State v. Chalice Renee Zeitner

IN THE
SUPREME COURT OF THE STATE OF ARIZONA
STATE OF ARIZONA,
Appellee,
v.
CHALICE RENEE ZEITNER,
Appellant.
No. CR-18-0076-PR
Filed
March 18, 2019
__________________
Appeal from the Superior Court in Maricopa County
The Honorable Michael W. Kemp, Judge
The Honorable Pamela S. Gates, Judge
No. CR2015-000299-001
AFFIRMED
Opinion of the Court of Appeals, Division One
244 Ariz. 217 (App. 2018)
AFFIRMED
COUNSEL:
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
STATE V. ZEITNER
Opinion of the Court
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
*JusticeAndrew W. Gould has recused himself from this case. Pursuant to article 6,
section 3 of the Arizona Constitution, the Honorable Sean E. Brearcliffe, Judge of the
Arizona Court of Appeals, Division Two, was designated to sit in this matter.
2
STATE V. ZEITNER
Opinion of the Court
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 (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. 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. Therefore, the court concluded, the AHCCCS
statutes “abrogate the privilege by implication when fraud is suspected by imposing
3
STATE V. ZEITNER
Opinion of the Court
disclosure obligations on physicians that are entirely inconsistent with the privilege.” Id.
at 223 ¶ 24.
¶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 (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 (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
(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
4
STATE V. ZEITNER
Opinion of the Court
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 physician-
patient confidentiality.” § 36-2903(I). In compliance with this provision, AHCCCS
provides that it “may release safeguarded information without the [beneficiary’s] written
or verbal consent, for the purpose of conducting or assisting an investigation,
prosecution, or criminal or civil proceeding related to the administration of the AHCCCS
program.” Ariz. Admin. Code R9–22–512(A)(2).
¶14 Internally, AHCCCS must investigate every report of suspected fraud,
§ 36-2918.01(A), and it has broad authority to subpoena any witness or record necessary
to support that investigation, A.R.S. § 36-2918(G). If the results of the investigation cause
the AHCCCS director or the director’s designee to believe that fraud has occurred,
AHCCCS must refer the matter to the attorney general. § 36-2918.01(A).
¶15 Within the Attorney General’s Office, Arizona has established the Medicaid
Fraud Control Unit (“MFCU”), which is responsible for investigating and criminally
prosecuting Medicaid provider fraud. See Dep’t of Health and Human Servs., Office of
Inspector Gen., OEI-07-15-00280, Arizona State Medicaid Fraud Control Unit: 2015 Onsite
Review 1, 3–4 (2015) (“2015 Onsight Review”). If the MFCU requests a beneficiary’s
medical record during its investigation of suspected fraud, AHCCCS must release the
5
STATE V. ZEITNER
Opinion of the Court
record without the beneficiary’s consent, “[n]otwithstanding any law to the contrary.”
§ 36-2903(I).
¶16 Zeitner argues that the sole purpose of any release or disclosure to the
attorney general is intended to further “an internal process for evaluating claims of fraud
so that administrative [rather than criminal] measures can be taken.” We disagree.
Instead, we are persuaded by the court of appeals’ conclusion that the legislature
intended claims of fraud to be referred from AHCCCS to the attorney general for
independent investigation and criminal prosecution. See Zeitner, 244 Ariz. at 223 ¶ 25.
The legislature has granted AHCCCS broad independent authority to pursue
administrative and civil penalties against beneficiaries and providers engaged in fraud
against AHCCCS without the attorney general’s involvement. See A.R.S.
§§ 36-2905.04(D), (G) and -2918(B)–(C), (F). More importantly, AHCCCS must provide
medical records to the MFCU without a beneficiary’s consent in cases of suspected fraud,
§ 36-2903(I), and the MFCU prosecutes only criminal Medicaid fraud cases, not civil cases,
see 2015 Onsite Review 4. Although Arizona’s MFCU prosecutes only provider fraud, the
AHCCCS statutes provide that, “[i]n addition to the requirements in state law, the
[M]edicaid fraud and abuse controls that are enacted under federal law apply to all
persons eligible for the system.” § 36-2905.04(C) (emphasis added). Thus, any disclosure
requirements contemplated by the federal Medicaid scheme to control fraud, including
those involving beneficiaries, are expressly adopted by the state Medicaid scheme.
