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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

SUNFLOWER ADULT DAY CARE CORPORATION, Plaintiff/Appellant,

v.

AHCCCS ADMINISTRATION, Defendant/Appellee.

No. 1 CA-CV 18-0162

Appeal from the Superior Court in Maricopa County

No. LC2017-000186-001

The Honorable Patricia A. Starr, Judge

AFFIRMED

COUNSEL

Hymson Goldstein Pantiliat & Lohr, PLLC, Scottsdale

By Eddie A. Pantiliat, Lori N. Brown

Counsel for Plaintiff/Appellant

Broening Oberg Woods & Wilson, Phoenix

By Jathan P. McLaughlin, John C. Quinn

Counsel for Defendant/Appellee

FILED 2-7-2019
SUNFLOWER v. AHCCCS

Decision of the Court

2

MEMORANDUM DECISION

Judge Maria Elena Cruz delivered the decision of the Court, in which 

Presiding Judge Lawrence F. Winthrop and Judge Kenton D. Jones joined.

C R U Z, Judge:

¶1 Sunflower Adult Day Care Corporation (“Sunflower”) 

appeals the termination of its Provider Participation Agreement (“PPA”) 

with the Arizona Health Care Cost Containment System (“AHCCCS”). 

For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 In 2005, Sunflower began operating an adult day care service 

for AHCCCS. A few years later, Sunflower began providing nonemergency transportation for AHCCCS members (“Members”)—for 

example, by providing rides to and from Sunflower’s facility, to doctor

appointments, or to Alcoholics Anonymous (“AA”) meetings. Sunflower 

provided these services to AHCCCS pursuant to its PPA, the most recent 

iteration of which was executed in June of 2014. Until 2015, Sunflower 

provided these services for AHCCCS without incident.

¶3 In June of 2015, Sunflower subcontracted with Hannah 

General Services, LLC (“Hannah”) to provide the same non-emergency 

transportation that Sunflower provided for Members under the PPA. 

Sunflower did not notify AHCCCS of this agreement.

¶4 On October 2, 2015, a contractor for Hannah, Quinn 

Montoya, was providing non-emergency transport to Members pursuant 

to Sunflower’s PPA. Montoya picked up Member J.B. to transport him to 

an AA meeting. J.B. got into the van with a gallon-sized bottle of vodka—

he had been drinking before the pick-up, and he continued to drink in the 

van. Although Montoya gave J.B. numerous admonitions to stop 

consuming alcohol in the van, Montoya allowed J.B. to continue to ride in 

the van with the open bottle of vodka. Montoya again picked up J.B.

following the AA meeting, and drove to the Flagstaff mall. Upon arriving 

at the mall, J.B. stated he was going to take a nap; shortly thereafter, 

Montoya saw that J.B.’s face was turning blue. Montoya began 

administering CPR to J.B. and ordered another Member to drive the van to 
SUNFLOWER v. AHCCCS

Decision of the Court

3

the hospital; J.B. died. Sunflower did not notify AHCCCS of the incident, 

and AHCCCS did not become aware of J.B.’s death until Flagstaff Police 

Department contacted them six days later.

¶5 Around this same time, AHCCCS was conducting an audit 

of Sunflower. The audit was precipitated by two events in August of 

2015: (1) AHCCCS received an anonymous referral that Sunflower drivers 

received prior authorizations for and were reporting more miles than 

could reasonably be driven; and (2) AHCCCS’ fee-for-service division 

discovered, during its internal audit, evidence of fraudulent activity on 

many trip sheets submitted by Sunflower.

¶6 On September 1, 2015—following its discovery of fraudulent 

trip sheets—AHCCCS ordered Sunflower to submit copies of its records. 

On September 17, Sunflower began requesting reversal of previously-filed 

fraudulent claims. Sunflower claims that, until it began compiling the trip 

sheets en masse to comply with AHCCCS’ records request, it was 

unaware of the fraudulent claims reflected within many of the sheets. 

