ALJDEC decisions subject to certification as final

26C-047-INS · Department of Insurance and Financial Institutions - Insurance · 2026-06-04

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of an appeal by:

Abigial Herrick

Petitioner/Insured Member,

of an Adverse Decision by

Health Net of Arizona, Inc.

Real Party in Interest/Insurer.

No. 26C-047-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: May 29, 2026 at 9:00 AM.

APPEARANCES: Abigail Herrick (“Petitioner”) appeared on her own behalf. Michelle Jabben appeared on behalf of Health Net of Arizona Inc., dba AZ Complete Health (“Insurer” and “Health Net”).

ADMINISTRATIVE LAW JUDGE: Jenna Clark.

EXHIBITS ADMITTED INTO EVIDENCE: The Notice of Hearing, Hearing Order issued May 01, 2026, and Insurer Exhibits 1-14 were admitted into the 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 Arizona Department of Insurance & Financial Institutions (“Department”).

FINDINGS OF FACT

Background and Procedure

During all relevant times related to the above-captioned matter Petitioner (DOB 10/26/1981) was insured by Health Net.

On December 15, 2025, Health Net received an Insurance Claim Form on behalf of Petitioner for $1,406.00 in services rendered by MicroGenDX December 01-05, 2025. Specifically, for five (5) units billed under CPT Code 87481 and single units under 0112U and 87507.

On December 31, 2025, Health Net issued an Explanation of Benefits (“EOB”) that denied Petitioner’s claim for laboratory services by an uncovered provider. The EOB included the following advisements, in pertinent parts:

Out-of-Network Provider Payments:

Provider names are included in the EOB. "Out-of-Network" (shown to the right of the provider name) means the provider who rendered services to you was not in our network. If you have received services from an out-of-network provider, you should expect the following:

To be responsible for paying the amount billed by the provider for non-emergent services rendered if you chose to see an out-of-network provider without proper prior authorization or approved exception.

To be responsible for paying the amount billed by the provider for all non-covered services. Non-covered services do not appear in your member cost share and are separately payable to the provider.

You should not be billed more than your Member Cost Share Responsibility for covered services when the services were received from an out-of-network provider and are covered through a network exception, are emergent, or the services were rendered at an in-network facility. In these instances, we pay out-of-network providers a reasonable rate to satisfy your liability in full after your member cost share responsibility is paid. You should not be balance-billed for any difference between the provider bill amount and the amount Ambetter from Arizona Complete Health paid the provider for covered services. However, if services were provided at an in-network facility and you consented to receiving the services from the out-of-network provider after you were notified, you could be billed in excess of your Member Cost Share Responsibility for the non-allowed charges.

* * *

“Out-of-network” describes providers and facilities that haven’t signed a contract with your health plan. Out-of-network providers may be permitted to bill you for the difference between what your plan agreed to pay and the full amount charged for a service. This is called “balance billing.” This amount is likely more than in-network costs for the same service and might not count toward your annual out-of-pocket limit.

* * *

To file a complaint with the Arizona Department of Insurance and Financial Institutions, go to https://difi.az.gov/complaint

(Emphasis in original.)

On January 28, 2026, Health Net received an appeal on behalf of Petitioner.

On February 16, 2026, Health Net issued an Initial Appeal Decision Letter that advised Petitioner the EOB determination was upheld. Specifically, Health Net determined that MicroGenDX was not a participating provider on Petitioner’s date of service. Additionally, Health Net noted that the claim form and test requisition form both list the referring provider as Petitioner with a National Provider Identifier (“NPI”) of [number redacted]. Health Net further noted that, "Self-referrals under this health plan are limited to In-Network specialists. Services received from a non-network provider may be denied by us and you may be held financially responsible for the charges."

On February 24, 2026, Health Net received an External Independent Review request from Petitioner.

On March 24, 2026, the Department issued a Notice of Determination per Arizona Revised Statute (“Ariz. Rev. Stat.”) 20-2537(M) regarding Petitioner’s external review request whereby the agency concluded that the underlying laboratory testing services at issue were performed by a non-contracted provider and not covered under the terms of Petitioner’s health insurance policy. The Department included highlighted sections from Health Net’s Evidence of Coverage policy:

Pages 109, 114, 117, GENERAL NON-COVERED SERVICES AND EXCLUSIONS

In addition to the limitations and exclusions described in the section titled, Major Medical Expense Benefits the following services are not covered or are limited in benefit application unless expressly stated herein:

Family Member (Services Provided by) and Member Self-Treatment

Professional services, supplies or provider referrals received from or rendered by a non- Ambetter from Arizona Complete Health contracted immediate family member (spouse, domestic partner, child, parent, grandparent or sibling related by blood, marriage or adoption) or prescribed or ordered by a non-Ambetter from Arizona Complete Health contracted immediate family member of the member; Member self-treatment including, but not limited to self prescribed medications and medical self-ordered services.

Non-Network Provider (Services Rendered by)

Benefits and services from non-network providers, except in the case of a medical emergency or under an approved network exception.

(Emphasis in original.)

On an unknown date, a timely Notice of Appeal and Request for State Fair Hearing was received on behalf of Petitioner.

On April 08, 2026, the above-captioned matter was referred 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 April 21, 2026.

