Arizona Court of Appeals Division One Holds That An Agency Decision Ordering Further Action From the Parties To Resolve the Merits of A Dispute Does Not “Terminate The Proceeding” and Is Thus Not Subject to Judicial Review.

Western Arizona Regional Medical Center provided medical services to patients enrolled with Arizona Physicians IPA (“APIPA”), a provider for Arizona’s Medicaid plan, the Arizona Health Care Cost Containment System (“AHCCCS”).  In 2004 and 2005, Western submitted grievances to APIPA alleging that APIPA had not reimbursed Western at the contract rate.  In 2008, Western sent a letter to APIPA stating that it had never received a decision.  Shortly after, APIPA denied the grievances, citing A.R.S. § 36-2903.01(B)(4), which requires grievances to be received within a year of the date of service.  Western requested a hearing, and the parties agreed that the hearing would be limited to determining whether APIPA “actually received” the grievances. 

After a hearing, the ALJ found that APIPA had timely received most of the grievances.  In a “Director’s Decision,” the AHCCCS sustained the ALJ’s decision and ordered APIPA to consider the merits of the timely grievances.  APIPA requested further review; AHCCCS affirmed in a “Final Decision” and also stated that the decision was “subject to judicial review.”  APIPA then filed a complaint in the superior court for judicial review.  Western moved to dismiss, arguing that the AHCCCS’s “Final Decision” was not actually a final administrative decision under Arizona’s Administrative Procedures Act.  The superior court agreed and dismissed the case, finding that the order did not “terminate the proceeding” because the order directed “the parties to litigate the merits of the claims.”  APIPA appealed.

The Court of Appeals affirmed.  The Administrative Procedures Act allows appeals from “final” agency decisions.  Specifically, the Act defines a reviewable decision as one that “terminates the proceeding before the administrative agency.”  A.R.S. § 12-901(2).  The Court held that the decision over which APIPA sought review did not “terminate the proceeding” because Western’s grievances had not yet been resolved.  Instead, AHCCCS ordered that APIPA issue written decisions regarding the timely grievances.  Consequently, the proceeding was still before the AHCCCS.  The Court viewed APIPA’s complaint for judicial review as more like an interlocutory appeal of a denial of a motion to dismiss than an appeal of a final order.  

Furthermore, the fact that the AHCCCS had described its decision as a “Final Decision” was not material because the agency’s incorrect statement could not create subject matter jurisdiction.  Finally, the Court noted that APIPA would still be able to challenge the timeliness issue after a final determination on the merits.

Judge Downie authored the unanimous opinion; Judges Swann and Kessler concurred.