U.S. District Chief Judge Christina Armijo denied the providers’ request for a temporary restraining order, saying they had not met the legal burden for such an extraordinary measure.
The TRO request was filed by eight of the 15 nonprofits whose Medicaid money for behavioral health was halted by the Human Services Department following an audit by a Boston firm. The HSD said the audit showed overbilling, widespread mismanagement and possible fraud.
The audit findings were referred to the attorney general, who is investigating.
The providers argued that the judge should order an immediate end to the payment suspensions and require the HSD to hold “name-clearing hearings” at which the providers could make their case.
In a related development, the dispute among state officials about Auditor Hector Balderas’ access to the HSD audit of the providers was resolved today. Balderas and the attorney general’s office filed a motion with a Santa Fe judge agreeing that Balderas should have access to the audit, but not be allowed to release its contents to the public. The dispute arose after HSD refused to turn over the audit to Balderas and he got a judge to issue a subpoena.
Lawmakers, meanwhile, heard warnings at a legislative hearing that the suspension of payments to providers and the proposed takeover by some Arizona companies will interrupt services to the mentally ill and addicted as the current providers go out of business.
The administration of Gov. Susana Martinez says that’s not the case, that services will continue during the transition to new managers.