Hearing Evidence

Petitioner testified on her own behalf. Michelle Jabben testified behalf of Health Net. The Department was not party to these proceedings. The substantive evidence of record is as follows:

Health Net’s Schedule of Benefits (“SOB”) is a summary of services covered under Petitioner’s plan. Per the SOB – Silver Plan, members are responsible for deductibles, copayments and/or coinsurance applied to eligible service expenses. For services that require prior authorization, network providers must obtain authorization from us prior to providing a service or supply to a member. Out-of-Network diagnostic testing, including lab work, imaging, and primary care or specialty office visits are not covered.

Petitioner testified that she confirmed that the underlying laboratory services were covered on multiple occasions with a representative for Health Net, and was explicitly advised that the services were “100% covered” with a “$5.00 copay” per order and no deductible, regardless of laboratory location. Petitioner denied ever being advised that her selected laboratory was out-of-network, prior authorization was required, or that coverage would differ based on laboratory location. Per Petitioner, she relied on the “clear and repeated confirmations” received by Health Net’s representatives when choosing to proceed with the lab work in question.

Ms. Jabben testified that the underlying claim was denied due to lack of coverage for investigative testing, the laboratory at issue being a non-participating provider, and because the orders were self-prescribed by Petitioner.

Additional Evidence

On November 24, 2025, Health Net received a call from Petitioner regarding laboratory services at MicroGenDX. Petitioner advised that she was the provider for the member and gave her NPI number to the representative. When the representative asked her if she obtained MicroGenDX’s information from its in-network participant website, Petitioner replied that she obtained their information via a Google search. After the representative ran the query, she was unable to locate MicroGenDX as being in-network. However, after placing Petitioner on a brief hold, the representative returned and confirmed that the laboratory was indeed in-network. Petitioner received a Reference Call ID from the representative and confirmation that a copay at MicroGenDX would be $5.00.

On November 25, 2025, Health Net received another call from Petitioner regarding laboratory services. The representative informed Petitioner that services provided at out-of-network laboratories would not be covered. Petitioner then provided the representative with MicroGenDX’s NPI number and was informed that services there were in-network. Petitioner received a new Reference Call ID and confirmation that a copay at MicroGenDX would be $5.00.

On December 05, 2025, Health Net received another call from Petitioner regarding laboratory service coverage. When asked to confirm her primary healthcare provider’s contact information, Petitioner retorted, “I don’t have a primary [healthcare provider], so whatever.” Before she addressed Petitioner’s inquiry the representative issued the following advisement:

This is not a guarantee of payment. Benefits are subject to member eligibility and provider participation at the time services are rendered. Prior authorization and/or referral may be required prior to services being rendered.

The representative then confirmed that MicroGenDX was in-network, that a $5.00 copay would be required at the time of service, no coinsurance, a referral was not necessary, but that prior authorization would be required for the CPT Code Petitioner provided. The representative clarified that Petitioner’s provider would have to submit an authorization code before Petitioner could receive the sought service. Petitioner then questioned how authorization could be granted if she was the practitioner/provider. Petitioner was advised to contact Provider Services for an answer to her question, but informed that generally she would have to fill out a prior authorization form and HIPAA release, and fax them in for review. Petitioner was then transferred to the Prior Authorization Department and instructed to ask for a form.

Closing Arguments

Respondent declined to provide a closing argument.

In closing, Petitioner argued that Respondent should be required to cover the full amount of the claims submitted, save the $5.00 copay required for each order. Petitioner opined that the denial of coverage unfairly shifted the cost to her after services were rendered, which contradicted the information she had been provided by Health Net’s representatives and “flies in the face” of her appropriate due diligence.

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 Health Net under the applicable terms of its policies.

Here, Petitioner failed to establish that she obtained prior authorization for the laboratory services at issue, or that said services were emergent and exempt from the prior authorization requirement. Nothing in the record indicates that obtained testing were due to precertification or medical necessity.

The Tribunal is not insensitive to Petitioner’s subjective beliefs, particularly in light of earlier information she received from Health Net representatives. However, the record clearly establishes that Petitioner was captured admitting that she did not have a primary healthcare provider and that she was a practitioner seeking self-prescribed testing. It is undisputed that on December 05, 2205, Petitioner was advised that prior authorization was required for the testing she sought, and she failed to obtain it prior to obtaining the tests at MicroGenDX.

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 with prejudice pursuant to Ariz. Rev. Stat. § 20-2537(M) and applicable Health Net policies.

IT IS FURTHER RECOMMENDED that Health Net’s December 31, 2025, EOB and the Department’s March 24, 2026, Notice of Determination be affirmed.

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, June 05, 2026.

Office of Administrative Hearings

/s/ Jenna Clark

Administrative Law Judge

Transmitted by either mail, e-mail, or facsimile to:

Charles Bassett, Interim Director

Alena Caravetta, Regulatory Legal Affairs Officer

Audrey Franklin, Health Care Appeals Supervisor

Jeanette Villines, Health Care Appeals Analyst

Department of Insurance and Financial Institutions - Insurance

100 N. 15th Ave., Ste. 102, 261

Phoenix, AZ 85007-2630

[email redacted]

[email redacted]

[email redacted]

Abigial Herrick, Petitioner

19756 W. Roma Ave.

Litchfield Park, AZ 85340-4802

[email redacted]

Health Net of Arizona, Insurer

c/o Michelle Jabben

1850 W. Rio Salado Pkwy., Ste. 211

Tempe, AZ 85281

[email redacted]

By: OAH Staff