The Superior Court of Arizona in Maricopa County is weighing a bid by Centene Corp. to shift a provider discrimination lawsuit from the courtroom to arbitration.
The case stems from actions taken during a state crackdown on alleged fraud involving sober living facilities serving Native American communities.
Counsel for Centene affiliate Arizona Complete Health argued that disputes with the plaintiff health care providers fall under arbitration clauses in their contracts. According to local court reports on oral arguments, the company contends that the claims should be resolved through the agreed arbitral process rather than through civil litigation.
The underlying dispute traces back to 2023, when Arizona’s Medicaid agency launched multiple criminal investigations into alleged fraudulent practices at sober living homes.
According to the initial complaint, the investigations centered on providers that marketed behavioral health services for substance use treatment, largely to Native American patients, but allegedly failed to deliver those services.
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In response to the alleged fraud, the state and participating insurers, including managed care entities, suspended, terminated or excluded certain providers from their networks.
The plaintiffs allege that these enforcement steps were applied to them based on race or ethnicity, or because they were associated with individuals of particular racial or ethnic backgrounds, rather than on substantiated findings of fraud.
The providers claim that they were singled out to limit or avoid payment for services they say were properly rendered. They assert that the defendants used fraud allegations as a pretext to cut off reimbursement obligations and narrow provider rosters.
The lawsuit also contends that the underlying fraud allegations were not adequately examined before action was taken. According to the complaint, in many instances regulators and plans moved ahead without substantiating the claims through thorough investigation.
The Arizona dispute comes at a time when Centene is managing broader financial and regulatory pressures in its core government-backed lines. In its third-quarter 2025 results, the company reported total revenue of $49.7 billion, up 22% from a year earlier, while its health benefits ratio rose to 92.7% amid higher medical costs in its Marketplace and Medicaid portfolios.
The case is unfolding against a wider backdrop of discrimination-related litigation involving insurers’ processes and tools. In a separate federal lawsuit, policyholders have accused State Farm of using “cheat and defeat AI algorithms as discriminatory tools” that allegedly disadvantaged elderly, disabled Black homeowners in Alabama.
