ALJDEC decisions subject to certification as final

26C-058-INS · Department of Insurance and Financial Institutions - Insurance · 2026-07-09

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

In the Matter of:

Jacob Glasser

Petitioner/Insurer

Blue Cross and Blue Shield of Arizona, Inc.

Insurer/Real Party in Interest

No. 26C-058-INS

ADMINISTRATIVE LAW JUDGE DECISION

HEARING: June 19, 2026

APPEARANCES:

Petitioner: John Glasser

Jacob Glasser

Respondent: John Lytle, Esq.

Matthew Kingry

ADMINISTRATIVE LAW JUDGE: Nedra-Su Kawasaki

EXHIBITS ADMITTED INTO EVIDENCE: Respondent Exhibits 1-8.

_____________________________________________________________________

FINDINGS OF FACT

Background and Procedure

Petitioner, Jacob Glasser was enrolled in an Individual HMO ACA StandardHealth with Health Choice Base On Marketplace (plan) with an effective date of January 1, 2025.

On December 5, 2025, Jeremy Cohran, Physician’s Assistant (PA) with Mayo Clinic, submitted a prior authorization request on behalf of Petitioner for a consultation with the Aerospace Medicine Clinic at Mayo Clinic on December 15, 2025. The prior authorization request included a copy of the referral triage pre-consultation assessment note dated October 29, 2025, from Mayo Clinic, which documented Petitioner’s complaints, symptoms, specific issues, diagnoses and orders placed.

On or about December 6, 2025, Respondent denied the prior authorization request for “Other Evaluation and Management Services”, stating, “Dr. Jeremy Cohran is not part of your health plan’s health maintenance organization (HMO) network”.

On December 18, 2025, Petitioner timely appealed Respondent’s denial of his request.

On January 16, 2026, Respondent issued a Notice of Appeal Resolution denying Petitioner’s appeal, finding that the request was to see an out-of-network provider for other evaluation and management services; however, Petitioner’s plan did not include out-of-network services, and there were appropriate in-network options available.

On February 5, 2026, Petitioner requested an External Independent Review of Respondent’s denial.

On March 5, 2026, the Arizona Department of Insurance and Financial Institutions (Department) issued a Notice of Determination, upholding Respondent’s denial, based on a finding that the requested services from an out-of-network provider were not covered under the terms of Petitioner’s policy and Respondent was not directed to provide benefits for the disputed services.

Petitioner requested a State Fair Hearing, and a Notice of Hearing was issued on May 6, 2026, setting a hearing to convene on June 19, 2026, at the Office of Administrative Hearings, an independent state agency.

The hearing was held on June 19, 2026.

Hearing Evidence

The October 29, 2025, Mayo Clinic assessment note documented diagnoses of dyspnea on exertion (R06.09), Fatigue (R53.83), Post COVID-19 Condition (U09.9), and Sickness Altitude Personal History (Z77.9). Additionally, the following orders were placed: arterial blood gas (ABG) – pulmonary clinic; comprehensive metabolic panel; ferritin; iron and total iron-binding capacity; lactate; phosphorus inorganic; urinalysis, with microscopic: urine, midstream; FL sniff test; aerospace medicine – consult (clinic); and an AOM OCC Capnic challenge test.

The December 6, 2025, denial of Petitioner’s prior authorization request provided the following, in pertinent part:

Your plan covers this service only when you receive it from a provider or health service center in your plan's HMO network. The only exceptions are medical emergencies or if you cannot get a covered service from a

network provider.

In his December 18, 2025, appeal request Petitioner provided that he had been ill for over two years and continued without relief, despite consulting with physicians in multiple medical specialties and undergoing numerous tests. He had made dozens of calls to the Plan and engaged with the Plan’s Care Team, however unsuccessfully. Petitioner noted that he had identified a physician with Mayo Clinic who could potentially address and treat his symptoms and requested authorization to consult with him, especially as there were no other physicians who specialized in his symptoms. Further, Petitioner noted that his in-network primary care physician (PCP) had referred him to the Mayo Clinic physician.

The January 16, 2026, Notice of Appeal Resolution documented the following ‘Facts of the Case,’ in pertinent part:

The member is requesting approval for this service to address his ongoing dyspnea, fatigue, Post‐COVID‐19 condition (unspecified), and exposure‐related health concerns, which have severely affected his daily functioning for nearly three years. Despite seeing multiple in‐network providers—including three primary care physicians, a neurologist with brain MRI, an ENT with vertigo testing, an ophthalmologist, a cardiologist with Holter monitoring, a gastroenterologist who identified a small sliding hiatal hernia, and an endocrinologist—he still has no diagnosis and continues to experience debilitating symptoms that prevent him from

driving, working, or socializing.

