FHMC v. BLUE CROSS

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

FHMC, LLC et al.,
Plaintiffs/Appellants,

v.

BLUE CROSS AND BLUE SHIELD OF ARIZONA, INC,
Defendant/Appellee.

No. 1 CA-CV 25-0735
FILED 06-22-2026

Appeal from the Superior Court in Maricopa County
No. CV2024-021225
The Honorable Dewain D. Fox, Judge

AFFIRMED

COUNSEL

Fountain Hills Medical Center, Fountain Hills
By Grover C. Peters
Counsel for Plaintiff/Appellant

Papetti Samuels Weiss McKirgan LLP, Scottsdale
By Randall S. Papetti, Lauren Ann Crawford
Counsel for Defendant/Appellee
FHMC, et al. BLUE CROSS
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Michael S. Catlett delivered the decision of the Court, in
which Judge Angela K. Paton and Judge Jennifer M. Perkins joined.

C A T L E T T, Judge:

¶1 This appeal involves a dispute between an out-of-network
health care provider and an insurer of health care plans and policies about
reimbursement for emergency care services. The health care providers,
FHMC, LLC and FHMC Clinic, LLC (together “FHMC”), appeal the
superior court’s judgment dismissing their complaint for failing to state a
claim against the insurer, Blue Cross and Blue Shield of Arizona, Inc. (“Blue
Cross”). Because the superior court correctly entered judgment dismissing
FHMC’s claims, we affirm.

FACTS AND PROCEDURAL HISTORY

¶2 On appeal from a dismissal for failure to state a claim, we
presume the well-pleaded factual allegations are true and “indulge all
reasonable inferences from those facts, but mere conclusory statements are
insufficient.” Coleman v. City of Mesa, 230 Ariz. 352, 356 ¶ 9 (2012).

¶3 Blue Cross insures health care plans and policies. FHMC
provides health care through a medical clinic and emergency care facility
in Fountain Hills, Arizona. FHMC is an out-of-network (“OON”) provider
because it has no contract with Blue Cross setting reimbursement rates or
otherwise governing payment for services provided to patients with Blue
Cross insurance plans (“the insureds”). During all relevant times, FHMC
provided emergency care services to the insureds as an OON provider.

¶4 In return for treatment, FHMC required all patients, including
the insureds, to execute several forms regarding payment. In one form, the
insureds confirmed they are “financially responsible” for services rendered.
The same form states that if the insureds receive a reimbursement check
from Blue Cross for such services, the funds are “legally due to” FHMC.

¶5 Another form, the “Conditions of Admission and Consent to
Medical Treatment,” includes an “Assignment of Insurance
Benefits/Promise to Pay” (“Assignment”) authorizing Blue Cross to pay

2
FHMC, et al. BLUE CROSS
Decision of the Court

FHMC directly and purporting to assign certain insurance rights and
benefits to FHMC. The Assignment provides:

I ASSIGN TO [FHMC] all of my rights and benefits under
existing policies of insurance providing coverage and
payment for any expenses incurred as a result of services and
treatment rendered by [FHMC]. I authorize direct payment to
[FHMC] of any insurance benefits otherwise payable to or on
behalf of myself.

The insureds also granted FHMC “power of attorney . . . expressly limited
to those [powers] reasonably required to collect any payments or
benefits[.]”

¶6 Pursuant to these forms, FHMC submitted claims to Blue
Cross for reimbursement for emergency care services. For some time, Blue
Cross sent reimbursements directly to FHMC for an unknown number of
claims. But for seventy-one claims, Blue Cross instead sent reimbursement
checks directly to the insureds, totaling an estimated $467,084.70 (“Pre-NSA
Claims”). FHMC has unsuccessfully tried to collect from these insureds.

¶7 After the federal No Surprises Act (“NSA”) became effective
in January 2022, FHMC alleges Blue Cross “dramatically decreased” its
reimbursement rates for emergency care services. See 42 U.S.C. § 300gg-111
et seq., Pub. L. No. 116-260, 134 Stat. 2758 (2020). According to FHMC, Blue
Cross violated the NSA by: (1) failing to timely process claims; (2) issuing
insufficient initial payments and denials without explanation; (3) refusing
to participate in open negotiations or agree on appropriate reimbursement
amounts; (4) submitting improper calculations for arbitration; and (5)
failing to pay or underpaying awards (“Post-NSA Claims”). As a result,
FHMC contends Blue Cross withheld “millions of dollars[.]”

