The California Insurance Guarantee Association 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.
CIGA filed this declaratory action in federal court, after Medicare paid for and demanded reimbursement from CIGA for medical expenses of certain individuals whose workers’ compensation benefits CIGA was administering. The federal district court ruled in favor of Medicare, concluding that federal law preempted California law to the extent it prohibited CIGA from reimbursing Medicare.
The 9th Circuit Court of Appeal reversed in the published case of California Insurance Guarantee Association v Alex M. Azar, Secretary of HHS.
Medicare regulations define “primary plan” to mean, “in the context in which Medicare is the secondary payer, a group health plan or large group health plan, a workers’ compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan), or no-fault insurance.” 42 C.F.R. § 411.21 (emphasis added); accord 42 U.S.C. § 1395y(b)(2)(A). CIGA does not fall within the plain meaning of this definition because it is not a workers’ compensation law or plan.
CIGA is “an insurer of last resort” and thus “assumes responsibility for claims only when no secondary insurer is available.”
The Court went on to say that “It makes little sense to interpret the statutory phrase ‘primary plan’ to refer to a payer of last resort. The Medicare statute describes Medicare only as ‘secondary.’ Under agency regulations, the term ‘secondary’ refers to benefits that ‘are payable only to the extent that payment has not been made and cannot reasonably be expected to be made under other coverage that is primary to Medicare.'”
Because CIGA is not a primary plan under the Medicare Act’s secondary payer provisions, it has no obligation to reimburse CMS for conditional payments made on behalf of workers’ compensation insureds. Therefore, the district court was reversed and the case remanded for further proceedings consistent with this opinion.