After extensive evaluation and research, he located Dr. Jan Stepanek at the Mayo Clinic, an out‐of‐network specialist in high‐altitude illnesses and unexplained shortness of breath, whose unique expertise directly aligns with the member’s symptoms, which began after a COVID infection in 2022 while living at 6,900 feet elevation in Flagstaff, Arizona. . . . his primary care provider, Dr. Lonquest, issued a referral.

Given that no in‐network provider offers comparable specialization, and considering the member’s prolonged suffering, inability to maintain daily function, and extensive history of inconclusive testing . . .

The Department’s March 5, 2026, Notice of Determination provided the following, in pertinent part:

Page 8, Your Health Plan Benefits, What’s Covered

Your AZ Blue health plan covers a wide range of services and items to help you protect your health. The services and items covered include all those required by federal and state law.

A service or item is covered when it is all of these:

A benefit of this plan;

Approved when prior authorization is required (see Prior Authorization for more information);

Given by a contracted, network provider acting within the scope of their practice as determined by AZ Blue or AZ Blue’s contracted vendor(s) with one exception: A network provider is not required for emergencies, or when AZ Blue has approved use of an out- of-network provider through prior authorization;

Has a referral from the member’s designated PCP, if a referral is required;

Medically or dentally necessary as determined by AZ Blue or AZ Blue’s contracted vendor(s);

Not excluded by this plan. (That is, the service or item is not listed in the What’s Not Covered section of this Base Benefit Book, or noted in this section as “Not covered”);

Not experimental or investigational as determined by AZ Blue (does not apply to covered services that are part of an approved clinical trial; see Clinical Trials in this section for more information); and

Provided while this plan is in effect, and while you are eligible for benefits

AZ Blue decides if the service or item meets all factors for coverage.

Pages 58-60, Prior Authorization, Factors we consider in evaluating a prior authorization request for services or medications:

If the service will be performed in the appropriate care setting

If the treating provider or location of services is a network provider

Whether the service is medically necessary (based on your medical or treatment history) or investigational

Whether you have reached your coverage limit

Whether your coverage is active or not (has lapsed)

Your plan’s limitations and exclusions

Page 60, Prior authorization for network cost share for services from an out of network provider

If there is no network provider who offers the covered services you need, your treating provider may contact AZ Blue and ask for prior authorization for the network cost share for services you will receive from an out-of-network provider. AZ Blue will first look for a network alternative. If we determine that a network provider is available to treat you, AZ Blue will not provide prior authorization for services from an out-of-network provider.

. . . .

Per Arizona Revised Statute 20- 2537(M): “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.”

At hearing, Mr. John Glasser, Petitioner’s father, testified in support of the facts as detailed above. Mr. Glasser testified that multiple requests had been made to Respondent to provide the contact information for any physician within the Plan’s network that could diagnose and treat Petitioner’s condition, however, none was provided.

Matthew Kingry, Director of Reimbursement Services, testified on behalf of Respondent that on review of Petitioner’s appeal he made the determination to deny the appeal and subsequently issued the Notice of Appeal Resolution. Mr. Kingry testified, generally, that a prior authorization request is reviewed based on what service is being requested and the physician whose services are being requested. He further testified that he denied the request for a consult with Dr. Stepanek of Mayo Clinic because Dr. Stepanek’s “licensed taxonomy was internal medicine” and “[Respondent had] a robust network of physicians that . . . cover[ed] . . . the same level of specialty.” Mr. Kingry stated, generally, that to review an appeal, Respondent researched which physicians and practitioners the member had seen, “to make sure [Respondent did not] necessarily request or require [the member] to go see somebody they [had] already seen. [Respondent] want[ed] to make sure that there [were] available options for the beneficiary network.” Mr. Kingry admitted that Petitioner “absolutely . . . [had] a robust history of going to see the medical doctor . . . but in this case . . . Dr. Stepanek [did] not have any board certification in aerospace science medicine, nor [was] there a network adequacy requirement to have aerospace medicine within an insurance plan product.” Mr. Kingry testified, “[Respondent believed] that [Respondent had] physicians within [the] network that [could] assess [Petitioner].”

CONCLUSIONS OF LAW

This matter is within the jurisdiction of the Director of the Arizona Department of Insurance pursuant to A.R.S. § 20-2537(H) and A.R.S. § 41-1092.02.

A.R.S. § 20-2537(M) provides that “[t]he 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.”

Complainant bears the burden of proof and the standard of proof on all issues is by a preponderance of the evidence.

A preponderance of the evidence is “such proof as convinces the trier of fact that the contention is more probably true than not.”

A preponderance of the evidence is:

The greater weight of the evidence, not necessarily established by the greater number of witnesses testifying to a fact but by evidence that has the most convincing force; superior evidentiary weight that, though not sufficient to free the mind wholly from all reasonable doubt, is still sufficient to incline a fair and impartial mind to one side of the issue rather than the other.