¶8 FHMC sued Blue Cross under the NSA in federal district
court, but that court dismissed the action for failure to state a claim. FHMC
then sued Blue Cross in superior court, asserting eleven claims under
Arizona law.

¶9 Blue Cross moved to dismiss FHMC’s complaint for failing to
state a claim. After briefing and argument, the superior court dismissed
FHMC’s complaint in full. As to the Pre-NSA Claims, the court concluded
that because FHMC was an OON provider, Blue Cross was not
contractually obligated to send reimbursements directly to FHMC. The
court also reasoned that the insureds could not pursue the Pre-NSA Claims
against Blue Cross, so FHMC also could not.

3
FHMC, et al. BLUE CROSS
Decision of the Court

¶10 The court dismissed the Post-NSA Claims based on conflict
preemption, concluding FHMC’s state-law claims “st[ood] as an obstacle to
the accomplishment and execution” of the NSA. Because the court
dismissed the Post-NSA Claims on preemption grounds, it did not consider
Blue Cross’s alternative arguments that FHMC’s claims fail under state law.

¶11 FHMC timely appealed. We have jurisdiction. A.R.S. §§ 12-
2101(A)(1), 12-120.21(A)(1).

DISCUSSION

¶12 For the most part, the superior court concluded that the NSA
preempts FHMC’s state law claims. So in large part, the court did not
decide whether FHMC stated any valid claim under state law. And on
appeal, the parties focus their arguments on federal preemption.

¶13 “[P]ursuant to the Supremacy Clause, U.S. Const. art. VI, cl.
2, when a state law clearly conflicts with federal. . . law, the state law must
yield[.]” In re Marriage of Quijada and Dominguez, 257 Ariz. 432, 437 ¶ 20
(2024). “We presume that federal lawmakers do not ‘cavalierly preempt’
state law because ‘the States are independent sovereigns in our federal
system,’ and have historically ‘had great latitude’ to protect ‘the lives,
limbs, health, comfort, and quiet’ of their citizens.” Varela v. FCA US LLC,
252 Ariz. 451, 459 ¶ 13 (2022) (citations omitted). Our supreme court has
cautioned against concluding that “state law is preempted not by what is
expressed in federal law, but rather by what may be implied by federal
law.” Id. at 460 ¶¶ 15–16. “[I]n our system of federalism, we do not start
with federal law and apply it unless the legislature manifests a contrary
intent; rather, we presume that state law prevails[.]” Roberts v. State, 253
Ariz. 259, 266 ¶ 21 (2022).

¶14 What does this mean here? It means we conduct our analysis
in a different order than the superior court. We start with the question
whether FHMC stated any valid claim under state law. Only if FHMC did
so, do we analyze whether any valid claim is preempted under federal law.
This approach is consistent with how Arizona courts proceed when a
defendant argues federal preemption and failure to state a claim under state
law. It also jives with federalism and avoiding constitutional issues when
possible. See Conklin v. Medtronic, Inc., 245 Ariz. 501, 506 ¶ 22 (2018)
(analyzing first if the plaintiff had a claim under Arizona law before
deciding preemption); Abbott v. Banner Health Network, 239 Ariz. 409, 412–
13 ¶ 10 (2016) (criticizing this court for finding federal preemption because
“[d]eciding whether the Arizona hospital lien statutes are preempted is

4
FHMC, et al. BLUE CROSS
Decision of the Court

unnecessary in determining whether the trial court properly considered
and granted Petitioners’ motion to dismiss”); Ansley v. Banner Health
Network, 248 Ariz. 143, 147 ¶ 9 (2020) (recognizing that federal preemption
and the existence of a cause of action “overlap but are analytically distinct”);
see also R.L. Augustine Constr. Co., Inc. v. Peoria Unified Sch. Dist. No. 11, 188
Ariz. 368, 370 (1997) (declining to reach the constitutional question because
issues could be “fairly decided on nonconstitutional grounds”) (collecting
cases).

