NOTICE: NOT FOR OFFICIAL PUBLICATION.

UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL

AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE

ARIZONA COURT OF APPEALS

DIVISION ONE

DIGNITY HEALTH, 

Plaintiff/Appellant,

v.

FARMERS INSURANCE COMPANY OF ARIZONA, 

Defendant/Appellee.

No. 1 CA-CV 18-0292 

Appeal from the Superior Court in Maricopa County

No. CV2017-002466

The Honorable Kerstin G. LeMaire, Judge

VACATED AND REMANDED

COUNSEL

Gammage & Burnham PLC, Phoenix

By Richard B. Burnham, Cameron C. Artigue, Christopher L. Hering

Counsel for Plaintiff/Appellant

Jardine, Baker, Hickman & Houston, P.L.L.C., Phoenix

By Bradley R. Jardine

Counsel for Defendant/Appellee

FILED 4-4-2019
DIGNITY v. FARMERS

Decision of the Court

2

MEMORANDUM DECISION

Chief Judge Samuel A. Thumma delivered the decision of the Court, in 

which Judge Kent E. Cattani and Judge James P. Beene joined.

T H U M M A, Chief Judge:

¶1 The dispositive issue in this appeal is whether payments 

under optional medical payments coverage included in an automobile 

insurance policy (which the parties call “medpay coverage”) is “health 

insurance” and, therefore, not subject to a health care provider lien under 

Arizona Revised Statutes section 33-931. As discussed below, because this 

medpay coverage is not health insurance, those payments are subject to the 

health care provider lien. Accordingly, the grant of defendant Farmers 

Insurance Company of Arizona’s motion to dismiss is vacated and this 

matter is remanded.

FACTS1 AND PROCEDURAL HISTORY

¶2 Farmers issued an automobile insurance policy to Bethanie 

Elliott that included optional medpay coverage. Plaintiff Dignity Health, 

doing business as Mercy Gilbert Medical Center, provided Elliott medical 

services after she was injured in a car accident. The usual and customary 

charges for those services exceeded $160,000. Dignity recorded and 

perfected a health care provider lien for more than $140,000 to secure 

payment for those medical services. See Ariz. Rev. Stat. (A.R.S.) § 33-931

(2019).

2 Notwithstanding that lien, Farmers directly paid Elliott $99,000 in 

medpay benefits under her automobile insurance policy.

¶3 Dignity timely filed this action to enforce its lien, claiming 

Farmers’ direct payment to Elliott violated the lien. Farmers moved to 

dismiss for failure to state a claim, arguing its payment was not subject to 

the lien. After briefing and oral argument, the superior court granted 

 

1 In reviewing the grant of a motion to dismiss, this court assumes the truth 

of all well-pleaded facts alleged in the complaint. Fid. Sec. Life Ins. Co. v. 

State, 191 Ariz. 222, 224 ¶ 4 (1998).

2 Absent material revisions after the relevant dates, statutes and rules cited 

refer to the current version unless otherwise indicated.
DIGNITY v. FARMERS

Decision of the Court

3

Farmers’ motion, stating “the court agrees with the reasoning as set forth 

by [Farmers] in its motion and reply.” Dignity timely appealed from the 

resulting final judgment. See Ariz. R. Civ. P. 54(c). This court has jurisdiction 

pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. §§

12-120.21(A)(1) and -2101(A)(1). 

DISCUSSION

¶4 Under A.R.S. § 33-931, a health care provider may obtain a 

lien to secure payment of customary charges for services provided to an 

injured person. The statute, however, provides exceptions to the scope of 

such a lien: 

A lien pursuant to this section extends to all 

claims of liability or indemnity, except health 

insurance and underinsured and uninsured 

motorist coverage as defined in § 20-259.01, for 

damages accruing to the person to whom the 

services are rendered . . . on account of the 

injuries that gave rise to the claims and that 

required the services. 

A.R.S. § 33-931(A) (emphasis added). Thus, if Farmers’ payment of medpay 

benefits to Elliott was for health insurance benefits, it was exempt from 

Dignity’s lien. But if the payment to Elliott was not a health insurance 

benefit, the payment violated the lien. Although aspects of medpay 

coverage have been the subject of litigation in Arizona for decades, e.g., 

Sahadi v. Mid-Century Ins. Co., 132 Ariz. 422, 423 (App. 1982), the specific 

issue presented here is one of first impression.