Petitioner’s plan states in pertinent part:

What’s Covered

A service or item is covered when it is all of these:

Benefit of this plan;

Approved when prior authorization is required (See Prior Authorization for more information);

Given by a contracted, network provider acting within the scope of their practice as determined by BCBSAZ or BCBSAZ’s contracted vendor(s) with one exception: A network provider is not required for emergencies, or when BCBSAZ has approved use of an out-of-network provider through prior authorization;

Has a referral from a member’s designated PCP, if a referral is required;

Medically or dentally necessary as determined by BCBSAZ or BCBSAZ’s contracted vendor(s);

Not excluded by the plan. (That is, the service or item is not listed in the What’s Not Covered section of this Base Benefit Book, or noted in this section as “Not covered”);

Not experimental or investigational as determined by BCBSAZ (does not apply to covered services that are part of an approved clinical trial; see Clinical Trials in this section for more information); and

Provided while this plan is in effect, and while you are eligible for benefits.

BCBSAZ decides if the services or items meet all factors for coverage

Ask for Prior Authorization When Required

Some covered services and prescriptions need an “okay” from BCBSAZ before you get them. Getting an okay is called prior authorization.

What’s Not Covered

The following services and/or expenses are not covered by your plan unless we’ve noted otherwise in this Benefit Book. That means that no benefits will be paid for any expenses for these services.

These exclusions do not apply to services that must be covered according to federal or state law.

. . . .

Services performed by out-of-network providers, except emergencies, urgent telehealth services, eosinophilic gastrointestinal disorder formula, medical foods, and services from an out-of-network provider that have received prior authorization.

Out-of-Network Providers

You have coverage for services from out-of-network providers only for emergencies, urgent telehealth services, EGID formula, medical foods, and services from an out-of-network provider that have received prior authorization.

How to Get a Prior Authorization

Prior authorization for network cost share for services from an out-of-network provider

If there is no network provider who offers the covered services you need, your treating provider may contact BCBSAZ and ask for prior authorization for the network cost share for services you will receive from an out-of-network provider.

In the instant matter, in its denial of Petitioner’s prior authorization request because Petitioner’s plan did not include out-of-network benefits, Respondent relied on and cited to the plan Benefit Book. However, the Benefit Book did not explicitly exclude out-of-network provider services. In fact, page 55 of the Benefit Book, upon which Mr. Kingry relied to deny Petitioner’s appeal, provides, “You have coverage for services from out-of-network providers only for emergencies, urgent telehealth services, EGID formula, medical foods, and services from an out-of-network provider that [has] received prior authorization.” The Department relied on the following sections in issuing the Notice of Determination provided, “A network provider is not required . . . when [Respondent] has approved use of an out-of-network provider through prior authorization,” and “If there is no network provider who offers the covered services you need, your treating provider may contact AZ Blue and ask for prior authorization for the network cost share for the services you will receive from an out-of-network provider.” Contrary to Respondent’s and the Department’s issued determinations, the policy sections cited to support the denial did not exclude out-of-network benefits, rather they provided that non-emergency out-of-network services were a benefit of Petitioner’s plan, if prior authorization was received. Respondent’s denial based only on the fact that the request was from an out-of-network provider was not appropriate as against Respondent’s own policy provided in the Benefit Book.

The Notice of Appeal Resolution, the Notice of Determination, and Mr. Kingry’s testimony at hearing all alluded to the suggestion that, even if, arguendo, out-of-network services were a benefit of Petitioner’s plan, there were appropriate in-network options available to address his symptoms, such as evaluation and treatment by a pulmonologist or cardiologist; therefore, out-of-network services could not be approved. In this case, the prior authorization request was submitted with a medical assessment note detailing the history of Petitioner’s symptoms, evaluations and treatments tried, diagnoses, and orders placed. The assessment note and prior authorization request were from Mayo Clinic Aerospace Medicine and referenced altitude sickness, among other diagnoses. Based on Mr. Kingry’s testimony that in making a determination whether to approve a prior authorization request Respondent researched which physicians a member had already seen and the physician to whom the member was being referred, Petitioner’s request would have been denied despite a review of the medical assessment note and Petitioner’s medical records. In fact, Mr. Kingry testified that his review of Petitioner’s appeal revealed that he had a “robust” history of seeking treatment for his symptoms, but Mr. Kingry believed that Respondent had appropriate in-network physicians. The evidence established that Petitioner sought treatment for his symptoms for over two years undergoing evaluations and tests performed by providers across multiple network specialties including pulmonology and cardiology, and the prior authorization request was to see a physician who specialized in aerospace medicine and related conditions specific to Petitioner’s symptoms. Additionally, Petitioner testified, without refute, that each time Respondent denied his requests citing “appropriate in-network options,” he requested Respondent identify the physicians so as to seek treatment, to no avail.

