Senator Finchem Demands Reform After Allegations Raise Alarming Questions About Hobbs Administration's Hearing Process
ARIZONA, September 15 - FOR IMMEDIATE RELEASE
Tuesday, September 15, 2026
PHOENIX, ARIZONA—Senator Mark Finchem is demanding answers from the Hobbs administration and calling for reform of Arizona's administrative hearing system after allegations surfaced that a decision against a healthcare provider was drafted before its hearing had even ended.
The Office of Administrative Hearings is supposed to give Arizonans an independent place to challenge decisions made by state agencies. Taxpayers spend more than $2 million each year on that process, but information provided to Senator Finchem raises serious questions about whether people and businesses are receiving a meaningful opportunity to be heard.
Those concerns intensified during a September 9 hearing involving Prorenata Labs and Banner University Family Care. The administrative law judge announced that the scheduled hearing would not move forward because the Arizona Health Care Cost Containment System (AHCCCS), which oversees Arizona's Medicaid program, had asked to pause the case. The judge said she would rule on AHCCCS' request and then determine whether another hearing would be scheduled. It was the second Prorenata hearing in less than a week that did not reach the underlying dispute because of AHCCCS' actions.
"When an Arizonan challenges the government, they deserve a fair hearing before an impartial judge," said Senator Finchem, Co-Chair of the Joint Legislative Audit Committee. "Instead, the government makes the original decision, defends that decision on appeal, and can disregard the judge's recommendation when it loses. Taxpayers are spending millions of dollars on this system, yet a provider alleges a five-page decision against it was saved before its hearing had even ended, while the Hobbs administration's AHCCCS is now attempting to stop 32 pending appeals from moving forward. If these allegations are accurate, this is not meaningful due process. It is a taxpayer-funded rubber stamp for the executive branch. Governor Hobbs must explain whether she believes this is acceptable. If this system cannot provide Arizonans with truly independent hearings, the Legislature must fundamentally reform it or replace it altogether."
Prorenata alleges that during one of its earlier cases, a five-page draft decision against the laboratory was saved in the Office of Administrative Hearings system at approximately 2:36 p.m. on April 10, 2023, seven minutes before the hearing ended. According to the laboratory, the final decision was also five pages and contained the same language as the draft.
The laboratory has raised a similar concern about a separate 2026 proceeding. Prorenata alleges that a substantially completed decision was saved approximately six minutes after the hearing concluded and that the administrative law judge referred during the proceeding to an issue already cited in "my decision." Prorenata says it has requested preservation and review of the document history, version history, timestamps, and audit records.
AHCCCS filed a motion September 2 asking the Office of Administrative Hearings to pause 32 pending appeals involving Prorenata and six AHCCCS-contracted health plans while the agency pursues a lawsuit in Maricopa County Superior Court. Prorenata alleges that AHCCCS filed a motion affecting its September 3 proceeding at approximately 4 p.m. on September 2, less than a day before the scheduled 10 a.m. hearing. Arizona's administrative hearing rules generally require motions to be filed at least 15 days before a hearing unless good cause exists.
AHCCCS argues that pausing the administrative hearings while its Superior Court lawsuit proceeds would reduce costs, prevent duplicative litigation, and avoid inconsistent decisions. The agency has acknowledged that hundreds of similar disputes have already gone through administrative hearings and were resolved in favor of AHCCCS and its contracted health plans.
The appeals concern reimbursement for COVID-19 testing, including whether certain tests are subject to a maximum reimbursement rate, typically $100 per test, and whether an out-of-network laboratory may be paid for non-emergency services provided without prior authorization or a documented urgent medical need. Senator Finchem is not taking a position on whether Prorenata is owed money. His concern is whether the Hobbs administration's AHCCCS is attempting to prevent a provider from receiving hearings through the process established under Arizona law, and whether other executive agencies could use the same strategy when their decisions are challenged.
According to the Office of Administrative Hearings' Fiscal Year 2025 Annual Report, 5,852 AHCCCS matters were filed during the year. Of the 942 administrative law judge recommendations acted upon, only 22 went against AHCCCS' original position in whole or in part. When an administrative law judge recommends a decision against AHCCCS, the agency director has the authority to accept, reject, or modify that recommendation.
Prorenata has raised additional allegations about how its cases have been handled. The laboratory claims managed-care organizations missed required prehearing deadlines without their cases being dismissed, while one of Prorenata's cases was dismissed after it missed the same deadline. It also alleges that hearings have been postponed or consolidated without a formal motion or stated legal basis, subpoenas for potentially relevant evidence have been quashed, and proceedings have continued when the opposing managed-care organization failed to appear.
In another case, an administrative law judge recommended a decision in Prorenata's favor after concluding that the rule cited to justify the denial did not support it. Prorenata alleges the AHCCCS director later rejected that recommendation and decided the case on a different issue after the hearing had concluded.
Senator Finchem intends to use the Joint Legislative Audit Committee's oversight authority to examine the handling of these cases, including when decisions were drafted, whether parties were held to the same procedural standards, why AHCCCS sought to halt the pending appeals, and how frequently the agency rejects or modifies administrative law judge recommendations. Based on those findings, Senator Finchem will determine whether an audit, legislative reforms, or additional oversight action is necessary.
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For more information, contact:
Kim Quintero
Director of Communications | Arizona State Senate Republican Caucus
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