This was “because it received trip sheets by fax from the . . . drivers and 

submitted the trip sheets to AHCCCS via scan one at a time.”

¶7 Because of the incident with J.B. and the fraudulent trip 

sheets, AHCCCS terminated Sunflower’s PPA on October 20, 2015. 

During the appeals process that followed, Sunflower raised its subcontract 

with Hannah as a defense; AHCCCS thereafter added to its argument that 

Sunflower further violated the PPA by subcontracting its responsibilities 

to outside parties without providing notice to AHCCCS.

¶8 Sunflower appealed the termination of its PPA, and after a 

hearing, the Administrative Law Judge (the “ALJ”) recommended in June 

of 2016 that AHCCCS reverse its decision. Despite the ALJ’s 

recommendation, AHCCCS upheld the termination in a July 2016 

Director’s Decision. Sunflower appealed to the superior court, and the 

court—finding that the Director wrongly assigned the burden of proof to 

Sunflower—vacated the Director’s Decision and remanded it for 

reconsideration under the correct burden of proof.

¶9 On remand, the Director again affirmed termination of 

Sunflower’s PPA, and Sunflower again appealed to the superior court. 

This time, however, the court affirmed the Director’s Decision on all 

grounds—the subcontract, the health and welfare of its Members, and the 

fraudulent trip sheets. Accordingly, the court concluded that substantial 
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Decision of the Court

4

evidence supported the second Director’s Decision, it “was not contrary to 

law, was not arbitrary or capricious, and was not an abuse of discretion.”

¶10 Sunflower timely appealed to this Court. We have 

jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, 

and Arizona Revised Statutes (“A.R.S.”) section 12-2101(A)(1).

DISCUSSION

¶11 Sunflower asks us to determine whether the Director erred 

in affirming the termination of Sunflower’s PPA. See Gaveck v. Ariz. State 

Bd. of Podiatry Exam’rs, 222 Ariz. 433, 436, ¶ 12 (App. 2009) (stating the 

Court of Appeals “engage[s] in the same process as the superior court 

when we review its ruling affirming an administrative decision”). 

Sunflower alleges three separate grounds for error, claiming:

(1) Sunflower did not violate the PPA by failing to disclose 

its subcontract with Hannah, because there was no 

disclosure requirement;

(2) The singular incident of J.B.’s death was insufficient to 

find Sunflower endangered the health or welfare of 

AHCCCS Members; and

(3) Sunflower acted within the PPA’s so-called 

“overpayment clause” when it discovered and reversed 

its claims under the fraudulent trip sheets.

Each of these three claimed violations, considered independently, 

represents grounds sufficient to terminate the PPA; we consider each 

alleged violation and Sunflower’s responding arguments in turn.

¶12 We review an administrative agency’s decision to determine 

whether it was “illegal, arbitrary, capricious or . . . an abuse of discretion.” 

Ariz. Cannabis Nurses Ass’n v. Ariz. Dep’t of Health Servs., 242 Ariz. 62, 65, 

¶ 8 (App. 2017) (citation and internal quotations omitted). We do not 

reweigh the evidence, St. Joseph’s Hosp. v. AHCCCS, 185 Ariz. 309, 312 

(App. 1996), but determine only whether substantial evidence supports 

the administrative decision, Smith v. Ariz. Long Term Care Sys., 207 Ariz. 

217, 220, ¶ 14 (App. 2004). We review de novo questions of law, including 

interpretation of contracts, statutes, or regulations. Am. Power Prods., Inc. 

v. CSK Auto, Inc., 242 Ariz. 364, 367, ¶ 12 (2017) (contracts); Ballesteros v. 

Am. Standard Ins. Co. of Wisc., 226 Ariz. 345, 347, ¶ 7 (2011) (statutes); 
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5

Gutierrez v. Indus. Comm’n of Ariz., 226 Ariz. 395, 396, ¶ 5 (2011)

(regulations).

