The administration of Arizona Governor Katie Hobbs has already been marked by numerous misfires in the ranks of her top administrators. Now they are dealing with more bad news as Arizona House Republicans are questioning how Governor Katie Hobbs’ chief medical officer for the state’s Medicaid agency could still be in her position, as she has an expired physician’s license.
Phoenix-based psychiatrist, Dr. Theresa Costales, has been chief medical officer for the Arizona Health Care Cost Containment System, known as AHCCCS, since January. However, records with the Arizona Medical Board show that her license expired on August 9.
Despite this, Costales continues advising on state health policies affecting more than 2 million Arizonans. Republican leaders say the lapse is a clear failure of oversight by Hobbs’ administration and undermines public trust in state healthcare leadership.
The Chief Medical Officer (CMO) carries critical responsibilities, including serving as an expert witness for the state in legal and regulatory matters and advising on clinical policies that directly affect patients. Medical directors making medical decisions are generally required to hold an active license. For comparison, the Arizona Department of Corrections requires its Chief Medical Officer applicants to “possess a valid, unrestricted Arizona medical license” as a pre-employment condition.
“A lapse like this should never happen in a healthcare agency responsible for millions of people,” said Speaker of the House Steve Montenegro. “The public deserves accountability when even the most basic standards aren’t met.”
“We work every day to protect the health and well-being of Arizonans, yet AHCCCS failed to do something as basic as verify a medical license,” said House Majority Leader Michael Carbone. “Any citizen can look this up in minutes. That it slipped through the cracks at the highest level of medical leadership is completely unacceptable.”
“As a healthcare professional, I find it deeply disturbing that someone is allowed to make decisions affecting vulnerable populations without a valid medical license,” said House Majority Whip Julie Willoughby. “You cannot have a Chief Medical Officer without an active license—it’s that simple. Was this avoidance? Was she afraid her license wouldn’t be renewed? Those are serious questions that demand answers. And now, with the controversial HCBS assessment tool rolled out, we must ask: were those reviews overseen by a CMO whose license had already expired? If so, how can families trust the integrity of the data or the decisions that came from it? The developmental disabilities community has already been harmed, and it is outrageous that those decisions may have been shaped by someone without a current medical license.”
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