State v. Zeitner

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

STATE OF ARIZONA, Appellee,

v.

CHALICE RENEE ZEITNER, Appellant.

No. 1 CA-CR 16-0679
FILED 1-16-2018

Appeal from the Superior Court in Maricopa County
No. CR2015-000299-001
The Honorable Michael W. Kemp, Judge
The Honorable Pamela S. Gates, Judge

AFFIRMED

COUNSEL

Arizona Attorney General's Office, Phoenix
By Michael T. O'Toole
Counsel for Appellee

Maricopa County Public Defender's Office, Phoenix
By Mikel Steinfeld
Counsel for Appellant

OPINION

Judge Diane M. Johnsen delivered the opinion of the Court, in which
Presiding Judge Lawrence F. Winthrop and Judge Maria Elena Cruz joined.
 STATE v. ZEITNER
Opinion of the Court

J O H N S E N, Judge:

¶1 Chalice Zeitner was convicted of defrauding the Arizona
Health Care Cost Containment System ("AHCCCS") by lying to a physician
to obtain coverage for an abortion. On appeal, she argues the superior court
breached the physician-patient privilege by admitting her medical records
and allowing her physicians to testify against her. We hold the privilege is
abrogated by statute in cases of suspected AHCCCS fraud and affirm
Zeitner's convictions.

FACTS AND PROCEDURAL BACKGROUND

¶2 Zeitner went to a Phoenix obstetrician for an abortion in
March 2010. She told him she just had discovered she was pregnant after
recently undergoing extensive radiation and chemotherapy treatments for
cancer. Zeitner said she wanted an abortion because she thought the
radiation and chemotherapy likely had harmed her fetus. After examining
Zeitner, however, the obstetrician concluded she was well-nourished and
healthy, about 20 weeks' pregnant and in no acute distress. Accordingly,
he proposed a course of care designed to avoid an abortion. He told Zeitner
to obtain information from her cancer physicians about her treatments and
referred her to a specialist in high-risk pregnancies in the hope that she
could deliver a viable baby.

¶3 Zeitner met with the specialist a few days later. Examining
Zeitner, the specialist grew suspicious. He thought it unusual that,
although Zeitner told him she had a diagnosed malignant uterine tumor,
the physicians treating her cancer had not removed her uterus. Zeitner told
the specialist her main chemotherapy drug was acetaminophen—an over-
the-counter pain reliever, not a chemotherapy drug. And Zeitner was
unable to relate details of her cancer diagnosis or treatment, other than that
she had been diagnosed at a hospital in Boston. From an ultrasound, the
specialist saw no abnormalities that compelled an abortion. He reported
his concerns about Zeitner's veracity to the obstetrician.

¶4 A few days later, Zeitner successfully applied for AHCCCS
benefits. AHCCCS had turned down an application Zeitner had submitted
1

1 AHCCCS administers Arizona's Medicaid program. Southwest
Fiduciary, Inc. v. Arizona Health Care Cost Containment System Admin., 226
Ariz. 404, 406, ¶ 8 (App. 2011). Medicaid is a federal program that funds
medical care for qualified low-income individuals in participating states.

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Opinion of the Court

just a month before, citing insufficient documentation. Although Zeitner's
earlier application had said she had no serious or chronic illnesses, on the
application she submitted in late March, Zeitner stated she had a serious
chronic illness and said her pregnancy was high-risk and life-threatening.

¶5 On March 31, the obstetrician received an email signed "Al
Zeitner" that seemed to be following up on behalf of Chalice Zeitner.2
Referencing Chalice in the third person, the email stated the author was
waiting to hear back from the obstetrician about a "procedure" that he
purportedly had proposed. The email suggested the procedure was urgent,
stating:

Chalice is scheduled to resume chemo and radiotherapy on
April 9th. She must have the tumors removed in the next 4
weeks. She is on bedrest and supervised care in her home
until notice from [the Phoenix obstetrician] of this procedure.

¶6 Shortly thereafter, Zeitner brought the obstetrician a letter
dated April 1, purportedly written by a "Dr. McMahon" at the Boston
hospital Zeitner claimed had treated her for cancer. The letter
recommended that Zeitner "receive an urgent [abortion] . . . to relieve third
term life-threatening certainties to the patient." Attached to the letter was
a list of chemotherapy and radiotherapy medications purportedly
prescribed to Zeitner. (Although a physician named McMahon actually
practiced at the Boston hospital at the time, he had never treated Zeitner
and had not written the letter or created the list of medications Zeitner gave
to him.)

