Gov. Katie Hobbs vetoed legislation that would have established financial transparency requirements tied to an alleged pay-to-play scandal involving her administration.
Hobbs called the legislation, SB 1186, a “political stunt” against her in a veto letter. The governor issued her veto last Friday as part of her office’s regular legislative action updates.
The governor also claimed that her proposed amendment to the financial disclosure reform bill — carried by Senate Minority Leader Priya Sundareshan (D-LD18) — was superior to what was vetoed by her.
“As I have made clear, this proposal is a political stunt that applies only to one elected official, when what we really need is real transparency and accountability for all elected officials, campaigns, and affiliated political committees,” said Hobbs. “Transparency and accountability are priorities I have acted on from day one.”
The Hobbs-Sundareshan amendment would have restricted lawmakers from receiving donations from state contract bidders.
Senate President Pro Tempore T.J. Shope (R-LD16), the bill sponsor, explained to Capitol Media Services that the governor’s office, not the legislature, handles procurement, and that the amendment would have weakened the legislation.
SB 1186 would have required companies holding or seeking state contracts and certain grants to disclose anything of value provided in the preceding five years to the governor or the governor’s campaign-related entities, inaugural funds, joint fundraising committees, and organizations supporting the governor or opposing the governor’s political opponents.
The bill also would have prohibited state agencies and employees from destroying contract proposal evaluation notes. Contracts tied to improperly destroyed records would be subject to resolicitation.
Multiple entities are investigating Hobbs for the alleged pay-to-play scheme, which involved $400,000 in campaign donations from group home operator Sunshine Residential Homes and a unique, multibillion-dollar rate increase contract nearly 40 percent above the average for other peer contractors, as awarded by the Arizona Health Care Cost Containment System (AHCCCS).
Hobbs was also the only Arizona candidate to receive contributions from Sunshine Residential Homes CEO Simon Kottoor and his wife, Elizabeth Kottoor, during the 2022 and 2024 election cycles.
Several investigations into this alleged scheme are occurring simultaneously: one by Attorney General Kris Mayes, one by Maricopa County Attorney Rachel Mitchell and Auditor General Lindsey Perry, and one by an advisory team within the Arizona House.
The agency told Capitol Media Services that the contract occurred because Sunshine Residential Homes threatened to increase intake of migrant children at the expense of the state’s foster children if it didn’t receive additional funding.
The Arizona Senate GOP stated in a press release that Hobbs had rejected essential safeguards to prevent government officials from rewarding financial supporters with taxpayer-funded contracts.
Shope accused Hobbs of denying Arizona taxpayers the right to transparency from their elected leaders.
“Arizona families work hard for every dollar they send to the government. They have every right to know whether companies seeking millions or even billions of taxpayer dollars have financial or political ties to the Governor’s inner circle before contracts are awarded, not after another scandal makes headlines,” said Shope. “If state contracting decisions are truly being made fairly and on merit alone, transparency should not be controversial.”
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Arizona lawmakers have approved legislation sponsored by Senator Hildy Angius (R-LD30) aimed at strengthening care for individuals living with serious mental illness while improving public safety and long-term stability across the state.
Senate Bill 1630, the Seriously Mentally Ill Enhanced Residential Treatment Pilot Program, passed the Arizona Senate by a bipartisan vote of 28-1 and cleared the House on a 42-13 vote. The legislation was transmitted to Governor Katie Hobbs on June 12.
The bill establishes a three-year pilot program designed to provide enhanced residential treatment options for adults with severe and persistent mental illness who require a higher level of care than traditional outpatient services can provide.
The program seeks to address a longstanding gap in Arizona’s behavioral health system by offering structured support to individuals at risk of repeated psychiatric crises, hospitalization, incarceration, and homelessness.
Under the legislation, the Arizona Health Care Cost Containment System (AHCCCS) would administer the pilot program, subject to approval by the federal Centers for Medicare and Medicaid Services (CMS). The program would initially serve up to 60 eligible participants statewide, with the possibility of future expansion if data demonstrates reduced utilization of high-cost services and overall cost savings.
🚨FOR IMMEDIATE RELEASE: Senator Angius Advances Bipartisan Health Care Reform Legislation to the Governor
“For too long, Arizona has lacked adequate options for some of our most vulnerable seriously mentally ill individuals who need more support than traditional outpatient services can provide but do not belong cycling endlessly between emergency rooms, jails, homelessness, and crisis facilities,” stated Senator Angius. “These are often individuals whose conditions have become so severe that they cannot safely care for themselves, maintain stable housing, manage complex medications, or consistently participate in treatment without significant support.”
The legislation creates a new category of licensed facilities known as Enhanced Residential Treatment Facilities. These facilities would provide behavioral health treatment, health-related services, and around-the-clock structured support for individuals who have been determined to be seriously mentally ill under Arizona law.