I. Failure to State a Claim

¶15 We review de novo a judgment dismissing a complaint under
Arizona Rule of Civil Procedure 12(b)(6). CVS Pharmacy, Inc. v. Bostwick,
251 Ariz. 511, 516 ¶ 10 (2021). Dismissal is appropriate if FHMC “would
not be entitled to relief under any interpretation of the facts susceptible of
proof” as a matter of law. Coleman, 230 Ariz. at 356 ¶ 8 (cleaned up).

¶16 As it did in the superior court, Blue Cross argues on appeal
that FHMC’s complaint failed to state a claim for relief. Again, the superior
court did not address most of Blue Cross’s state law arguments, hinging
dismissal primarily on federal preemption. But because Blue Cross raised
state law arguments below and with us, they are independent grounds for
affirming the judgment. See Ariz. R. Civ. App. P. 13(b)(2) (this court may
consider “any issue [discussed in the answering brief] that was properly
presented in the superior court without the need for a cross-appeal, and
[we] may affirm the judgment based on any such grounds”); Fappani v.
Bratton, 243 Ariz. 306, 309 ¶ 8 (App. 2017) (“[W]e will affirm the court’s
order dismissing a complaint if it is correct for any reason.”).

¶17 In its reply brief on appeal, FHMC ignores Blue Cross’s state
law arguments. We could consider that a concession that it failed to state a
claim for relief under Arizona law. See Castillo v. Lazo, 241 Ariz. 295, 298 ¶ 9
(App. 2016) (this court could consider the failure to respond to an argument
to be “a concession of the issue”). When a party fails to respond to an
opposing party’s argument and debatable issues exist, “we may consider
such failure a confession” on the issue. Savord v. Morton, 235 Ariz. 256, 259
¶ 9 (App. 2014). A debatable issue is a matter that takes “independent
research to refute” or creates “grave doubt” about the legal issue we decide
Merrill v. Wheeler, 17 Ariz. 348, 350 (1915); Adkins v. Adkins, 39 Ariz. 530, 532
(1932). We therefore review Blue Cross’s arguments and the record to
determine if it is debatable whether FHMC stated a valid claim for relief.
See Stover v. Kesmar, 84 Ariz. 387, 388 (1958). We conclude it is not
debatable, so we address those claims on their merits.

5
FHMC, et al. BLUE CROSS
Decision of the Court

A. Count 1: Breach of Contract

¶18 To state a claim for breach of contract, FHMC had to allege it
had a contract with Blue Cross, Blue Cross breached the contract, and
FHMC suffered damages. See Thomas v. Montelucia Villas, LLC, 232 Ariz. 92,
96 ¶ 16 (2013). FHMC concedes that during all relevant times it was an
OON provider, meaning it had no contract with Blue Cross. Instead, FHMC
alleged that the Assignments constitute an enforceable contract between
Blue Cross and FHMC.

¶19 The key issue is whether the insureds have a breach of
contract claim against Blue Cross that FHMC can now assert as assignee.
They do not.

¶20 “The assignee’s rights are derivative of the insured’s[.]”
Republic Ins. Co. v. Feidler, 178 Ariz. 528, 534 (App. 1993). A valid
assignment allows the assignee to “‘stand[ ] in the shoes’ of the assignor,
taking [assignor’s] rights and remedies” subject to any defenses the insurer
has “against the assignor prior to notice of the assignment.” Farmers Ins.
Exch. v. Udall, 245 Ariz. 19, 23 ¶ 13 (App. 2018). Therefore, the assignee may
assert only those claims possessed by the insured-assignors and nothing
more. Id. at 24 ¶ 16.

¶21 In its complaint, FHMC alleged Blue Cross breached its
contracts with the insureds by failing “to make full payment for reasonable
services rendered by FHMC in the manner and amounts required under the
terms of each insured’s [p]lans.” This conclusory allegation does not state
a claim for relief. See Coleman, 230 Ariz. at 356 ¶ 9 (“mere conclusory
statements are insufficient”). Nowhere in the complaint does FHMC
describe the terms of the insured’s plans that Blue Cross is alleged to have
breached. And FHMC cannot state an assigned claim for breach of contract
without sufficiently alleging that Blue Cross breached a contract with the
insureds.

