FHMC, LLC v. Blue Cross and Blue Shield of Arizona, Inc.
Arizona Court of Appeals, Division One · Ariz. Ct. App. · Arizona bar guidance
Conduct
Provider's counsel filed appellate briefs citing five LexisNexis reporter cites that do not exist, plus statutes and cases for rules they do not contain.
Consequence
Dismissal affirmed; the court forwarded its decision to the State Bar of Arizona to review counsel's conduct. No monetary sanction.
Lesson
Nonexistent Lexis cites, a 15-day rule neither cited authority imposes, and a Coleman proposition it does not support drew a State Bar referral without any AI finding.
Verified September 28, 2026
- Citation
- FHMC, LLC v. Blue Cross & Blue Shield of Ariz., Inc., No. 1 CA-CV 25-0735 (Ariz. App. June 22, 2026) (mem. decision)
- Decided
- June 22, 2026
Summary
FHMC, LLC and FHMC Clinic, LLC, an out-of-network emergency care provider in Fountain Hills, appealed the dismissal of their state-law claims against Blue Cross and Blue Shield of Arizona over reimbursement for emergency services. Reviewing FHMC's opening and reply briefs, the court "found defective legal citations, including fabricated reporter and pin citations and unsupported propositions to bolster arguments." It listed five case citations whose LexisNexis reporter citations do not exist, including two for Mod. Orthopaedics of NJ v. Premera Blue Cross (D.N.J. Nov. 3, 2025), one for Kennedy v. UnitedHealth Grp. Inc. (S.D.N.Y.), one for Arnal v. Travelers (D. Ariz. 2007), and one for the federal district court's own earlier order in this litigation. The briefs also cited A.R.S. section 20-3102 and an insurance regulatory bulletin for a 15-day claim acknowledgment requirement neither imposes, and cited Coleman v. City of Mesa for a preservation rule it "neither mentions nor supports." Appellants were represented by Grover C. Peters (listed as Fountain Hills Medical Center).
- AI tool:
- Unidentified (the decision flags fabricated LexisNexis reporter citations and unsupported propositions but does not attribute them to AI)
- Amount or terms:
- No monetary sanction; decision forwarded to the State Bar of Arizona to review whether counsel violated any rule of professional conduct
How did the court address the AI-related conduct?
In a memorandum decision by Presiding Judge Catlett (joined by Judges Paton and Perkins), the court affirmed the judgment dismissing FHMC's complaint for failure to state a claim. In a separate section on FHMC's violation of the appellate rules, it cited ARCAP 13(a)(7), the duty of candor under Ariz. R. Sup. Ct. 42, ER 3.3, and Ariz. R. Civ. P. 11, and stated: "We forward this decision to the State Bar of Arizona to review whether counsel violated any rule of professional conduct." It imposed no monetary sanction for the citations. Separately, Blue Cross was awarded reasonable appellate attorney fees under A.R.S. section 12-341.01 on the claims arising out of contract, and its costs, subject to ARCAP 21(a); that award rests on the contract fee statute, not on the citation defects.
Why does FHMC, LLC v. Blue Cross and Blue Shield of Arizona, Inc. matter for law firms using AI?
The decision’s treatment of the citations is short and appears in its own section after the merits. The court described what it found as “fabricated reporter and pin citations and unsupported propositions to bolster arguments,” and set out the five LexisNexis citations that it said do not exist, bolding the reporter portion of each. One of them purported to cite the federal district court’s own 2024 order in the same dispute. The court did not state how the errors arose and did not mention artificial intelligence.
The court grounded its response in candor rather than in any finding about tools: “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.” It cited Mangan v. Mangan, where counsel were sanctioned for misrepresenting the record and relying on inappropriate authority, and a January 2026 memorandum decision, Washburn v. Houston, with the parenthetical “reporting appellant to state bar where brief contained incorrect and misleading citations to bolster arguments,” and then forwarded this decision to the State Bar.
For firms, the case illustrates citations whose case names and courts look plausible while the reporter or database citation does not exist. Firms documenting compliance may wish to consider cite-checking that confirms each citation resolves in the named database, since checking a case name alone may not catch this kind of error.
Implications for your firm
Operational steps a firm reading this case may wish to consider documenting. Strategic and rule-application calls belong to your firm's attorneys.
- Verify every electronic database citation (LEXIS, LX, WL) against the database itself, not only the case name. Here the court identified the LexisNexis reporter citations themselves as nonexistent and treated them as a candor issue.
- Review statutory and regulatory propositions as closely as case citations. The court flagged a claimed 15-day acknowledgment requirement that neither the cited statute nor the bulletin imposes.
- Consider that Division One has forwarded decisions to the State Bar (here and in Washburn) for citation misconduct without imposing a fine, so the professional-conduct consequence can arise independently of any sanction.
Sources
Primary sources
- AI attribution: the decision does not mention artificial intelligence. That the defective citations were AI-generated is a Charlotin tracker inference ('Implied'), not a finding of the court.