¶7 Accepting the letter as authentic, the obstetrician concluded
Zeitner urgently needed an abortion. Based on his opinion that an abortion
was necessary to protect Zeitner's health, AHCCCS authorized payment,
and the obstetrician aborted Zeitner's fetus on April 9.

¶8 Meanwhile, Zeitner launched a scheme to garner donations
from friends and others to fund her purported cancer treatments. Using the
name "Trinity McLaughlin," Zeitner sent a social media message to her

See 42 U.S.C. §§ 1396 to 1396w-5 (2012). Each participating state administers
its own Medicaid program, which must conform to federal requirements.
See, e.g., Ariz. Rev. Stat. §§ 36-2901 to -2999.57 (2018).

2 Unbeknownst to the obstetrician, from time to time Chalice Zeitner
used "Al Zeitner" as an alias.

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Opinion of the Court

boyfriend, informing him that "Trinity" and a few others had created a
webpage to raise funds for Zeitner's cancer treatments and suggesting the
boyfriend take over the fundraising effort. The next week, "Trinity" emailed
the boyfriend fundraising materials for him to use, including a
heartrending plea for donations detailing Zeitner's cancer, her costly
painful treatments and her resulting financial hardships.

¶9 Acting on "Trinity's" request, the boyfriend posted on a
fundraising website the story "Trinity" had sent him, forwarded "Dr.
McMahon's" letter to the website to satisfy its request for proof that Zeitner
actually had a medical condition, opened a bank account for donations, and
solicited more than 600 social media friends to help pay for the purported
cancer treatments. In response, more than 20 people donated a cumulative
total of more than $2,000 to Zeitner's cancer fund via the website.

¶10 Several months later, Zeitner became pregnant again, and the
Phoenix obstetrician delivered her child by caesarean section. During the
procedure, the obstetrician saw no evidence that tumors had been removed
from Zeitner's uterus or that she had undergone chemotherapy or
radiation. By then highly suspicious about Zeitner's claimed cancer, the
obstetrician contacted Dr. McMahon at the Boston hospital, who said he
had not treated Zeitner nor authored the letter Zeitner had given him. The
obstetrician reported his suspicions about Zeitner to her health plan, which
forwarded the matter to AHCCCS.

¶11 A grand jury eventually indicted Zeitner on 11 charges.
AHCCCS generally does not cover abortions; the indictment alleged
Zeitner defrauded AHCCCS and stole public health benefits by lying about
having cancer so that her abortion would fall within an exception to that
rule. The State also alleged Zeitner defrauded the donors to her cancer
fund, attempted to steal donations and committed identity theft and
forgery.

¶12 After pleading not guilty to each of the charges, Zeitner
moved to preclude all information her physicians obtained from her,
including records relating to her communications with the physicians and
their examinations of her, arguing they were protected under Arizona's
physician-patient privilege, Arizona Revised Statutes ("A.R.S.") section 13-
4062(A)(4) (2018).3 The State opposed the motions, arguing the privilege

3 Absent a material revision of a statute since the relevant date, we cite
the statute's current version.

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was abrogated by statute and, in any event, Zeitner had waived it. The
court denied the motions.

¶13 After an 11-day trial in which the court admitted Zeitner's
medical records and allowed her physicians to testify, the jury found
Zeitner guilty of all charges. The court sentenced her to concurrent prison
terms, the longest of which was ten years.

¶14 Zeitner timely appealed. We have jurisdiction pursuant to
Article 6, Section 9 of the Arizona Constitution, and A.R.S. §§ 12-
120.21(A)(1) (2018), 13-4031 (2018) and -4033(A)(1) (2018).

DISCUSSION

A. General Principles.

¶15 On appeal, the only argument Zeitner raises is that the
superior court erred by admitting her medical records and allowing her
physicians to testify against her.4 We review de novo whether a privilege
applies. State v. Wilson, 200 Ariz. 390, 393, ¶ 4 (App. 2001); see also State v.
Herrera, 203 Ariz. 131, 136, ¶ 12 (App. 2002) (reviewing de novo a statutory
exception to a privilege).