Services available through the facilities would include continuous supervision, medication administration and monitoring, crisis intervention, case management, treatment planning, social skills development, budgeting assistance, and other support services designed to help residents maintain stability and improve long-term outcomes.
Eligibility for the pilot program would be limited to Arizona adults who have been designated as seriously mentally ill and meet specific clinical and financial requirements. Priority would be given to individuals experiencing the most significant challenges, including those under court-ordered treatment, those under legal guardianship due to psychiatric incapacity, individuals recently released from correctional or behavioral health facilities individuals experiencing homelessness or at risk of homelessness, and those with repeated psychiatric hospitalizations or crisis episodes.
The legislation also requires comprehensive service planning, annual medical necessity reviews, stakeholder input during implementation, and annual reporting to state leaders on outcomes such as housing stability, hospitalization rates, crisis service utilization, emergency department visits, jail involvement, and fiscal impacts.
Providers would be required to document behavioral interventions and develop transition and discharge plans before releasing participants from treatment, helping prevent individuals from being discharged into unstable or unsafe situations.
If approved by Governor Hobbs, the pilot program would take effect for three years following federal approval, with enrollment beginning no later than one year after federal authorization is granted.
“SB 1630 creates a pathway for enhanced residential treatment that focuses on stability, accountability, and longterm recovery,” said Angius. “Just as importantly, it helps prevent dangerous situations where individuals experiencing severe psychiatric crises are released back into the community without the structure and services necessary to protect themselves and those around them. This legislation is about compassion, public safety, and finally addressing a gap in Arizona’s behavioral health system that families, caregivers, law enforcement, and providers have been struggling with for years.”
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
A bipartisan bill aimed at reducing overlapping health care regulations and establishing statewide standards for behavioral health technicians is headed to Gov. Katie Hobbs after clearing the Arizona Legislature with broad support.
SB 1162, sponsored by Sen. Hildy Angius (R-LD30), would require the Arizona Department of Health Services (ADHS) and the Arizona Health Care Cost Containment System (AHCCCS) to review duplicative licensing, compliance, inspection, auditing, and reporting requirements affecting health care institutions.
SB 1162 passed the Senate on final reading Tuesday in a 28-1 vote after previously passing the House in April by a 49-8 vote. The bill was transmitted to the governor on Wednesday.
🚨FOR IMMEDIATE RELEASE: Senator Angius Advances Bipartisan Health Care Reform Legislation to the Governor
Angius said the measure is intended to reduce duplicative regulation while maintaining oversight and patient safety.
“Government works best when it focuses on protecting people, not creating layers of unnecessary bureaucracy,” Angius said in a statement. “SB 1162 takes a commonsense approach by identifying regulatory overlap between state agencies and reducing administrative burdens that pull health care providers away from patient care.”
Under the bill, ADHS and AHCCCS would be required to review areas of overlap involving licensing, certification, enrollment requirements, on-site surveys, inspections, audits, compliance activities, data collection, reporting requirements, corrective action processes, and enforcement procedures applicable to health care institutions.
The legislation directs the two agencies to identify opportunities to eliminate or reduce duplicative, redundant, or inconsistent requirements while maintaining patient safety and regulatory oversight. It also requires the agencies to coordinate or align policies, procedures, and operational practices to minimize administrative burdens on health care institutions.
The bill states that nothing in the measure requires action inconsistent with federal Medicaid conditions of participation, conditions of payment, or other applicable federal requirements.
SB 1162 would also require ADHS to submit a written report to the House and Senate Health and Human Services committees by Dec. 31, 2026, and every four years thereafter. The report must summarize the review’s findings, identify any duplication or overlap, and include recommendations for statutory, regulatory, or administrative changes.
The measure also adds a new article to state law governing behavioral health technicians. Under the bill, a behavioral health technician must be at least 18 years old, possess a high school diploma or equivalent, and successfully complete required background checks before serving in the role.
Before providing supervised direct services, behavioral health technicians would be required to complete training covering behavioral health system orientation, confidentiality and compliance, professional boundaries and ethics, crisis response and de-escalation, and trauma-informed and recovery-oriented care.
The bill defines a behavioral health technician as a person employed by a behavioral health facility or a hospital authorized to provide psychiatric services who provides behavioral health services under the supervision or clinical oversight of a licensed behavioral health professional or a registered nurse working within the nurse’s scope of practice.
The legislation also limits behavioral health technicians to delegated clinical and support functions consistent with their demonstrated training and competence, as well as the policies and procedures of the employing behavioral health facility or hospital.
The House summary of the bill states that a behavioral health technician would not be authorized to diagnose medical or behavioral health conditions, prescribe medications, or provide services beyond those delegated and supervised by a licensed behavioral health professional or licensed registered nurse.