¶17 For these reasons, we conclude that both the federal and state Medicaid
schemes contemplate and require the disclosure of confidential patient information to
assist in the criminal prosecution of providers and beneficiaries who engage in fraud
against the Medicaid system. We next examine whether, despite these federal and state
statutory and regulatory disclosure mandates, the physician-patient privilege prohibits
such disclosure of confidential patient information.
III.
¶18 Arizona’s physician-patient privilege statute, applicable in criminal cases,
prohibits the examination of “[a] physician or surgeon, without consent of the physician’s
or surgeon’s patient, as to any information acquired in attending the patient which was
necessary to enable the physician or surgeon to prescribe or act for the patient.”
§ 13-4062(4). We have held that the privilege protects “[a]ll information obtained by the
physician, whether from examination, testing, or direct communication,” State v. Mincey,
141 Ariz. 425, 439 (1984), and, although framed as a testimonial privilege, the privilege
also protects patient medical records, see Tucson Med. Ctr., Inc. v. Misevch, 113 Ariz. 34, 37
(1976) (citing Tucson Med. Ctr. Inc. v. Rowles, 21 Ariz. App. 424 (1974)).
6
STATE V. ZEITNER
Opinion of the Court
¶19 “The primary purpose of the physician[-]patient privilege is to protect
communications made by a patient to his or her physician for the purpose of treatment.”
Mincey, 141 Ariz. at 439 (citing State v. Santeyan, 136 Ariz. 108, 110 (1983)). The privilege
is also intended “to [e]nsure that [a] patient will receive the best medical treatment by
encouraging full and frank disclosure of medical history and symptoms by a patient to
his doctor.” Lewin v. Jackson, 108 Ariz. 27, 31 (1972). That purpose is served by
“protect[ing] information obtained in the physician-patient relationship from disclosure
to third parties.” Samaritan Health Servs. v. City of Glendale, 148 Ariz. 394, 397 (App. 1986).
¶20 But the physician-patient privilege is not absolute, and the legislature has
imposed limitations when “the public good requires [the privilege to] give way to serve
a greater good.” See Martin v. Reinstein, 195 Ariz. 293, 320 ¶ 96 (App. 1999); see also State
v. Wilson, 200 Ariz. 390, 394–95 ¶ 11 (App. 2001). In many instances, the legislature has
created express exceptions to the privilege within the language of the applicable statutes.
See, e.g., A.R.S. § 46-453(A) (“[T]he physician-patient privilege . . . shall not pertain in any
civil or criminal litigation in which a vulnerable adult’s exploitation, abuse or neglect is
an issue . . . .”); A.R.S. § 23-908(D) (“[I]nformation obtained by any physician or surgeon
examining or treating an injured person shall not be considered a privileged
communication . . . .”).
¶21 In other instances, the legislature has created exceptions by merely
mandating disclosure of information otherwise protected by the physician-patient
privilege. See, e.g., A.R.S. § 13-3806(A) (requiring physicians to disclose to law
enforcement wounds which may have resulted from illegal activity); A.R.S. § 36-621
(requiring physicians to disclose to the health department evidence of contagious or
infectious diseases). Collectively, “[t]hese [exceptions] indicate that the legislature has
found certain societal interests sufficiently important to override the state’s general
interest in protecting confidential patient information from disclosure to third parties.”
Samaritan, 148 Ariz. at 397; see also Johnson v. O’Connor, 235 Ariz. 85, 92 ¶ 29 (App. 2014)
(“The public policy of apprehending and prosecuting criminals often trumps the policy
of the privilege.”) (citing A.R.S. §§ 13-3620(A) and -3620(K)(1)); State ex rel. Udall v.