¶16 Arizona's physician-patient privilege applicable in criminal
cases provides:

A person shall not be examined as a witness in the following
cases:

* * *

4. A physician or surgeon, without consent of the physician's
or surgeon's patient, as to any information acquired in
attending the patient which was necessary to enable the
physician or surgeon to prescribe or act for the patient.

4 As explained below, we conclude that the physician-patient
privilege does not apply in cases of suspected fraud against AHCCCS.
Zeitner does not argue that even if the evidence she challenges was
properly admitted to show she defrauded AHCCCS, the jury should not
have been allowed to consider that evidence on the other charges against
her.

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A.R.S. § 13-4062(4). Although the privilege is framed as a testimonial
privilege, it also protects patient medical records. Tucson Med. Ctr. Inc. v.
Rowles, 21 Ariz. App. 424, 427 (1974); see State v. Mincey, 141 Ariz. 425, 439
(1984) (privilege protects "[a]ll information obtained by the physician,
whether from examination, testing, or direct communication").5

¶17 "The purpose of the [physician-patient] privilege is to
encourage 'full and frank disclosure of medical history and symptoms by a
patient to [her] doctor.'" Phoenix Children's Hosp., Inc. v. Grant, 228 Ariz. 235,
237, ¶ 8 (App. 2011) (quoting Lewin v. Jackson, 108 Ariz. 27, 31 (1972)). That
purpose is served by protecting "communications made by the patient to
[her] physician for the purpose of treatment." State v. Santeyan, 136 Ariz.
108, 110 (1983).

B. Common-Law Exception for Crimes or Frauds.

¶18 Under a common-law exception to the attorney-client
privilege, that privilege does not protect statements a client makes to a
lawyer in committing a fraud. See Buell v. Superior Court, 96 Ariz. 62, 68
(1964) ("A client who consults an attorney for advice that will serve him in
the commission of a fraud will have no help from the law.") (quoting Clark
v. United States, 289 U.S. 1, 15 (1933)). The State argues the common law
similarly constrains the physician-patient privilege.

¶19 This court already has ruled, however, that no common-law
exception for crimes or frauds applies to the physician-patient privilege.
See Wilson, 200 Ariz. at 395, ¶ 11. The defendant in Wilson was charged with
workers' compensation fraud, and the State argued the superior court erred
by precluding the defendant's treating physicians from testifying about the
claimed injury. 200 Ariz. at 392-93, ¶¶ 2-3. As here, the State argued the
privilege does not apply when the patient is accused of fraud. Id. at 394, ¶
9. Rejecting that argument, we held that "[i]n the absence of any supporting
authority," a fraud allegation, by itself, does not render the privilege
ineffective. Id. "The state's mere charge of fraud against [the patient] and
its alleged need for the otherwise privileged evidence at issue . . . do not

5 Rowles involved A.R.S. § 12-2235 (2018), the physician-patient
privilege applying to civil cases, 21 Ariz. App. at 427, but its analysis applies
to A.R.S. § 13-4062(4). "Because the language of § 12-2235 'is not
significantly different from' § 13-4062(4), 'there is no sound reason why the
legal interpretation of the statutes should be any different.'" Wilson, 200
Ariz. at 397, ¶ 19 (quoting State v. Santeyan, 136 Ariz. 108, 110 (1983)).

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Opinion of the Court

justify abrogating the privilege or broadly engrafting a common law 'crime-
fraud exception' to the privilege in this particular context." Id. at 395, ¶ 11.

¶20 Wilson's rejection of the asserted common-law exception arose
out of the origin of the physician-patient privilege in Arizona. The
common-law crime-fraud exception applies to the attorney-client privilege
because that privilege is rooted in the common law: Both the attorney-client
privilege and the exception to that privilege for crimes and frauds existed
in the common law long before Arizona enacted an attorney-client privilege
statute. See Buell, 96 Ariz. at 68 (quoting Clark, 289 U.S. at 15 (tracing history
of the common-law attorney-client privilege to at least the time of Queen
Elizabeth, and the common-law crime-fraud exception to the attorney-
client privilege to the 19th century)). Accordingly, by codifying the
common-law attorney-client privilege, the legislature impliedly authorized
the common-law exception to that privilege for crimes and frauds.