¶22 FHMC argues that, by disregarding the Assignments, Blue
Cross is subject to “double liability[.]” That is, despite Blue Cross already
paying the insureds, it is contractually obligated via the Assignments to
again reimburse FHMC. But FHMC does not have a derivative claim for
missed payments when the insureds—FHMC’s assignors—could not have
brought such a claim.

¶23 Still, FHMC reasons that by virtue of the Assignments, the
amounts Blue Cross paid to the insureds and any amounts still due are
owed to FHMC. FHMC concedes that Blue Cross reimbursed the insureds

6
FHMC, et al. BLUE CROSS
Decision of the Court

directly for emergency care services. Still, FHMC asserts the Assignments
transferred the insureds’ “contractual rights” and “legal right to payment”
under their insurance plans. FHMC reasons that, upon notice, the
Assignments imposed an enforceable contractual obligation on Blue Cross,
a non-party, to honor the Assignment by reimbursing FHMC.

¶24 The precedent FHMC relies on for its “contractual rights”
theory is inapposite. Each case FHMC cites involved an action to enforce
an assignment of contractual rights, not an assignment of claims under an
insurance policy. See Van Waters & Rogers, Inc. v. Interchange Res., Inc., 14
Ariz.App. 414, 419 (1971) (assignee of proceeds of a construction contract);
Indep. Nat. Bank v. Westmoor Elec., Inc., 164 Ariz. 567, 569–70 (App. 1990)
(wrongful payment action based on assignment of construction contract);
Bank of Yuma v. Arrow Constr. Co., 106 Ariz. 582, 583 (1971) (assignment of
right to payments due under construction contract).

¶25 Those opinions do not help FHMC because the general rule is
that an indemnity insurance policy, like a health insurance policy, “cannot
be assigned, especially where an assignment is expressly prohibited by the
terms of the policy, unless the insurer consents.” Aetna Cas. & Sur. Co. v.
Valley Nat’l Bank of Ariz., 15 Ariz.App. 13, 15 (1971). This principle “is based
upon the right of the insurer to choose its insured so as to know its risks.”
Id. However, “[a]fter a loss has occurred and the rights under the [plan]
have accrued,” an assignment is “not of the [plan] itself, but of a claim
under, or a right of action on, the [plan].” St. Paul Fire & Marine Ins. Co. v.
Allstate Ins. Co., 25 Ariz.App. 309, 311 (1975) (citation omitted).

¶26 That Blue Cross may have had notice of the Assignments is
irrelevant. FHMC did not allege that the insured’s policies permitted them
to assign their contractual rights to third parties or that Blue Cross
consented to the insureds assigning their contractual rights to FHMC. At
oral argument, FHMC conceded that it has not alleged that Blue Cross
consented to the Assignments.

¶27 At bottom, FHMC confuses assignment of a contractual right
with a post-loss assignment of a claim under an insurance plan. See Pointe
16 Cmty. Ass’n v. GTIS-HOV Pointe 16, LLC, 260 Ariz. 377, __ ¶ 25 (2025)
(“An assignment of rights under a contract is different than an assignment
of accrued claims for damages arising from a breach of that contract.”).
Based on the allegations in the complaint (or lack thereof), the insureds
could only assign a post-loss claim.

7
FHMC, et al. BLUE CROSS
Decision of the Court

¶28 Therefore, as to FHMC’s Pre-NSA Claims, there is no
contractual relationship between Blue Cross and FHMC, so Blue Cross had
no obligation to pay FHMC directly. The Assignments did not create a
contractual relationship imposing any payment obligation between the
two. And because Blue Cross reimbursed the insureds, there is no breach
of contract claim for FHMC to pursue via the Assignments.

