California Insurance Guarantee Assoc. v. Azar, No. 17-56526 (9th Cir. 2019)
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The Ninth Circuit reversed the district court's judgment in favor of Medicare in an action brought by CIGA, seeking declaratory relief after Medicare paid for and demanded reimbursement from CIGA for medical expenses of certain individuals whose workers' compensation benefits CIGA was administering.
The panel held that Medicare, as a secondary payer, was entitled to seek reimbursement from a beneficiary's primary payer, typically private insurance. However, CIGA was not a primary plan, and specifically was not a workmen's compensation law or plan. Rather, the panel held that CIGA was an insolvency insurer of last resort. The panel explained that insurance regulation was a field traditionally occupied by the states, and it must presume that the Medicare secondary payer provisions do not preempt state insurance laws unless Congress clearly manifested its intent to do so. Furthermore, nothing in the Medicare statute or its implementing regulations suggested that Congress meant to interfere with state schemes to protect against insurer insolvencies.
Court Description: Medicare / Preemption. The panel reversed the district court’s judgment in favor of Medicare in an action brought by the California Insurance Guarantee Association (“CIGA”), seeking declaratory relief after Medicare paid for and demanded reimbursement from CIGA for medical expenses of certain individuals whose workers’ compensation benefits CIGA was administering. CIGA provides funding when one of its member insurers becomes insolvent and unable to pay its insureds’ claims. California state law prohibited CIGA from reimbursing state and federal government agencies, including Medicare. The district court concluded that federal law preempted California law to the extent it prohibited CIGA from reimbursing Medicare. The panel held that as a “secondary payer,” Medicare was entitled to seek reimbursement from a beneficiary’s “primary payer,” typically private insurance. The panel * The Honorable Michael M. Baylson, United States District Judge for the Eastern District of Pennsylvania, sitting by designation. CAL. INS. GUARANTEE ASS’N V. AZAR 3 further held that CIGA was not a primary plan, and specifically not a “workmen’s compensation law or plan,” 42 U.S.C. § 1395y(b)(2)(A)(ii), but instead CIGA was an insolvency insurer of last resort. The panel noted that insurance regulation was a field traditionally occupied by the states, and the panel presumed that the Medicare secondary payer provisions did not preempt state insurance laws unless Congress clearly manifested its intent to do so. The panel held that nothing in the Medicare statute or its implementing regulations suggested that Congress meant to interfere with state schemes to protect against insurer insolvencies. The panel reversed and remanded for further proceedings.
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