¶21 By contrast, because the physician-patient privilege did not
exist at common law, the legislature's enactment of that privilege brought
with it no crime-fraud exception. As Wilson stated, "'[b]ecause there was no
[physician-patient] privilege at common law, the [physician-patient] statute
must be strictly construed.'" Wilson, 200 Ariz. at 393, ¶ 5 (quoting State v.
Morales, 170 Ariz. 360, 363 (App. 1991)). Because the physician-patient
privilege was created by the legislature, it is up to the legislature, not the
courts, to adopt any exception applicable in cases of crimes or frauds. Id. at
395, ¶ 12.

C. Abrogation by Arizona's AHCCCS Statutes.

¶22 Although no common-law exception to the physician-patient
privilege applies in Arizona, our legislature has created other exceptions to
the privilege. Id. at 395, ¶ 11, n.3 (listing exceptions); see Martin v. Reinstein, 195 Ariz. 293, 320, ¶ 96 (App. 1999) ("the legislature has, in several instances,
determined that the public good requires that statutory or rule-based
confidentiality give way to serve a greater good."). We agree with the State
that the legislature likewise has created a statutory exception to the
physician-patient privilege that applies when a patient lies to a physician
in seeking treatment for which AHCCCS otherwise would not provide
reimbursement.

¶23 By law, health-care providers must report "suspected fraud"
to AHCCCS, and if the agency's resulting "preliminary investigation" gives
rise to a belief that a fraud has occurred, AHCCCS "shall" refer the claim for
prosecution:

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Opinion of the Court

All contractors, subcontracted providers of care and
noncontracting providers shall notify the [AHCCCS] director
or the director's designee immediately in a written report of
any cases of suspected fraud or abuse. The director shall
review the report and conduct a preliminary investigation to
determine if there is sufficient basis to warrant a full
investigation. If the findings of a preliminary investigation
give the director reason to believe that an incident of fraud or
abuse has occurred, the matter shall be referred to the
attorney general.

A.R.S. § 36-2918.01(A) (2018).6 Further, when fraud is suspected, Arizona
law requires a physician to turn over a patient's records to AHCCCS
investigators:

Subject to existing law relating to privilege and protection, the
director shall prescribe by rule the types of information that
are confidential and circumstances under which such
information may be used or released, including requirements
for physician-patient confidentiality. . . . Notwithstanding
any law to the contrary, a member's medical record shall be
released without the member's consent in situations or
suspected cases of fraud or abuse relating to the system to an
officer of the state's certified [AHCCCS] fraud control unit
who has submitted a written request for the medical record.

A.R.S. § 36-2903(I) (2018). AHCCCS may subpoena any record necessary to
support an investigation and may subpoena any person to testify under
oath. A.R.S. § 36-2918(G) (2018).

¶24 These provisions together demonstrate a plain directive by
the legislature that the physician-patient privilege will give way when
necessary to allow investigation and prosecution of suspected fraud against
AHCCCS. Although the cited provisions do not explicitly constrain the
physician-patient privilege, they abrogate the privilege by implication
when fraud is suspected by imposing disclosure obligations on physicians
that are entirely inconsistent with the privilege. In the normal case, the
physician-patient privilege does not permit compelled disclosure of the

6 Those who report suspected fraud in good faith are protected from
civil liability, while those who fail to report risk negative consequences. See
A.R.S. § 36-2918.01(B)-(C) (one obligated to report AHCCCS fraud who fails
to do so is subject to disciplinary action).

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physician's records concerning a patient. See Mincey, 141 Ariz. at 439;
Rowles, 21 Ariz. App. at 427. But when fraud against AHCCCS is suspected,
A.R.S. §§ 36-2903(I) and -2918(G) require physicians to release a patient's
medical records without the patient's consent. Indeed, § 36-2903(I)
explicitly trumps the physician-patient privilege in such cases by
compelling a physician to release patient records to investigators
"[n]otwithstanding any law to the contrary."