Superior Court, 183 Ariz. 462, 463, 466 (App. 1995) (holding that the physician-patient
privilege did not shield the medical records of a mother charged with murdering her
infant); Benton v. Superior Court, 182 Ariz. 466, 468 (App. 1994) (“[T]he public’s interest in
protecting victims outweighs the privacy interest reflected in the physician-patient
privilege.”).
¶22 Although we acknowledge that abrogation by implication “is generally
disfavored,” we have concluded that “it is required when conflicting statutes cannot be
harmonized to give each effect and meaning.” Cave Creek Unified School Dist. v. Ducey,
7
STATE V. ZEITNER
Opinion of the Court
233 Ariz. 1, 7 ¶ 24 (2013) (citing UNUM Life Ins. Co. of Am. v. Craig, 200 Ariz. 327, 333
¶¶ 28–29 (2001); Ariz. State Tax Comm’n v. Reiser, 109 Ariz. 473, 479 (1973)). Here, even
absent an express exception, the statutory scheme reflects the legislature’s intent to
exempt AHCCCS from the comprehensive constraints imposed by the physician-patient
privilege. Based on its purpose and scope, the privilege would generally prohibit the
type of disclosures required by the AHCCCS statutes (i.e., disclosure of confidential
patient information to a third party). Nevertheless, physicians providing AHCCCS
services must report “any cases of suspected fraud,” and AHCCCS must investigate these
reports. § 36-2918.01(A). In conducting its investigations, AHCCCS may subpoena and
“examine any person under oath” and “compel the production of any record . . .
necessary to support an investigation.” § 36-2918(G). We cannot infer that the legislature,
in granting such broad investigatory authority, intended the privilege to stand as a
bulwark against AHCCCS fraud investigations. Accordingly, considering the nature of
legislative exceptions to the privilege and the purposes those exceptions serve—the
prosecution of crime or the protection of a “greater good”—we conclude that the
provisions expressly granting AHCCCS the authority to compel disclosure of patient
information to investigate reports of fraud—§§ 36-2903 and -2918(G)—create an
exception to the privilege for internal AHCCCS investigations and proceedings.
¶23 We likewise conclude that the MFCU possesses authority to compel
disclosure of patient information to investigate and prosecute fraud. It is illogical to
believe that the legislature intended AHCCCS to withhold information relevant to a
criminal investigation and prosecution of fraud after expressly mandating that all matters
of suspected fraud be referred to the attorney general. See § 36-2918.01(A). The critical
issue in a Medicaid beneficiary fraud case is whether the beneficiary lied to her physician
to obtain AHCCCS coverage. This is particularly true, as here, where the beneficiary’s
fraud is designed to obtain AHCCCS coverage for services not generally covered by the
program. We fail to see how the attorney general can fulfill his duty—and the
legislature’s intent—to prosecute beneficiary fraud, or how a jury can determine whether
the beneficiary committed fraud against AHCCCS, without having access to the
beneficiary’s and physician’s relevant communications. It is the very information
contained within these communications that forms the foundation of the fraud charges.
Because the physician-patient privilege would prohibit the same disclosures that the
AHCCCS statutes require, we conclude that the privilege cannot be harmonized with the
AHCCCS statutes “to give each effect and meaning.” See Cave Creek, 233 Ariz. at 7 ¶ 24.
Accordingly, we also hold that the AHCCCS statutes implicitly abrogate the privilege in
the attorney general’s investigation and prosecution of suspected AHCCCS fraud.
¶24 Zeitner contends that, even if the statutory scheme abrogates the physician-
patient privilege as to AHCCCS, patient information disclosed to the attorney general
8
STATE V. ZEITNER
Opinion of the Court
(through the MFCU) remains subject to its protections. We are unpersuaded. In addition
to lacking statutory support, this contention does nothing to advance the purpose of the
privilege. After AHCCCS begins its internal investigation of fraud, the protective curtain
of confidentiality—intended to promote full and frank disclosures between a patient and
her physician—is already stripped away. And even if such an interpretation did
somehow advance the privilege’s purpose, the state and public’s legitimate and
substantial interests in deterring and prosecuting fraud and preserving the state’s federal
Medicaid funding carry the day over the patient’s residual privacy interests. See generally
Benton, 182 Ariz. at 468 (holding that in instances where a victim invokes the privilege to
protect her abuser, “the public’s interest in protecting victims outweighs the privacy
interest reflected in the physician-patient privilege”).