¶5 Dignity claims the superior court misinterpreted A.R.S. § 33-

931. In seeking dismissal for failure to state a claim based on an exception 

to the lien statute, Farmers had the burden to show Dignity’s claim failed 

as a matter of law. See Ariz. R. Civ. P. 12(b)(6); cf. Troutman v. Valley Nat’l 

Bank of Ariz., 170 Ariz. 513, 517 (App. 1992) (stating burden of showing 

applicability of statutory exception is “on the party asserting that 

exception”). This court reviews de novo both the interpretation of a statute 

and the grant of a Rule 12(b)(6) motion to dismiss. Coleman v. City of Mesa, 

230 Ariz. 352, 355 ¶ 7 (2012); Canon Sch. Dist. No. 50 v. W.E.S. Constr. Co., 

177 Ariz. 526, 529 (1994). 
DIGNITY v. FARMERS

Decision of the Court

4

¶6 “[T]he best and most reliable index of a statute’s meaning is 

its language and, when the language is clear and unequivocal, it is 

determinative of the statute’s construction.” State v. Hansen, 215 Ariz. 287, 

289 ¶ 7 (2007) (citation omitted). “In giving effect to every word or phrase, 

the court must assign to the language its ‘usual and commonly understood 

meaning unless the legislature clearly intended a different meaning.’” Bilke 

v. State, 206 Ariz. 462, 464-65 ¶ 11 (2003) (citation omitted). Only where 

statutory text is ambiguous and susceptible to more than one plausible 

interpretation does the court use tools of statutory construction, looking to 

“the statute’s context; its language, subject matter, and historical 

background; its effects and consequences; and its spirit and purpose.” Hayes 

v. Cont’l Ins. Co., 178 Ariz. 264, 268 (1994).

I. As Used In A.R.S. § 33-931, “Motorist Coverage As Defined In § 20-

259.01” Does Not Modify “Health Insurance.” 

¶7 Farmers argues Section 33-931 should be read so that 

“motorist coverage as defined in § 20-259.01” modifies not only the words 

“underinsured” and “uninsured,” but also “health insurance.” Arguing the 

statute “is clear and unambiguous,” Farmers asserts Section 33-931 excepts 

from the lien “health insurance . . . motorist coverage as defined in § 20-

259.01,” which it claims means the payment to Elliott is not subject to the 

lien, because medpay is “the only term that meets the definition of ‘health 

insurance motorist coverage.’” Dignity argues that Farmers failed to raise 

this argument in the superior court, meaning it was waived. In the superior 

court, however, Farmers did argue a Section 33-931 lien is limited by Section 

20-259.01 and the two statutes “must be interpreted together in a 

harmonious and consistent manner.” Accordingly, Farmers at least 

minimally raised with the superior court this argument that it now presses 

on appeal.

¶8 Contrary to Farmers’ assertion, the text of Section 33-931 

excludes from the scope of a health care provider’s lien: (1) health insurance

(without reference to § 20-259.01); (2) uninsured motorist coverage as 

defined in § 20-259.01 and (3) underinsured motorist coverage as defined in 

§ 20-259.01. Moreover, to the extent any ambiguity exists, the changes to 

Section 33-931 over the years negate Farmers’ argument and compel a 

reading excepting health insurance without reference to Section 20-259.01. 

See Carrow Co. v. Lusby, 167 Ariz. 18, 20 (1990) (“Legislative intent often can 

be discovered by examining the development of a particular statute.”). 
DIGNITY v. FARMERS

Decision of the Court

5

¶9 Until 1988, Section 33-931 authorized a health care provider 

lien, without any exceptions, on “any and all claims for damages accruing 

to the person to whom hospital service is rendered.” Gartin v. St. Joseph’s 

Hosp. & Med. Ctr., 156 Ariz. 32, 35 (App. 1988) (quoting A.R.S. § 33-931(A)

(1988)). In 1988, the Legislature amended Section 33-931 to except “health 

insurance” from the coverage of such a lien. See 1988 Ariz. Sess. Laws, ch. 

298, § 2 (2d Reg. Sess.). It was not until 2004 – 16 years later – that Section 

33-931 was amended to also except “underinsured and uninsured motorist 

coverage as defined in § 20-259.01.” 2004 Ariz. Sess. Laws, ch. 154, § 1 (2d 

Reg. Sess.). 

