940 F.3d 1061
9th Cir.2019Background
- California established the California Insurance Guarantee Association (CIGA) under the Guarantee Act to fund covered claims when member insurers become insolvent; participation by insurers is mandatory.
- The Guarantee Act bars CIGA from reimbursing state or federal government agencies and limits CIGA’s obligations to covered claims triggered by insurer insolvency (CIGA is an insurer of last resort).
- CMS (administrator of Medicare) made conditional Medicare payments for medical services of certain beneficiaries whose workers’ compensation claims CIGA was administering, then demanded reimbursement from CIGA.
- CIGA sued for declaratory and injunctive relief; the district court held federal Medicare secondary-payer law preempted the state prohibition and required CIGA to reimburse CMS.
- The Ninth Circuit reversed, holding CIGA is not a Medicare "primary plan" (specifically not a "workmen’s compensation law or plan") and that Medicare’s secondary-payer provisions do not plainly preempt state insolvency schemes.
Issues
| Issue | Plaintiff's Argument (CIGA) | Defendant's Argument (CMS) | Held |
|---|---|---|---|
| Does Medicare’s secondary‑payer regime preempt the Guarantee Act’s bar on reimbursing government agencies? | No — state law bars reimbursement and CIGA is not a primary plan, so no conflict. | Yes — Medicare’s secondary‑payer rules and CMS regulations make Medicare secondary to primary payers like CIGA, so federal law preempts state prohibition. | No preemption: statute/regulations do not clearly manifest intent to displace state insolvency scheme; state law stands. |
| Is CIGA a “primary plan” or a “workmen’s compensation law or plan” under 42 U.S.C. § 1395y(b)(2)(A)(ii)? | CIGA is an insolvency guaranty (last‑resort payer) whose obligation is triggered by insurer insolvency, not by the worker’s injury, so it is not a workers’ comp plan. | CIGA should be treated as the insurer for covered claims (deemed insurer) and thus a primary payer under Medicare. | CIGA is not a workers’ compensation plan or primary plan; its obligations are limited and distinct from solvent carriers. |
| Do CMS regulations (and agency statements) show clear federal intent to displace state guaranty‑fund schemes? | No — agency examples and decades of inaction show deliberate omission; insurance insolvency regulation is a traditional state field. | Yes — regulations assert Medicare is secondary even if state law says otherwise. | The court applied the presumption against preemption in state insurance regulation and found no clear congressional/agency intent to interfere with state insolvency schemes. |
Key Cases Cited
- Wyeth v. Levine, 555 U.S. 555 (2009) (Congressional intent is ultimate touchstone; presumption against preemption of traditional state powers)
- Altria Grp., Inc. v. Good, 555 U.S. 70 (2008) (ambiguities in preemption clauses are resolved in favor of avoiding preemption)
- United States v. R.I. Insurers' Insolvency Fund, 80 F.3d 616 (1st Cir. 1996) (treated an insolvency fund as deemed insurer under Rhode Island statute)
- Isaacson v. Cal. Ins. Guarantee Ass'n, 750 P.2d 297 (Cal. 1988) (CIGA is an insolvency insurer of last resort and does not act as an ordinary insurer)
- Denny's Inc. v. Workers' Comp. Appeals Bd., 129 Cal. Rptr. 2d 53 (Ct. App. 2003) (CIGA provides insolvency insurance and is distinct from a workers' compensation carrier)
- Haro v. Sebelius, 747 F.3d 1099 (9th Cir. 2014) (describing Medicare conditional payments and recovery against primary payers)
- Palomar Med. Ctr. v. Sebelius, 693 F.3d 1151 (9th Cir. 2012) (context on Medicare program and secondary‑payer framework)