App. 2007) (discussing state's ability to provide limited dental coverage independent of Medicaid requirements because dental care is considered an optional service). Not only does Cancino make no attempt to distinguish Medicaid and Medicare requirements or laws, but she offers no authority or analysis to show that any such requirements apply to her HCG plan. Based on the above considerations, we find inapplicable the federal formulary requirements with respect to (1) providing drugs in each therapeutic category and class of covered Medicare part D drugs, and (2) exclusion of drugs only when there is no clinically meaningful therapeutic advantage.
IV. Cancino has not established that the MHCG formulary violates her equal protection rights under state law.
¶33 Citing Article 2, Section 13, of the Arizona Constitution, Cancino summarily asserts that because MHCG's formulary "excludes all TNF [Alpha] inhibitor medications" it "violates the Equal Protection clause of the Arizona Constitution [by excluding] treatment arbitrarily and capriciously for an entire group of individuals based solely on their medical status." In her reply brief, she asserts that "[n]o rational basis exists for [the] disparate treatment" between individuals "with severe Crohn's and ulcerative colitis requiring . . . TNF Alpha Inhibitor[s] . . . [that] do not receive coverage" and "individuals with mild or moderate Crohn's and/ or ulcerative colitis that . . . do receive treatment." MHCG argues that because Remicade is uniformly excluded and that there is no evidence MHCG provides Remicade for some while refusing the medication for others, there is no disparate treatment.
"No law shall be enacted granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which, upon the same terms, shall not equally belong to all citizens or corporations." Ariz. Const. art. 2, § 13.
Cancino does not argue that A.R.S. § 36-2912(Q) is unconstitutional.
The parties maintain that MHCG's formulary contains medication useful for the treatment of Crohn's disease or ulcerative colitis.
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¶34 "Equal protection is denied when the state unreasonably discriminates against a person or class." State v. Loughran, 143 Ariz. 345, 348, 693 P.2d 1000, 1003 (App. 1985) (emphasis added and internal citation omitted). On appeal, Cancino sparingly and inconsistently articulates the state action alleged to be in violation of her rights. We understand her argument to be that the MHCG formulary violates her rights because that is what she focuses on in the body of her brief, although in her section heading she asserts that the Director's decision to uphold the denial of benefits is the act that violates her rights. In any event, Cancino does not explain how the Director's mandatory denial of her claim for benefits, as required by statute and the GSA, is a state act in violation of her equal protection rights, nor how the creation of the MHCG formulary constitutes a state act.
¶35 Even assuming there was a state act here, "[t]o establish an equal protection violation, a party must . . . . show that it was treated differently than other people in the same 'similarly situated' class." Aegis of Arizona, L.L.C. v. Town of Marana, 206 Ariz. 557, 570-71, ¶ 54, 81 P.3d 1016, 1029-30 (App. 2003); see also State v. Nguyen, 185 Ariz. 151, 153, 912 P.2d 1380, 1382 (App. 1996) ("The equal protection clauses of the state and federal constitutions have the same effect and generally require that all persons subject to state legislation shall be treated alike under similar circumstances." (internal quotation marks and citation omitted)).
¶36 As stated above, Cancino defines her class as severe sufferers of her illnesses, and she contrasts her class with less severe sufferers of the same illnesses. That some medication is available for people suffering less severe forms of Cancino's illnesses does not establish that Cancino is being treated differently from others in her class of severe suffers who need TNF Alpha Inhibitors. In other words, Cancino's constitutional claim hinges on her assertion that she is being treated differently than a class of people to which she does not belong, and thus, she has failed to establish even a prima facie showing of unequal treatment. See Nguyen, 185 Ariz. at 154-55, 912 P.2d at 1383-84 (stating that appellant's argument was hypothetical and did not show any actual unequal treatment in how law was applied).
¶37 Although Cancino states that there is no rational basis for the purportedly disparate treatment here, and in a section heading states that the denial of Remicade is unlawful because it is based only on cost containment, she offers no legal or factual analysis to support her position. Having concluded that there is no disparate treatment between members of Cancino's class, we need not address whether there is a rational basis to justify the purported disparity. Cancino has not established a violation of the Arizona Constitution.
V. Attorneys' fees.
¶38 MHCG requests attorneys' fees pursuant to A.R.S. § 12-341.01 (Supp. 2013). In our discretion, we decline to award MHCG its attorneys' fees.
¶39 MHCG also requests an award of its costs pursuant A.R.S. § 12-341 (2003). Section 12-341 provides that the successful party in a civil action is entitled to costs. Because MHCG is the successful party, it is entitled to recover its costs from Cancino. We award MHCG taxable costs upon MHCG's compliance with ARCAP 21.
CONCLUSION
¶40 The superior court correctly affirmed the decision of the Director insofar as it concludes that Cancino failed to establish that exclusion without exception of the TNF Alpha Inhibitor class of medication from MHCG's formulary violates either applicable Arizona statutes or federal law, or that such exclusion offends constitutionally protected equal protection rights. Therefore, we affirm.