¶10 Contrary to Farmers’ argument, there is no suggestion that 

the 2004 amendment to Section 33-931, which first added the reference to 

Section 20-259.01, was designed to modify the “health insurance” 

exemption added in 1988. Indeed, Legislative materials make clear the 2004 

amendment was made solely to exempt “underinsured and uninsured 

motorist coverage as defined in § 20-259.01,” not to alter the “health 

insurance” exemption in Section 33-931. See House Bill Summary, H.B. 2681 

(Apr. 20, 2004) (explaining the 2004 amendment “[p]rohibits private and 

county health care institutions from recovering an injured person’s 

uninsured or underinsured motorist coverage when enforcing a lien to 

recover hospital charges for medical care”); Senate Fact Sheet, H.B. 2681 

(Mar. 30, 2004) (similar). This history of Section 33-931 undercuts Farmers’

argument that the statute should be read to exempt from a lien “[h]ealth 

insurance motorist coverage as defined in § 20-259.01.”

¶11 Apart from this history, the term “health insurance” is not 

defined in Section 20-259.01. Thus, it would be illogical to read Section 33-

931 to mean “health insurance as defined in § 20-259.01.” Section 20-259.01 

is entitled “Motor vehicle liability policy; uninsured optional; underinsured 

optional; subrogation; medical payments liens; definitions.” The section

contains three definitions: “[u]ninsured motor vehicles;” “[u]ninsured 

motorist coverage” and “[u]nderinsured motorist coverage.” A.R.S. § 20-

259.01(D), (E) & (G). The fact that “health insurance” is not used in, much 

less defined in, Section 20-259.01 negates any suggestion that Section 33-931 

should be read such that “motorist coverage as defined in § 20-259.01”

modifies the phrase “health insurance.” See Callen v. Rogers, 216 Ariz. 499, 

507 (App. 2007) (“[W]hen the legislature has specifically included a term in 

some places within a statute and excluded it in other places, courts will not 

read that term into the sections from which it was excluded.”) (citation 

omitted). 
DIGNITY v. FARMERS

Decision of the Court

6

¶12 Had the Legislature wanted to exempt “[h]ealth insurance 

motorist coverage as defined in § 20-259.01” from a healthcare provider 

lien, it could have done so, either by amending Section 33-931 or by defining 

“health insurance” in Section 20-259.01. It did neither. Based on this history 

of Section 33-931, and the text used (and not used) in that statute and in 

Section 20-259.01, “motorist coverage as defined in § 20-259.01,” as used in 

Section 33-931, does not modify “health insurance.” Accordingly, Farmers’

argument to the contrary fails.

II. As Used In A.R.S. § 33-931, “Health Insurance” Does Not Include 

Medpay Coverage. 

¶13 Farmers argued before the superior court that “‘health 

insurance’ from A.R.S. § 20-259.01 is synonymous with terms such as 

‘medpay,’” meaning “health insurance” as used in Section 33-931 should be 

read to include medpay. Dignity argues Farmers failed to raise this 

argument on appeal, which it claims should be treated as a confession of 

error. Because Farmers failed to press this argument on appeal, arguing 

instead that medpay is “health insurance motorist coverage,” it has been 

waived. See, e.g., Van Loan v. Van Loan, 116 Ariz. 272, 274 (1977) (“[F]ailure 

to raise an issue either at the trial level or in briefs on appeal constitutes a 

waiver of the issue.”). Even absent waiver, Farmers’ argument would fail.