At the hearing, to support Respondent’s denial, Mr. Kingry presented the prior authorization in strict isolation—independent of the included medical record—and applied a hyper-technical, restrictive semantic view that failed to consider the evidentiary record as a whole. Specifically, Mr. Kingry testified that per the prior authorization request form submitted on behalf of Petitioner, the requested service was a consultation with Dr. Stepanek, whose “licensed taxonomy” was an internal medicine doctor with a “passion” for aerospace medicine. Mr. Kingry argued that the denial was appropriate because Respondent had a robust network of internists with whom Petitioner could consult.

Respondent argued that per A.R.S. § 20-2537(M), Respondent could not be ordered by the Department, Director, or Office of Administrative Hearings to provide a service or pay a claim for a benefit or service that was excluded from coverage by the contract. However, neither the benefit nor the requested service, in the instant matter, were excluded from coverage. As Respondent acknowledged, the service requested was a consultation. The Benefit Book provides an index explicitly identifying the excluded benefits and services, stating, “The following services and/or expenses are not covered by your plan unless we’ve noted otherwise in this Benefit Book. That means that no benefits will be paid for any expenses for these services. These exclusions do not apply to services that must be covered according to federal or state law.” The requested service—Consultation—was not identified in the exclusions index. Therefore, consultations were a covered service. The requested benefit—coverage of services provided by an out-of-network provider—was identified in the exclusion index. Specifically identified as “Services performed by out-of-network providers.” However, the exclusion provided an exception for “services from an out-of-network provider that [has] received prior authorization.” Therefore, receiving services provided by an out-of-network physician was not, on its own, an excluded benefit. Thus, the Notice of Appeal Resolution erroneously claimed, “There [were] no out-of-network benefits under [Petitioner’s] plan.”

Finally, Respondent argued that because Petitioner’s plan excluded from coverage services received from out-of-network providers, a prior authorization request to receive out-of-network services was appropriately denied. However, even if, arguendo, the out-of-network benefit was not excluded, such services were only covered with prior authorization. Further, per the Benefit Book, Respondent was the sole determiner of whether services met all coverage criteria, including whether prior authorization was appropriate and granted. Additionally, as noted above, Respondent argued that per A.R.S. § 20-2537(M), because Petitioner’s plan excluded out-of-network benefits, Respondent could not be ordered to approve Petitioner’s prior authorization request. This argument is untenable, based a circular fallacy. The argument presupposes that out-of-network services are excluded from the plan to conclude that statute prevents Respondent from being ordered to approve the prior authorization. Furthermore, the argument presents a contradictory alternative, asserting arguendo, that out-of-network services are a benefit, but are excluded in all non-emergency cases unless Respondent approves a prior authorization. Based on this logic, Respondent concluded that its denial of the prior authorization effectively excluded the out-of-network services from coverage, thereby invoking A.R.S. § 20-2537(M) barring an order requiring Respondent to approve the request. Respondent’s argument necessarily implies that Respondent—as the drafter of the Benefit Book—excluded out-of-network services from coverage, unless it granted prior authorization. Under this framework, if Respondent denies prior authorization of out-of-network services, the services thereby fail to meet coverage criteria. Consequently, Respondent frames the benefit as an excluded service that it cannot be ordered to approve. To accept this circular argument, renders external or judicial review purely performative, which is an absurd result. Respondent cannot utilize its discretionary authority to deny a service as the sole mechanism for creating the exclusion itself.

The undersigned Administrative Law Judge concludes that Petitioner established by a preponderance of the evidence that no network provider was available to offer the required covered services. Specifically, as supported by the record, Petitioner required a consultation for a complex presentation of multiple symptoms experienced for over two years without relief, despite evaluations and treatment across multiple diverse specialties in coordination with his primary care physician. Therefore, Petitioner’s appeal should be granted, and Respondent should be ordered to approve the prior authorization request at issue.

RECOMMENDED ORDER

Based on the foregoing findings of fact and conclusions of law,

IT IS RECOMMENDED that Complainant’s appeal be granted.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be forty (40) days from the date of that certification.

-54864001

001

-137160-45720000Done this day, July 9, 2026.

/s/ Nedra-Su Kawasaki

Administrative Law Judge

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

Charles Bassett, Interim Director

Department of Insurance and Financial Institutions - Insurance

Jacob Glasser

[email redacted]

Jeremy Cochran, P.A.-C

Jan Stepanek, M.D.

13400 E Shea Blvd.

Scottsdale, AZ 85259

Brian Charlton

Blue Cross and Blue Shield of Arizona, Inc.

[email redacted]

John Lytle

Blue Cross and Blue Shield of Arizona, Inc.

[email redacted]

By: OAH Staff