¶29 As to FHMC’s Post-NSA Claims, FHMC does not assert a
right to sue to collect insurance benefits under the insureds’ plans. See
Udall, 245 Ariz. at 20 ¶ 1 (assignees validly assigned “their rights to sue to
collect post-loss benefits under the policies” to the assignees). Rather,
FHMC urges that Blue Cross violated the NSA, which breached the
insureds’ plans. This suffers from the same flaw as the Pre-NSA Claims.
To the extent FHMC seeks reimbursement premised on Blue Cross
violating the NSA, that is not a claim the insureds can assert. To the
contrary, the NSA shields insureds from the OON costs that are the subject
of FHMC’s complaint; in other words, the outcome of any billing dispute
between FHMC and Blue Cross under the NSA cannot impact the insureds
in any cognizable way. See 42 U.S.C. § 300gg-111(a)(1)(C)(iv)(II). So
FHMC’s Post-NSA Claims for breach of contract also fail to state a claim.

B. Counts 2 and 8: Good Faith and Fair Dealing and Tortious
Bad Faith

¶30 A covenant of good faith and fair dealing is implied in every
Arizona contract, meaning “neither party will act to impair the right of the
other to receive the benefits which flow from their agreement or contractual
relationship.” Rawlings v. Apodaca, 151 Ariz. 149, 153 (1986). “While every
contract contains implied covenants of good faith and fair dealing, such
covenants presume the existence of a valid contract.” Norman v. State Farm
Mut. Auto. Ins. Co., 201 Ariz. 196, 203 ¶ 25 (App. 2001). Because it is
undisputed that there is no contract between FHMC and Blue Cross, FHMC
fails to state a claim for relief. To the extent FHMC brings this claim based
on the Assignments, as discussed supra ¶¶ 21–28, this claim fails.

¶31 FHMC also asserted a claim for tortious bad faith. A “bad
faith claim is an intentional tort which arises out of contractual
relationships.” Wagner v. Arizona Mun. Risk Retention Pool, __ Ariz. __, ___,
585 P.3d 816, 822 ¶ 21 (App. 2026). A bad-faith tort claim may exist when
there is a “special relationship arising from elements of public interest,
adhesion, and fiduciary responsibility.” Enyart v. Transamerica Ins. Co., 195
Ariz. 71, 76 ¶ 14 (App. 1998) (citation omitted).

8
FHMC, et al. BLUE CROSS
Decision of the Court

¶32 Again, there is no contractual relationship between FHMC
and Blue Cross, so this claim fails. We also agree with Blue Cross that the
relationship between an OON medical provider and a health care insurer
does not impose on the insurer a duty in tort. FHMC provides no legal
authority supporting the existence of a special relationship between Blue
Cross and FHMC, and we have found none.

C. Count 3: Promissory Estoppel

¶33 To state a claim for promissory estoppel, FHMC had to allege
that Blue Cross made a promise to FHMC that Blue Cross “should have
reasonably foreseen” FHMC would rely on, that FHMC relied on that
promise, and that FHMC suffered damages. See Double AA Builders, Ltd. v.
Grand State Const. L.L.C., 210 Ariz. 503, 507 ¶ 19 (App. 2005). Lastly, the
court may make the promise “binding if injustice can be avoided only by
enforcement of the promise.” Id. (quoting Restatement (Second) of
Contracts § 90(1)).

¶34 FHMC alleged Blue Cross promised the emergency care costs
and fees were covered under the insureds’ plans, and it reasonably and
detrimentally relied on such promises by providing emergency care
services to the insureds. FHMC asserted it is entitled to “full and complete
payment[.]” Blue Cross argues these alleged promises are not sufficiently
definite. We agree.

¶35 Even accepting FHMC’s factual allegations as true, at most
Blue Cross “promised” the insureds that their plans would cover service
costs and fees, but not at a specific rate. These allegations do not establish
that Blue Cross promised FHMC, directly or indirectly, that it would pay
FHMC at a particular rate if FHMC provided the insureds with treatment.
FHMC’s complaint fails to state a claim for promissory estoppel.

D. Counts 4 and 5: Prompt Pay Statute

¶36 Arizona’s Prompt Pay Statute (A.R.S. § 20-3102) generally
requires health care insurers, such as Blue Cross, to “adjudicate any clean
claim from [an OON] health care provider relating to health care insurance
coverage within thirty days[.]” A.R.S. § 20-3102(A). FHMC alleged that
Blue Cross violated this statute, so Blue Cross is liable for late payments
and interest. See A.R.S. §§ 20-3102, 20-462. But FHMC concedes the Prompt
Pay Statute did not create a private right of action. FHMC thus fails to state
a claim for liability or interest under the Prompt Pay Statute.