¶25 Zeitner next argues that § 36-2903(I) distinguishes between the “use” and
“release” of privileged information and only provides for the “release” of such
information, thereby prohibiting the attorney general from introducing the privileged
information at trial. We disagree. The basic statutory premise of Zeitner’s argument is
flawed. Section 36-2903(I), which contains the distinguishing language between use and
release, requires the AHCCCS director to create rules governing the use or release of
confidential information, which unquestionably includes information generally
protected by the physician-patient privilege. These rules, however, govern only the
actions of the agency and those who contract to provide services for the agency. See Ariz.
Admin. Code R9–22–512(A) (limiting the release of safeguarded information by “[t]he
Administration, contractors, providers, and noncontracting providers”). Consequently,
after AHCCCS refers a matter to the attorney general for prosecution of beneficiary fraud,
the agency’s rules no longer apply, and the distinction between use and release is
immaterial.
¶26 Furthermore, interpreting the AHCCCS statutory scheme as precluding the
use of the very information that the statutes require to be released to support the
investigation and prosecution of fraud would generate an absurd result. See, e.g., State ex
rel. Montgomery v. Harris, 237 Ariz. 98, 101 ¶ 13 (2014) (noting that “[s]tatutes should be
construed sensibly to avoid reaching an absurd conclusion”). Zeitner’s position is
untenable because it would defeat the purpose of those statutes and regulations which
contemplate disclosure and prosecution—to deter and punish AHCCCS fraud by
providers and beneficiaries.
¶27 Zeitner further argues that, even if the privilege is abrogated, it is only
abrogated to the extent expressly contemplated by the AHCCCS statutes—the release or
disclosure of patient medical records, not physician testimony. This argument, too, is
unavailing. We agree with the court of appeals that “[i]t would serve little purpose, and
9
STATE V. ZEITNER
Opinion of the Court
would make little sense, for a patient to retain the power to prevent her physician from
testifying when the physician can be legally compelled to release the patient’s medical
records.” Zeitner, 200 Ariz. at 224 ¶ 26. Arizona courts have expanded the physician-
patient privilege beyond its original testimonial protections to include patients’ medical
records because “the privilege . . . would be rendered meaningless if it were destroyed
the moment that a physician transcribed communications from a patient or knowledge
he has obtained from his examination of a patient into hospital records.” Rowles, 21 Ariz.
App. at 427. Applying that same reasoning in reverse, protecting the physician’s
testimony after compelling disclosure of a patient’s medical records would not advance
the privilege—the curtain of confidentiality has already been pulled aside. Thus, the only
purpose served by restricting disclosure to medical records would be to impede the
attorney general in his investigation and prosecution of AHCCCS fraud, a result wholly
inconsistent with the AHCCCS statutory fraud control scheme.
IV.
¶28 The comprehensive fraud control measures embodied in the federal and
state Medicaid schemes, including sweeping patient record disclosure requirements,
make clear that the physician-patient privilege must yield to the State’s interest in
combatting fraud where providers and beneficiaries are suspected of AHCCCS fraud.
The legislature’s express provisions in the AHCCCS statutes granting AHCCCS broad
authority to investigate matters of suspected fraud—§§ 36-2903 and -2918(G)—
necessarily imply an exception to the privilege for AHCCCS investigations and
proceedings. These same provisions also exhibit an intent to provide law enforcement
access to patient information when investigating and prosecuting AHCCCS fraud,
thereby implicitly abrogating the privilege in the attorney general’s investigation and
prosecution of suspected provider and beneficiary AHCCCS fraud.
¶29 Accordingly, we affirm the court of appeals’ opinion and affirm Zeitner’s
convictions and resulting sentences.
10