¶14 An argument that “health insurance” (a phrase that does not 

appear in Section 20-259.01) is the same as medpay would run counter to 

the directive that different statutory terms or phrases are not to be treated 

as synonymous unless the context permits no other meaning. See P.F. West, 

Inc. v. Superior Court, 139 Ariz. 31, 34 (App. 1984). Although not defined in 

Sections 33-931 or 20-259.01, the A.R.S. Insurance Title (Title 20) defines

“health insurance” in the context of a “[p]remium tax credit for health 

insurance certificates submitted by qualified persons,” A.R.S. § 20-

224.05(H)(3), to mean a “a licensed health care plan or arrangement that 

pays for or furnishes medical or health care services and that is issued by a 

health care insurer.” This statute directs that “[h]ealth insurance does not 

include limited benefit coverage,” id., defined as “an insurance policy that 

is designed, advertised and marketed to supplement major medical 

insurance and that includes accident only” and other types of coverage, 

A.R.S. § 20-1137(B). This definition would exclude from health insurance 

the medpay at issue here. And although this definition is limited to the

premium tax credit context, Farmers has not shown that the Legislature 

defined “health insurance” to mean two irreconcilably different things 

depending upon whether the phrase was used in Section 33-931 or Section 

20-224.05. Cf. Wyatt v. Wehmueller, 167 Ariz. 281, 284 (1991) (“A court also 
DIGNITY v. FARMERS

Decision of the Court

7

should interpret two sections of the same statute consistently, especially 

when they use identical language.”).

¶15 A statute authorizing a different type of lien also undercuts 

the thought that “health insurance” and medpay coverage mean the same 

thing. A qualified insurer providing specified medpay coverage benefits 

(“medical payments coverage of a motor vehicle insurance policy”) is 

authorized to obtain an insurer’s lien for any medpay coverage payment 

exceeding $5,000 “that is paid to or on behalf of that insured.” A.R.S. § 20-

259.01(J). Farmers did not obtain such a lien and this statute is not 

applicable to the health care provider lien recorded and perfected by 

Dignity. This insurer’s lien statute, however, is evidence that the 

Legislature treats “health insurance” and medpay coverage as two different 

things. A similar distinction comes from the one other reference to 

“[m]edical payments coverage” in Title 20 as being one of seven types of 

“basic coverage” within motor vehicle insurance policies subject to certain 

renewal limitations. See A.R.S. § 20-1631(K)(5). 

¶16 Apart from these statutory differences, this court has 

recognized the difference between health insurance and medpay coverage, 

albeit in a different context. In Haisch v. Allstate Insurance Co., the plaintiff 

had health insurance coverage for all “charges resulting from health care 

services listed in her plan” and had an “automobile liability policy that 

included optional Med Pay coverage.” 197 Ariz. 606, 607 ¶ 2 (App. 2000). 

After the plaintiff was treated for injuries sustained in a car accident, her 

automobile insurer refused to pay medpay benefits for any treatment 

covered by health insurance. Id. at 608 ¶ 3. The plaintiff sued her automobile 

insurer, arguing it “engage[d] in a systematic practice of unfairly marketing 

Med Pay coverage, because it fails to disclose to its customers that Med Pay 

will not cover any medical expenses already covered by the insured’s . . . 

health insurance.” Id. at 609 ¶ 8. Although rejecting the plaintiff’s claims, id. 

at 612 ¶ 27, Haisch repeatedly acknowledged the difference between health 

insurance and medpay coverage and that the two phrases are not 

synonymous.

¶17 Had the Legislature wanted to exempt “medical payments 

coverage” from the scope of a Section 33-931 health care provider lien, it 

could have done so. It has not done so, and that has meaning. Padilla v. 

Indus. Comm’n, 113 Ariz. 104, 106 (1976) (“[W]hat the Legislature means, it 

will say.”). The exclusion of “health insurance” for a Section 33-931 lien 

does not also exclude medpay coverage. For these reasons, even absent 

waiver, Farmers has not shown that its medpay coverage payment was

included in the “health insurance” exception to Dignity’s health care 
DIGNITY v. FARMERS

Decision of the Court

8

provider lien under Section 33-931. Accordingly, the superior court erred in 

dismissing Dignity’s complaint.

3

¶18 Dignity requests an award of attorneys’ fees incurred both on 

appeal and in the superior court proceedings pursuant to A.R.S. § 33-934. 

In the exercise of the court’s discretion, Dignity is awarded an amount of 

reasonable attorneys’ fees incurred on appeal, as well as its taxable costs on 

appeal, contingent upon its compliance with Ariz. R. Civ. App. P. 21. This 

court leaves to the superior court’s discretion any award of attorneys’ fees 

resulting from proceedings before that court.

CONCLUSION

¶19 The dismissal of Dignity’s complaint is vacated, and this 

matter is remanded for further proceedings consistent with this decision. 

 

3 Given this conclusion, the court need not address Dignity’s arguments 

based on the classifications in Arizona’s insurance code.