9
FHMC, et al. BLUE CROSS
Decision of the Court

E. Counts 6 and 7: Quantum Meruit and Unjust Enrichment

¶37 FHMC pressed separate claims for quantum meruit and
unjust enrichment. Although unjust enrichment is a valid cause of action,
“[q]uantum meruit is actually a measure of damages.” Landi v. Arkules, 172
Ariz. 126, 135 (App. 1992). FHMC must, therefore, successfully plead
unjust enrichment to recover quantum meruit damages. See W. Corr. Grp.,
Inc. v. Tierney, 208 Ariz. 583, 590 ¶ 28 (App. 2004). So we ask only whether
FHMC pleaded a valid claim for unjust enrichment.

¶38 Unjust enrichment is an equitable remedy when there is no
“specific contract” between the parties. Brooks v. Valley Nat. Bank, 113 Ariz.
169, 174 (1976). To plead an unjust enrichment claim, FHMC had to allege
“(1) an enrichment, (2) an impoverishment, (3) a connection between the
enrichment and impoverishment, (4) the absence of justification for the
enrichment and impoverishment, and (5) the absence of a remedy provided
by law.” See Freeman v. Sorchych, 226 Ariz. 242, 251 ¶ 27 (App. 2011). There
is no unjust enrichment if “the defendant has not retained a benefit.” See
Span v. Maricopa Cnty. Treasurer, 246 Ariz. 222, 227 ¶ 16 (App. 2019).

¶39 FHMC alleged the enrichment it conferred on Blue Cross was
(1) emergency care services to insureds and (2) the discharge of Blue Cross’s
obligations to the insureds. Blue Cross argued these are not legally
cognizable benefits. FHMC provided no contrary authority.

¶40 For unjust enrichment to exist, a plaintiff must have
undertaken an endeavor to its detriment “solely to benefit” the defendant.
Sorchych, 226 Ariz. at 252 ¶ 28. The plaintiff cannot recover when the benefit
to the defendant is simply a by-product of the plaintiff’s efforts it would
have expended regardless. Id. Similarly, merely receiving a benefit is
insufficient. Murdock-Bryant Const., Inc. v. Pearson, 146 Ariz. 48, 54 (1985).

¶41 Even if Blue Cross received some benefit because FHMC
provided emergency medical services to the insureds, FHMC’s services
directly benefited its patients (the insureds), not Blue Cross. FHMC
concedes federal law requires it to provide emergency care services,
regardless of the patient’s “insurance status or ability to pay.” See 42 U.S.C.
§ 1395dd. So any benefit FHMC conferred on Blue Cross was derivative of
or tangential to the (sometimes mandatory) medical care FHMC provided
to the insureds. FHMC could not state a derivative claim for unjust
enrichment against Blue Cross.

10
FHMC, et al. BLUE CROSS
Decision of the Court

F. Count 9: Misrepresentations and False Disclosures

¶42 A private right of action exists under A.R.S. § 20–443 when
one “[m]isrepresent[s] the terms of any policy . . . or the benefits or
advantages promised[.]” A.R.S. § 20–443(A)(1); Haisch v. Allstate Ins. Co.,
197 Ariz. 606, 610 ¶ 13 (App. 2000). A “misrepresentation” must concern
the “’terms’ of a policy, its ‘benefits’ or ’advantages,’ or its ’true nature.’”
Id. at 610–11 ¶ 16 (quoting A.R.S. §§ 20-443(A)(1), (4)).

¶43 FHMC alleged Blue Cross violated § 20-443 by sending
reimbursement checks directly to insureds. Blue Cross responded that it
did not make a misrepresentation by mailing reimbursement checks. We
again agree with Blue Cross. Blue Cross did not make any representation,
let alone a misrepresentation, to FHMC by mailing checks to the insureds
rather than FHMC. FHMC did not allege that the insureds’ policies
prohibited Blue Cross from directly reimbursing them and it is far from
clear how mailing a check constitutes a representation about an insurance
policy’s terms. To the extent FHMC bases this claim on the Assignment, it
still fails. See supra ¶¶ 21–28.