I. The Hannah Subcontract

¶13 Sunflower contends that its subcontract with Hannah,

executed without the knowledge or consent of AHCCCS, did not provide 

AHCCCS grounds to terminate the PPA. The PPA states in paragraph 6 

that the “Provider shall comply with all federal, state and local laws, rules, 

[and] regulations,” and in paragraph 31 that “AHCCCS has the right to 

terminate . . . this Agreement upon twenty-four (24) hours[’] written 

notice when . . . the Provider fails to comply with this Agreement or with 

Federal and State laws and regulations.” AHCCCS does not claim that the 

Hannah subcontract violates a specific provision of the PPA; rather, 

AHCCCS’ position is that the subcontract violates Arizona regulations.

¶14 The parties dispute the applicability of Arizona 

Administrative Code (“A.A.C.”) § R9-22-714(B)(1), which provides:

[AHCCCS] . . . shall reimburse a provider for a service 

furnished to a member only if:

1. The provider personally furnishes the service to a specific 

member. For purposes of this Section, services 

personally furnished by a provider include:

a. Services provided by medical residents or dental students in 

a teaching environment; or

b. Services provided by a licensed or certified assistant under 

the general supervision of a licensed practitioner in 

accordance with [other A.A.C. provisions].

(Emphasis added.) Specifically at issue is the meaning of “personally 

furnishes” and “include,” as italicized above. AHCCCS claims that 

Sunflower violated this provision of the A.A.C. when it sought 

reimbursement for services that it did not “personally furnish,” but were 

instead provided by Hannah, an unregistered and unapproved 

subcontractor.

¶15 Sunflower responds that A.A.C. § R9-22-714(B)(1) does not 

apply to Sunflower, as a transportation provider. Sunflower argues that 

the definition of “personally furnishes” is limited exclusively to those 
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Decision of the Court

6

services listed in subsections (a) and (b) by the use of the word “include,” 

as opposed to “include, but are not limited to.”

¶16 We interpret regulations according to their plain meaning, 

Hourani v. Benson Hosp., 211 Ariz. 427, 431, ¶ 7 (App. 2005) (stating we 

apply the plain meaning of statutes if it “is clear and unambiguous”); 

Kimble v. City of Page, 199 Ariz. 562, 565, ¶ 19 (App. 2001) (“The same 

principles of construction that apply to statutes also apply to 

administrative rules and regulations.”), and to “yield a fair and sensible 

meaning,” Kimble, 199 Ariz. at 565, ¶ 19. The interpretation Sunflower 

would have this Court adopt is neither plain nor sensible.

¶17 “[U]nless the context otherwise requires,” we will apply the 

definition of “include” as found in A.R.S. § 1-215. In Arizona, “‘[i]ncludes’ 

or ‘including’ means not limited to and is not a term of exclusion.” A.R.S. 

§ 1-215(14). We do not interpret a regulation in a vacuum; rather, we 

consider the regulatory scheme as a whole, and will “presume that the 

legislature does not include [regulatory] provisions which are redundant, 

void, inert, trivial, superfluous, or contradictory.” Cf. Hourani, 211 Ariz. at 

431, ¶ 7 (internal quotations omitted) (discussing statutory interpretation).

¶18 Sunflower’s interpretation of A.A.C. § R9-22-714(B)(1)—

limiting AHCCCS to reimbursing only for services provided by students 

in teaching environments, or by licensed or certified assistants under 

supervision of licensed practitioners—is untenable. The regulation 

includes those listed in subsections (a) and (b) to expand the services 

beyond those “personally furnished” by the provider—because, as 

AHCCCS rightly points out in its brief, those enumerated are unable to 

independently receive AHCCCS Provider IDs.

¶19 We therefore hold that A.A.C. § R9-22-714(B)(1) applies to 

the services provided by Hannah and billed to AHCCCS by Sunflower. 

