ALJDEC decisions subject to certification as final

26C-014-INS · Department of Insurance and Financial Institutions - Insurance · 2026-03-31

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Marlee Penka-Shack,

Petitioner/Insured Member,

vs.

Banner Health and Aetna Health Plan, Inc.,

Real Party in Interest.

No. 26C-014-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: March 25, 2026, at 9:00 AM.

APPEARANCES: Marlee Penka-Shack (“Petitioner”) appeared on her own behalf. Marvin Ruth, Esq. appeared on behalf of Banner Health and Aetna Health Plan (“Banner”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The February 10, 2026, Notice of Hearing, February 18, 2026, Hearing Order, Petitioner Exhibits 1-3, Banner Exhibits A-K were admitted into the evidentiary record.

_____________________________________________________________________

After review of the hearing record in this matter, the undersigned Administrative Law Judge makes the following Findings of Fact and Conclusions of Law, and issues this Recommended Order to the Director of the Department.

FINDINGS OF FACT

Background and Procedure

During all relevant times related to the above-captioned matter Petitioner (DOB 09/11/1996) was insured by Banner.

Petitioner received the following treatments:

On June 27, 2025, July 09, 2025, and July 25, 2025, Petitioner received chiropractic treatment from John Demaio, DC of Maryland. Petitioner was billed $544.00 in total for those visits.

On July 18, 2025, Petitioner received care including diagnostic imaging from Cindy Cai, MD of Maryland. Petitioner was billed $717.00 for the visit.

On July 28, 2025, Petitioner received care including diagnostic imaging from Bryn Burkholder, MD. Petitioner was billed $1,133.00 for the visit.

On July 30, 2025, Petitioner received a radiologic examination from Jamshid Danaie, MD of Maryland. Petitioner was billed $125.00 for the visit.

On July 31, 2025, Petitioner received a new patient evaluation from Devorah Segal, MD of Maryland. Petitioner was billed $1,155.00 for the visit.

On August 20, 2025, Petitioner received genetics counseling services from Kara Anstett, MS of New York. Petitioner was billed $275.00 for the visit.

On August 25, 2025, Petitioner received a new patient evaluation from Abhijit Bhatia, MD of Maryland. Petitioner was billed $435.00 for the visit.

On August 26, 2025, Petitioner received a new patient evaluation and examination from Michael Carper, MD. Petitioner was billed $1,255.00 for the visit.

In or around late-August/early-September 2025, Banner denied the above-referenced claims under Codes IDI and V77 – citing that each provider was out-of-network.

On September 09, 2025, Petitioner submitted a timely appeal.

On November 06, 2025, Banner issued a Final Decision that noted, in pertinent parts, its prior decision was upheld because Petitioner’s policy usually generally “pays for covered services only within a specific geographic area, called a service area” and “pays only when you get care from network providers.” (Emphasis in original.) Exceptions include emergency or urgent care services. Banner further noted that none of Petitioner’s treating providers were in-network; as they were all outside of Cochise, Coconino, Gila, Maricopa, Pima, Pinal, and Yuma counties, and none of the claims had been billed as emergent.

On December 19, 2025, a Request for External Review was timely submitted to Banner on behalf of Petitioner, which was forwarded to the Department.

On January 13, 2026, Banner issued a Notice of Determination that informed Petitioner the Department had upheld its denial. Specifically, the Department noted that reviewed documentation did not establish emergent medical services, precertification in place prior to rendering of non-emergent services, or that any identified provider was included in Banner’s health maintenance organization (“HMO”) network.

On January 26, 2026, a Notice of Appeal and Request for State Fair Hearing was received on behalf of Petitioner.

On January 29, 2026, the above-captioned matter was sent to the Office of Administrative Hearings (“OAH”), an independent state agency, for adjudication to address the issue of whether the services sought by Petitioner are covered benefits under Banner’s terms. A formal Notice of Hearing was issued February 10, 2026.