G. Count 10: Consumer Fraud

¶44 The Consumer Fraud Act (“CFA”) grants a private cause of
action for deceptive or unfair acts or practices, misrepresentations,
concealment, suppression or omissions of material fact made “in
connection with the sale or advertisement of merchandise.” Dunlap v.
Jimmy GMC of Tucson, Inc., 136 Ariz. 338, 342 (App. 1983); A.R.S. § 44-
1522(A). “To succeed on a claim of consumer fraud, a plaintiff must show
a false promise or misrepresentation made in connection with the sale or
advertisement of merchandise and consequent and proximate injury
resulting from the promise.” Kuehn v. Stanley, 208 Ariz. 124, 129 ¶ 16 (App.
2004).

¶45 FHMC alleged that Blue Cross violated the CFA in the
following ways: (1) by failing to explain billing and reimbursement process
issues after the Insureds received care from FHMC; and (2) by making
statements to FHMC about claims subject to the NSA. In neither situation
is the CFA applicable. In neither situation is Blue Cross alleged to have
made representations “in connection with the sale or advertisement of [ ]
merchandise.” A.R.S. § 44-1522(A). In the first situation, the alleged
omission occurred after the insureds purchased policies from Blue Cross.
In the second, the statements occurred during the claim adjudication
process, after the insureds purchased their policies and obtained services

11
FHMC, et al. BLUE CROSS
Decision of the Court

(i.e., indemnity) from Blue Cross. Accord Physicians Surgery Ctr. of Chandler
v. Cigna Healthcare Inc., 609 F. Supp. 3d 930, 939-41 (D. Ariz. 2022)
(dismissing healthcare provider’s claim premised on pre-approval by
insurer and subsequent refusal to pay because prior approval is
“unconnected ‘with the sale or advertisement of [ ] merchandise.’”)
(emphasis in original) (omitted word in original).

¶46 The purpose of the CFA is to “provide injured consumers
with a remedy to counteract the disproportionate bargaining power often
present in consumer transactions.” Waste Mfg. & Leasing Corp. v. Hambicki,
183 Ariz. 84, 88 (App. 1995). Because FHMC’s allegations do not touch on
the bargaining process in a consumer transaction, the complaint does not
state a claim under the CFA.

H. Count 11: Tortious Interference

¶47 Tortious interference requires: (1) a valid contract or business
expectancy; (2) the interferer’s knowledge of the business contract or
expectancy; (3) intentional interference causing a breach of the contract or
business expectancy; and (4) damages. Neonatology Assocs., LTD. v. Phoenix
Perinatal Assocs., Inc., 216 Ariz. 185, 187 ¶ 7 (App. 2007). Moreover, the
interference must be “improper as to motive or means,” and not merely
“the act of interference.” Id. at 187–88 ¶ 8. Although “the issue of motive
. . . is one of fact and not law,” the court “may resolve the issue as a matter
of law when there is no reasonable inference to the contrary in the record.”
See id. at 188 ¶ 9.

¶48 FHMC alleged Blue Cross interfered with a contract by
mailing reimbursement checks directly to the insureds, requiring FHMC to
collect funds from the insureds, some of whom failed to remit payment.
Again, Blue Cross had no duty to reimburse FHMC directly (see supra
¶¶ 21–28) and fulfilled its obligations under the insureds’ plans by
reimbursing them. That some insureds refused to remit reimbursement to
FHMC does not show that Blue Cross intentionally interfered with
contracts between FHMC and the insureds. Nor does it make Blue Cross’s
conduct improper or intentional. That FHMC had to later attempt to collect
payment from some of the insureds does not establish that Blue Cross
engaged in improper or intentional interference. See Bar J Bar Cattle Co., Inc.
v. Pace, 158 Ariz. 481, 483–84 (App. 1988). This claim also fails as a matter
of law.