¶25 Zeitner argues that even though the cited statutes may
compel physicians to report suspected fraud and release patient records in
such cases, it does not follow that the State may use that information to
prosecute a patient suspected of fraud. We are not persuaded. Under § 36-
2918.01(A), when a preliminary investigation by AHCCCS "give[s] the
director reason to believe that an incident of fraud or abuse has occurred,"
the director "shall" refer the matter to the attorney general. The purpose of
such a referral, of course, would be for consideration of prosecution. See
Ariz. Admin. Code R9-22-512(A)(2) (AHCCCS may "release safeguarded
information . . . without the [patient's] consent, for the purpose of
conducting . . . prosecution . . . related to the administration of the AHCCCS
program.").7

¶26 Zeitner also argues that no statute or regulation allows a
physician to be compelled to testify about a patient's medical care. But
under § 36-2903(I), medical records relating to a suspected fraud must be
disclosed; that abrogation of the privilege necessarily implies that a

7 Although not raised directly on appeal, other courts have held that
the Supremacy Clause requires a state physician-patient privilege to give
way when necessary to investigate and prosecute Medicaid fraud. See In re
Zyprexa Prod. Liab. Litig., 254 F.R.D. 50, 57 (E.D.N.Y. 2008), aff'd, No. 04-MD-
1596, 2008 WL 4682311 (E.D.N.Y. Oct. 21, 2008) ("The physician-patient
privilege simply is not implicated when a state agency compels production
of Medicaid records for use in connection with the agency's lawful
functions; and to the extent that state law provides otherwise, it is trumped
by the Supremacy Clause and by the state's obligations under the Medicaid
regulations."); In re Search Warrant for 2045 Franklin, Denver, Colo., 709 P.2d
597, 601 (Colo. App. 1985); People v. Ekong, 582 N.E.2d 233, 234-35 (Ill. App.
1991); In re Grand Jury Investigation, 441 A.2d 525, 531 (R.I. 1982); cf. People v.
Bhatt, 611 N.Y.S.2d 447, 452 (Sup. Ct. 1994) ("[A]n exception to the
physician-patient privilege . . . must be created to permit appropriate
oversight of the Medicare program."). Given that we resolve this appeal
based on state-law grounds, we need not consider the implications of the
Supremacy Clause on the privilege.

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Opinion of the Court

physician may be called to testify about statements the patient made
relevant to the suspected fraud. Cf. Rowles, 21 Ariz. App. at 427 (although
nominally a testimonial privilege, physician-patient privilege also shields
records a physician maintains for his or her patients). It would serve little
purpose, and would make little sense, for a patient to retain the power to
prevent her physician from testifying when the physician can be legally
compelled to release the patient's medical records—the confidences the
privilege is designed to protect already will have been disclosed.

¶27 In construing statutes, we "apply constructions that make
practical sense" rather than those that "frustrate legislative intent." State v.
Hasson, 217 Ariz. 559, 562, ¶ 11 (App. 2008). Construing the AHCCCS anti-
fraud statutes to abrogate the privilege for records in which a physician
recounts a patient's statements but not for the physician's testimony about
those statements would frustrate the legislature's intent by impeding fraud
prosecutions while failing to meaningfully protect a patient's privacy.
Construing the reporting and disclosure requirements in §§ 36-2918.01(A)
and -2903(I) to serve the purpose of investigating and prosecuting fraud,
we hold that in cases of suspected fraud against AHCCCS, a physician may
be required to testify about communications with a patient.

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CONCLUSION

¶28 In sum, as in Wilson, we decline to apply a common-law
crime-fraud exception to the statutory physician-patient privilege. The
reporting and disclosure requirements that AHCCCS imposes on
physicians, however, distinguish a prosecution of suspected AHCCCS
fraud from the workers' compensation fraud in Wilson. The reporting
requirements that AHCCCS imposes on physicians and the requirement to
disclose confidential patient information in cases of suspected fraud
abrogate the privilege insofar as it otherwise might shield a patient's
records and statements to a physician in such a case. Accordingly, the
superior court did not err in declining to enforce the privilege and by
admitting Zeitner's medical records and allowing the State to call her
physicians to testify.8 We therefore affirm Zeitner's convictions and the
resulting sentences.

AMY M. WOOD • Clerk of the Court
FILED: AA

8 We may affirm the superior court's ruling for any reason supported
by the record. See Gila River Indian Cmty. v. Dep't of Child Safety, 242 Ariz.
277, 283, ¶ 26 (2017).

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