“At the same time, this legislation strengthens standards for behavioral health technicians who play a critical role in serving some of Arizona’s most vulnerable individuals,” Angius said. “Patients deserve qualified professionals, clear accountability, and a behavioral health system that puts care first.”
SB 1162 was first introduced in January and received unanimous support in the Senate Health and Human Services Committee. It passed the Senate in March on a 29-0 vote before being amended in the House. After the House approved the amended bill, the Senate concurred with the changes on Tuesday.
Sen. Angius’ bill now awaits action from Gov. Hobbs.
A recent op-ed in the Arizona Republic by the Arizona Center for Economic Progress argued that the legislature’s budget “doesn’t add up” and that Arizona needs a “reality check.” We agree a reality check is in order, but definitely not the kind being offered.
The argument, which has become the standard refrain from the Left on tax policy, is that Arizonans have enjoyed too many tax cuts over the years (the fault of Republican lawmakers), and that this has left the state anemic in revenues and starved of the ability to provide essential government services.
But the average middle-class, tax-paying resident would probably scratch their head at this. They still have roads to drive on. The police still come when they call (except maybe if they live in Tucson). There are still bureaucrats employed to receive their tax filings and permit fees.
No matter how much the Left likes the story that government is running on fumes, people don’t believe it – and their intuition is right, because none of the actual data supports it. The reality is the very opposite. Arizona’s state budget has been ballooning for years. Our welfare programs have never been more riddled with fraud. And governments of every size in the state just keep sizing up. But most concerning about the myth that state government is poor and taxpayers are too rich is that it belies a philosophy that every Arizonan should find alarming…
The U.S. Department of Justice has formed the West Coast Healthcare Fraud Strike Force, a new multi-district initiative targeting the significant rise in healthcare fraud across Arizona, California, and Nevada. The effort unites federal prosecutors with law enforcement partners to protect Arizona taxpayers, patients, and legitimate healthcare services from sophisticated fraud networks.
Assistant Attorney General Colin McDonald of the DOJ’s Fraud Division cited data showing sharp increases in fraud activity in the three states. “The Fraud Division is committed to bringing that same relentless, data-driven prosecutorial force to bear across every corner of this region,” said McDonald, “making unmistakably clear that no scheme is too sophisticated, no network too large or small, and no fraudster too distant to escape federal accountability.”
Arizona has been particularly hard-hit and is already on the front lines of enforcement. U.S. Attorney Timothy Courchaine for the District of Arizona noted that federal law enforcement and his office have already disrupted fraud schemes worth over a billion dollars of taxpayer money in the state. “Our mission as part of the West Coast Health Care Fraud Strike Force is to ensure Americans who need critical services are not used as pawns to make bad actors rich,” Courchaine stated. “Through excellent investigations, trial work, and seizures of ill-gotten gains, the District of Arizona will continue safeguarding those services.”
Arizona Attorney General Kris Mayes told The Center Square, “Arizona has been on the front lines of fighting Medicaid fraud for the past several years, and we welcome the federal government’s help in combatting this problem.” Mayes also highlighted that since 2023, her office has indicted 166 individuals and entities and recovered or seized more than $139 million in cash and assets.
Recent Arizona cases underscore the scale of the threat. In one scheme, Farrukh Jarar Ali, a 41 year old Pakistan-based operator, was charged with conspiracy to commit healthcare fraud and related offenses after allegedly submitting approximately $650 million in false and fraudulent claims to Arizona’s Medicaid program (AHCCCS) through at least 41 substance abuse treatment clinics.
Many patients were recruited from homeless populations or Native American reservations, and clinics often provided little or no legitimate care. AHCCCS paid out roughly $564 million before the scene was uncovered. Ali personally received about $24.5 million and used some proceeds to purchase luxury real estate in Dubai.
In another prosecution, Phoenix residents Alexandra Gehrke and her husband Jeffery King were sentenced to 15.5 years and 14 years in prison, for orchestrating a massive wound graft fraud scheme. Between November 2022 and May 2024, they and co-conspirators submitted over $1.2 billion in false or fraudulent claims to Medicare and other insurers for medically unnecessary bioengineered skin substitutes applied to elderly and terminally ill patients — often through illegal kickbacks and regardless of medical need.
Federal programs paid out nearly $615 million. Authorities seized substantial assets from the couple, including $97 million from bank accounts, luxury vehicles, life insurance annuities, cash, and gold and silver.
Mayes also referenced a prior $2.5 billion Medicaid fraud scheme involving fraudulent sober living homes targeting Native Americans, from which the state recovered only about 5% of losses. Her office has since launched a $6 million grant program to assist affected tribal nations.
The new Strike Force builds on these successes and addresses emerging threats identified by Scott Lampert, Acting Deputy Inspector General for Investigations at the U.S. Department of Health and Human Services. Lampert pointed to “sham operations designed to appear legitimate while exploiting patients and inflating claims through increasingly sophisticated methods.”
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