Sunflower did not “personally furnish” those services to Members, 

because Sunflower employees—all of whom it concedes it was required to 

disclose to AHCCCS—did not provide the transportation services; rather, 

they were provided by Hannah pursuant to a subcontract of which

AHCCCS was unaware. Finally, Sunflower points to no other provision 

of the A.A.C. under which those services may have qualified for payment 

from AHCCCS, and our research uncovers none.1 Accordingly, the 

 

1 We note that A.R.S. § 36-2904 explicitly provides for payment to 

subcontractors of AHCCCS Contractors. However, under neither the 
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7

Director did not err in finding that Sunflower’s reimbursement requests 

for services provided by Hannah violated the A.A.C., and therefore 

paragraph 6 of the PPA.

II. The Health or Welfare of AHCCCS’ Members2

¶20 Sunflower next argues that the Director erred by upholding 

AHCCCS’ termination of the PPA on the ground that Sunflower 

endangered the health or welfare of Members. Paragraph 31 of the PPA 

provides AHCCCS the authority to terminate the PPA when “AHCCCS 

deems the health or welfare of a member is endangered.” This

determination is fact specific—neither party points to any legal standard 

for determining when Member health or welfare is endangered, and such 

factual determinations are beyond the purview of this Court. We review 

only to determine whether substantial evidence supports the Director’s 

conclusion. Gaveck, 222 Ariz. at 436, ¶ 11 (“The court must defer to the 

agency’s factual findings and affirm them if supported by substantial 

evidence. . . . even if the record also supports a different conclusion.”) 

(internal citations omitted).

¶21 We also note the singular nature of the object of this 

particular PPA clause: “a member.” Sunflower improperly frames the 

contractual standard, Am. Power Prods., Inc., 242 Ariz. at 367, ¶ 12

(citations omitted) (stating we review interpretation of contracts de novo); 

we therefore disagree with Sunflower that this “one aberrational incident 

is not [a] sufficient basis on which to conclude” it endangered the health 

or welfare of a Member.

 

definition of Contractor provided in A.R.S. § 36-2901(3), nor the PPA, is 

Sunflower a Contractor; it is a Provider. Sunflower’s status as a nonContractor is clear upon review of section A of the PPA, which authorizes 

payment for services provided by Sunflower to Members who are and are 

not “enrolled with a Contractor.”

2 In its response brief, AHCCCS addresses Sunflower’s previouslyraised alternative argument that the subcontract with Hannah shielded 

Sunflower from any liability regarding J.B.’s death. Because Sunflower 

does not argue this issue in its brief, it is waived. See ARCAP 13(a)(7); 

AMERCO v. Shoen, 184 Ariz. 150, 154 n.4 (App. 1995) (stating failure to 

develop argument or present supporting authority on appeal waives 

issue).
SUNFLOWER v. AHCCCS

Decision of the Court

8

¶22 J.B. was a Member. At the time of J.B.’s death, he was 

aboard a van which provided transport, purportedly pursuant to 

Sunflower’s PPA. Montoya, Hannah’s contract-driver of the van, violated 

numerous contract policies that inarguably endangered J.B.’s health or 

welfare: permitting J.B. to board the van with and drink from a gallonsized container of vodka, driving Members to multiple unapproved 

locations other than the AA meeting, failing to immediately call 9-1-1 and 

wait for EMT services upon discovering J.B.’s incapacitation, and having 

another Member drive the van to a hospital.

¶23 Given the events and circumstances surrounding J.B.’s 

death, we cannot say the Director erred in deeming Sunflower 

endangered “the health or welfare of a member.” Substantial evidence 

supports the Director’s findings. We affirm on this ground.

III. The Fraudulent Trip Sheets

¶24 The final issue is whether the PPA’s overpayment clause 

excuses Sunflower’s receipt of overpayment based on the fraudulent trip 

sheets, or whether the fraudulent trip sheets provided AHCCCS sufficient 

grounds to terminate the PPA. We review de novo issues of contract 

interpretation. Am. Power Prods., Inc., 242 Ariz. at 367, ¶ 12 (citations 

omitted).