12
FHMC, et al. BLUE CROSS
Decision of the Court

II. FHMC’s Violation of Arizona Rules of Civil Appellate Procedure

¶49 When reviewing FHMC’s Opening and Reply briefs, we
found defective legal citations, including fabricated reporter and pin
citations and unsupported propositions to bolster arguments.

¶50 FHMC cites A.R.S. § 20-3102 and the Arizona Department of
Insurance and Financial Institutions Regulatory Bulletin 2025-01 for the
proposition that they impose a 15-day requirement for insurers to
acknowledge claims. Neither of these authorities impose such a
requirement, but FHMC repeatedly represented that such a requirement
exists when arguing that Arizona law does not conflict with the NSA.

¶51 In another instance, FHMC cites Coleman v. City of Mesa, 230
Ariz. 352 (2012), for the proposition that “[w]hen a trial court dismisses all
claims on a single threshold ground, appellants need not brief every claim’s
merits to preserve them.” Coleman neither mentions nor supports this
proposition.

¶52 We also identified the following case citations where the
LexisNexis reporter citation (which we bold for emphasis) does not exist:

 Mod. Orthopaedics of NJ. v. Premera Blue Cross, No. 2:25-cv-01087
(BRM) (JSA), 2025 LX 425206 (D.N.J. Nov. 3, 2025);
 Mod. Orthopaedics of Nj. v. Premera Blue Cross, No. 2:25-cv-01087
(BRM) (JSA), 2025 U.S. Dist. LEXIS 215824 (D.N.J. Nov. 3, 2025);
 Kennedy v. UnitedHealth Grp. Inc., 2025 U.S. Dist. LEXIS 117870
(S.D.N.Y. June 20, 2025);
 FHMC LLC v. Blue Cross & Blue Shield of Ariz. Inc., No. CV-23-00876-
PHX-GMS, 2024 U.S. Dist. LEXIS 62018 (D. Ariz. Apr. 3, 2024) (the
federal district court’s order in this litigation); and
 Arnal v. Travelers Prop. Cas. Ins. Co., 2007 U.S. Dist. LEXIS 112974 (D.
Ariz. Jan. 19, 2007).

¶53 Arizona Rule of Civil Appellate Procedure 13(a)(7) requires
that arguments contain citations to legal authority. The integrity of the
appellate process depends on accurate and honest advocacy. Counsel has
an ethical duty of candor to this court and to certify that representations
and citations made to this court are accurate. Ariz. R. Sup. Ct. 42, ER 3.3;
Ariz. R. Civ. P. 11(a), (b); see also Mangan v. Mangan, 227 Ariz. 346, 353–54
¶¶ 29–32 (App. 2011) (sanctioning counsel for misrepresenting the record
and relying on inappropriate legal authorities); In re Matter of Washburn v.
Houston, 2026 WL 16825, at *4 ¶ 31(Ariz. App. Jan. 2, 2026) (mem. decision)

13
FHMC, et al. BLUE CROSS
Decision of the Court

(reporting appellant to state bar where brief contained incorrect and
misleading citations to bolster arguments). We forward this decision to the
State Bar of Arizona to review whether counsel violated any rule of
professional conduct.

ATTORNEY FEES AND COSTS

¶54 Pursuant to A.R.S. § 12-341.01, Blue Cross requests its
attorney fees on appeal for defending against FHMC’s claims for breach of
contract, breach of the implied covenant, and tortious interference because
those claims arise out of contract. Blue Cross also seeks its costs on appeal
pursuant to Arizona Rules of Civil Appellate Procedure 21(a).

¶55 We grant Blue Cross’s request for reasonable attorney fees on
appeal with respect to any of FHMC’s claims arising out of contract. See
A.R.S. § 12-341.01. We also grant Blue Cross its costs on appeal. See A.R.S.
§ 12-341. These fee and cost awards are subject to Blue Cross complying
with Arizona Rule of Civil Appellate Procedure 21(a).

CONCLUSION

¶56 Because FHMC’s complaint did not state a valid claim for
relief under state law, we need not address federal preemption. We affirm
the superior court’s judgment dismissing FHMC’s claims.

MATTHEW J. MARTIN • Clerk of the Court
FILED: JR

14