Arizona Revised Statutes § 12-962 gives the state and its political subdivisions a subrogation right to recover the reasonable value of medical care they paid for when someone else’s wrongful act caused the injury or illness. The state can step into the injured person’s shoes against the at-fault party, intervene in the injured person’s lawsuit, file its own suit if the injured person waits too long, and collect from any settlement or judgment the injured person receives.
The trigger is tort liability. The injury or illness must have been caused by a third party’s wrongful act or failure to act. Without that causal link to someone else, § 12-962 gives the state nothing to recover on.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
What “Stepping Into Your Shoes” Actually Means
Subrogation transfers legal position, not the claim itself. When the state pays for your care after a third party injured you, it gains whatever rights you had against that third party, up to the reasonable value of the treatment provided. The state’s parallel claim runs alongside yours; it does not replace it.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
Section 12-962 also reaches past the injured person. The state’s subrogation right extends to the guardian, personal representative, estate, dependents, and survivors. If the injured person dies, the state can assert its claim against a wrongful death recovery on the same footing.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
Assignment: A Stronger Version of the Same Right
The head of the department or agency that furnished the care can require the injured person, or the person’s representative, to assign the claim against the third party to the state, up to the reasonable value of the treatment. Assignment is more aggressive than subrogation. It transfers the claim itself rather than creating a parallel one, and once assigned, the state controls that piece of the case.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
Intervening in Your Lawsuit
If you sue the third party, the state can intervene in your case at any time. Intervention lets the state join the existing lawsuit and press its own claim for the cost of the medical care it paid. The statute gives the state that right outright; the injured person does not have a say in whether it happens.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
The Six-Month Window Before the State Sues on Its Own
If the injured person does not file a lawsuit within six months after the first day of state-funded medical care, the state can file its own action against the third party. That action can go in state or federal court, and the state can bring it in its own name, in the injured person’s name, or jointly. The injured person is not required to join the state’s lawsuit if the state proceeds without them.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
That window is shorter than most people expect, and the clock matters. It runs from the first day of treatment, not the last. Someone still deciding whether to sue may find the state already positioned to take the claim over.
Recovery From Your Settlement or Judgment
The state does not have to wait for the third party to pay. Section 12-962 lets the state recover directly from an injured person who has received money from a settlement or judgment against the at-fault party. If you settle and keep the proceeds without reimbursing the state for the care it provided, the state can pursue you for repayment.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
The statute does not cap recovery at a percentage of the settlement. It reaches the full reasonable value of the medical care, to the extent the injured person received compensation from the third party.1Arizona Legislature. Arizona Code 12-962 – Recovery of Cost of Medical Care
Compromise and Waiver Under § 12-963
A.R.S. § 12-963 lets the state compromise, settle, or waive its claims. In practice, that means the state can negotiate the amount it seeks, and it often will where the total settlement does not fully cover the injured person’s other damages. The flexibility is discretionary, though. You cannot force the state to accept less than the reasonable value of the care.
What § 12-962 Does Not Cover
Section 12-962 is the state’s own tort-based recovery statute. It is not the source of authority for every medical reimbursement claim you may see on an Arizona injury case, and confusing the tracks can be costly.
- AHCCCS liens. Arizona’s Medicaid program recovers under its own lien statute, A.R.S. § 36-2915, with its own perfection procedure and a 20-day written notice obligation on the member when a claim or lawsuit is started.2Arizona Legislature. Arizona Code 36-2915 – Lien of Administration on Damages Recovered by Injured Person; Perfection, Recording, Assignment and Notice of Lien
- Healthcare provider liens. Hospitals, physicians, ambulance services, and public healthcare facilities can attach liens to a personal injury claim under A.R.S. § 33-931. One-third of any third-party judgment, settlement, or award is exempt from those liens, so providers can only reach up to two-thirds of the total recovery.3Arizona Legislature. Arizona Code 33-931 – Lien of Health Care Provider on Damages Recovered by Injured Person Receiving Services
- Workers’ compensation subrogation. When a workplace injury is caused by a non-employer third party, the carrier’s lien runs under A.R.S. § 23-1023, and the claim is deemed assigned to the carrier if the injured worker does not sue within one year.4Arizona Legislature. Arizona Code 23-1023 – Liability of Third Person to Injured Employee; Election of Remedies
- Federal caps on state Medicaid recovery. The U.S. Supreme Court in Wos v. E.M.A. limited state Medicaid recovery to the portion of a tort settlement allocated to medical expenses. States cannot claim a share of the settlement allocated to pain and suffering, lost wages, or other non-medical damages, and cannot use a flat statutory percentage to bypass that limit.5Justia. Wos v. E. M. A.
- Medicare’s separate recovery right. Medicare payments related to a liability or workers’ compensation claim are conditional and must be repaid from a settlement, judgment, or award. Medicare’s recovery runs through the Benefits Coordination and Recovery Center and takes priority over state law and private insurance contracts under the Medicare Secondary Payer provisions.6Centers for Medicare & Medicaid Services (CMS). Medicare Secondary Payer
Each of these tracks can appear alongside a § 12-962 claim on the same case, and each has its own deadlines, notice rules, and limits. Section 12-962 tells you what the state can do with the medical costs it paid; it does not tell you what AHCCCS, a hospital, a workers’ comp carrier, or Medicare can do with theirs.