¶25 The overpayment clause of the PPA states:

Pursuant to Section 6402 of the Affordable Care Act of 2010, 

if Provider [Sunflower] has received an overpayment, 

Provider shall report and return the overpayment to 

AHCCCS . . . within 60 days of the date the overpayment 

was identified.

As outlined in paragraph 13, supra, the PPA provides AHCCCS the right 

to terminate it if Sunflower violates any of its provisions, or any federal or 

state law. Stated plainly: If Sunflower violates the overpayment clause, 

AHCCCS may terminate the PPA with 24 hours’ notice.

¶26 Sunflower argues that it complied with the terms of the 

overpayment clause—in other words, that it reported the overpayment 

within 60 days of “discovering” it. But even a generous reading of the 

facts of this case do not place Sunflower’s activities beneath the umbrella 

of the overpayment clause. After discovering evidence that numerous trip 

sheets were fraudulent—specifically, traces of whiting out and refilling 

certain blanks, and sheets with identical odometer readings, miles 
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9

travelled, and patient names—AHCCCS’ fee-for-service department 

flagged Sunflower’s activities for investigation. As part of its 

investigation, AHCCCS ordered Sunflower to resubmit its trip sheets en 

masse. Only at this point did Sunflower claim to realize the fraudulent 

nature of the trip sheets and attempt to reimburse AHCCCS.

¶27 We can hardly state the issue with Sunflower’s argument 

more clearly than the superior court:

While [the overpayment clause] of the PPA provides that a 

provider who receives an overpayment shall report and 

return the overpayment within 60 days of its identification, 

Sunflower did not report the overpayments. Instead, 

AHCCCS identified the pattern of false claims through its 

own audit. A plain reading of the PPA shows that the 

overpayment clause was meant to allow Sunflower to 

correct overpayments on its own initiative, not wait for 

AHCCCS to find problems and allow a grace period for 

repayment.

¶28 To interpret the repayment clause as Sunflower proposes 

and reverse on this issue would be tantamount to green-lighting the 

commission of fraud upon AHCCCS by service providers in Arizona until 

caught. The repayment clause is not intended to benefit the provider who 

rectifies fraud only upon its discovery by AHCCCS, or even after 

AHCCCS commences an audit; rather, it intends to encourage providers 

who independently and proactively discover and report mistakes made in 

good faith, by providing them a means to preserve their PPA. We simply

cannot interpret the clause to save providers who address what appear to 

be intentional false submissions only after the submissions are discovered 

by AHCCCS. To do so would nullify the PPA’s termination clause as it 

relates to the overpayment clause. See Aztar Corp. v. U.S. Fire Ins. Co., 223 

Ariz. 463, 478, ¶ 56 (App. 2010) (“It is a cardinal rule of contract 

interpretation that we do not construe one term of a contract to essentially 

render meaningless another term.”).

¶29 Furthermore, as noted above, the PPA provides AHCCCS 

the right to terminate the PPA if the Provider violates state law. As the 

superior court pointed out, Arizona law forbids a person from presenting, 

or causing to be presented, a claim for a service “the person knows or has 

reason to know is false or fraudulent.” A.R.S. § 36-2918(A)(2). At the very 

least, the record shows that Sunflower had reason to know the trip sheets 

were fraudulent and could have easily discovered such fraud. In fact, by 
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Decision of the Court

10

its own admission, Sunflower readily discovered the fraud upon 

compliance with AHCCCS’ records request simply by looking at the trip 

sheets side-by-side. We hold there was no abuse of discretion in finding 

that Sunflower violated both the repayment clause of the PPA and 

Arizona law.

CONCLUSION

¶30 The Director did not err in upholding termination of the 

PPA. We affirm.