Hearing Evidence

Petitioner testified on her own behalf. Banner did not call any witnesses. The Department was not party to these proceedings. The substantive evidence of record is as follows:

Petitioner testified that she utilized Banner’s website to select each provider at issue and verified that they were all in-network. She then contacted each provider to verify that they were all indeed in-network, and was advised by each that they were. Petitioner attended each medical appointment under the belief that her only expense would be her copay.

Petitioner testified that she did not observe anywhere in Banner’s portal signage to indicate or express geographical limitations of her plan, and noted that it failed to plainly state coverage was not extended outside of the State of Arizona.

Per Petitioner, after she received Banner’s Final Decision, which instructed her to utilize its online “find a provider” tool, she did so and the search returned multiple providers that were physically located in the State of Maryland. None of the providers Petitioner located using Banner’s online tool, that were practicing outside of Arizona, included any of the underlying providers who treated Petitioner in this matter.

On August 14, 2023, Petitioner was provided with the following information by the office manager of chiropractor John Demaio, DC of Maryland:

Per our conversation, I spoke with Aetna and confirmed we are in network with your plan. However, your plan does not cover treatment out of state and they have you listed as a resident of Arizona so because we are in Maryland claims are getting denied. They did suggest a reconsideration request to prove medical necessity and that then it would likely be approved.

I will resubmit for reconsideration ASAP and let you know the results.

The call reference from my conversation with Aetna today was #25874873.

(All errors in original.)

Additional Evidence

Banner’s policy manual is ninety-nine (99) pages and provides, in pertinent parts, as follows:

Page 4. This is your policy. It describes your covered services – what they are and how to get them. The second document is the schedule of benefits. It tells you how we share expenses for covered services and explains any limits – like when your policy covers only a certain number of visits. Each may have riders or amendments attached to them. These change or add to the document.

Page 8. Your policy provides covered services. These are:

• Described in this section.

• Not listed as an exclusion in this section or the General policy exclusions section.

• Not beyond any limits in the schedule of benefits.

• Medically necessary. See the How your policy works – Medical necessity and precertification requirements section and the Glossary section for more information.

• Services that are not prohibited by law. See Services not permitted by law in the General policy exclusions section for more information

Pages 44, 49, and 50. Your HMO policy helps you get and pay for a lot of, but not all, health care services. The policy usually pays only when you get care from network providers.

Our provider network is there to give you the care you need. You can find network providers and see important information about them by logging in to the member website. There you’ll find our online provider directory.

Your policy generally pays for covered services only within a specific geographic area, called a service area. There are some exceptions, such as for emergency services, urgent care, and transplant services.

We have contracted with providers in the service area to provide covered services to you. These providers make up the network for your policy. To get network benefits, you must use network providers. There are some exceptions:

• Emergency services – see the description of emergency services in the Coverage and exclusions section.

• Network provider not reasonably available – You can get services from an out-of-network provider if an appropriate network provider is not reasonably available. You or your provider must request approval from us before you get the care. Contact us for

assistance.

• Transplants

There are several general requirements for the policy to pay any part of the expense for a covered service. They are:

• The service is medically necessary

• You get your care from a network provider

• You or your provider precertifies the service when required

Generally, your policy and you share the cost for covered services when you meet the general requirements. But sometimes your policy will pay the entire expense, and sometimes you will. For details, see your schedule of benefits and the information below. You pay the entire expense when:

• You get services or supplies that are not medically necessary.

• Your policy requires precertification, your physician requests it, we deny it and you get the services without precertification.

• You get care from an out-of-network provider, except for emergency, urgent care and transplant services.

Banner’s public website contains the following advisement:

Important notice about participating providers

Provider information contained in this directory is gathered from information that we receive from our provider network and updated 6 days per week, excluding Sundays, or interruptions due to system maintenance, upgrade or unplanned outages. This information is subject to change at any time. Please check with the provider before scheduling your appointment or receiving services to confirm he or she is participating in your health plan’s network. Not all outpatient service providers located at in-network hospitals are in-network providers. Please confirm whether such a provider is a member of the network before obtaining services from the provider. To obtain office staff language information, please call the provider office directly.

(Emphasis in original.)

Closing Arguments

In closing, Banner argued that Petitioner knew or should have known that out-of-state services were not covered, absent exigency and/or medical necessity, per applicable Banner policies that specify precertification is required prior to receipt of non-emergent services by an out-of-network provider. As such, Banner opined that it was not required to cover costs associated with Petitioner’s unauthorized treatments related to this matter.

In closing, Petitioner argued, overall, that she acted in good faith and was bamboozled by misleading information provided by Banner, which robbed her of her right to make medical and financial decisions for herself. Per Petitioner, but for Banner’s online tool, which listed out-of-state providers as being in-network, she would not have unwittingly accumulated thousands of dollars in medical debt due to lack of coverage.

CONCLUSIONS OF LAW

This matter lies with the Department’s jurisdiction and was properly brought before OAH for adjudication.

Petitioner bears the burden of proof to establish by a preponderance of the evidence that the terms of applicable Banner policies provide coverage for services requested.

A preponderance of the evidence means proof which leads the trier of fact to find that the existence of the contested fact is more probable than its nonexistence.

Ariz. Rev. Stat. § 20-2537(M) specifically provides that “the independent review organization, the director or the office of administrative hearings may not order the health care insurer to provide a service or to pay a claim for a benefit or service that is excluded from coverage by the contract.”

Statutes shall be liberally construed to affect their objects and to promote justice. Statutes should be interpreted to provide a fair and sensible result.

The Tribunal is required to apply equitable principles when rendering decisions. The application of equity entails offering a remedy to avoid an unconscionable or unjust result.

In crux of the case at bar is whether the requested services were, in fact, covered – not excluded from, and if so, whether said services should have been covered or otherwise paid for by Banner under the applicable terms of its policies.

Here, Petitioner was advised as early as August 14, 2023, by a treating provider in Maryland that claims from his office were being denied coverage because Petitioner’s HMO plan did not cover treatment outside of Arizona. Utilizing that same plan, Petitioner was then seen by multiple out-of-state providers between June 27, 2025, and August 26, 2025, for nonemergent services. Nothing in the record indicates that treatments received were due to prior authorization, precertification, or medical necessity.

The Tribunal is not insensitive to Petitioner’s subjective beliefs, particularly in light of information from Banner’s website that could be considered objectively unclear. However, Petitioner’s beliefs were ultimately unreasonable given information she received in 2023, coupled with the fact that none of the out-of-state providers she sought treatment from in 2025 were listed as being in-network on Banner’s website.

Therefore, based on the credible evidence of record, it must be concluded that Petitioner did not sustain her burden of proof by the requisite evidentiary standard in this matter. Consequently, her appeal must be dismissed.

RECOMMENDED DECISION

In view of the foregoing,

IT IS RECOMMENDED that Petitioner’s appeal be dismissed pursuant to Ariz. Rev. Stat. § 20-2537(M) and applicable Banner policies, with prejudice.

NOTICE

In the event of certification of the Administrative Law Judge Decision by OAH’s Director, the effective date of the Order will be five (5) days from the date of that certification.

Done this day, March 31, 2026.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted electronically to:

Charles Bassett, Interim Director

Department of Insurance and Financial Institutions – Insurance

100 N. 15th Ave., Ste. 261

Phoenix, AZ 85007-2630

[email redacted]

Marlee Penka-Shack, Petitioner

1400 E. Bethany Home Rd., Unit 32

Phoenix, AZ 85014

[email redacted]

Marvin C. Ruth, Esq.

Kathy A. Steadman, Esq.

Coppersmith Brockelman PLC, Counsel for Banner

2800 N. Central Ave., Ste. 1900

Phoenix, Arizona 85004

[email redacted]

Banner Health and Aetna Health Plan, Inc., Real Party at Interest

c/o Brian Charlton, Pamela Rowland

2000 River Edge Pkwy., Ste. 300

Atlanta, GA 30328

[email redacted]

By: OAH Staff