Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

California Insurance Guarantee Association v. Azar

United States Court of Appeals, Ninth Circuit

October 10, 2019

California Insurance Guarantee Association, Plaintiff-Appellee/ Cross-Appellant,
v.
Alex M. Azar II, Secretary of Health and Human Services; U.S. Department of Health & Human Services; Center for Medicare and Medicaid Services, Defendants-Appellants/ Cross-Appellees.

          Argued and Submitted May 16, 2019 Pasadena, California

          Appeal from the United States District Court for the Central District of California No. 2:15-cv-01113-ODW-FFM Otis D. Wright II, District Judge, Presiding

          Daniel Tenny (argued) and Alisa B. Klein, Appellate Staff; Nicola T. Hanna, United States Attorney; Joseph H. Hunt, Assistant Attorney General; Civil Division, United States Department of Justice, Washington, D.C.; for Defendants-Appellants/Cross-Appellees.

          Steven T. Whitmer (argued), Hugh S. Balsam, and Julie L. Young, Locke Lord LLP, Chicago, Illinois, for Plaintiff-Appellee/Cross-Appellant.

          Benjamin F. Aiken, Orrick Herrington & Sutcliffe LLP, Washington, D.C.; John Blatt, National Conference of Insurance Guaranty Funds, Indianapolis, Indiana; Thomas Welsh, Orrick Herrington & Sutcliffe LLP, Sacramento, California; for Amicus Curiae National Conference of Insurance Guaranty Funds.

          Xavier Becerra, Attorney General; Diane S. Shaw, Senior Assistant Attorney General; Lisa W. Chao, Supervising Deputy Attorney General; Laura E. Robbins, Deputy Attorney General; Office of the Attorney General, Los Angeles, California; for Amicus Curiae Dave Jones, Insurance Commissioner of the State of California.

          Before: Jacqueline H. Nguyen and John B. Owens, Circuit Judges, and Michael M. Baylson, [*] District Judge.

         SUMMARY [**]

         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 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.

          OPINION

          NGUYEN, CIRCUIT JUDGE:

         California requires insurers providing certain types of coverage to participate in the California Insurance Guarantee Association ("CIGA"), which provides funding when a member insurer becomes insolvent and unable to pay its insureds' claims. State law prohibits CIGA from reimbursing state and federal government agencies, including Medicare.

         CIGA filed this declaratory action after Medicare paid for and demanded reimbursement from CIGA for medical expenses of certain individuals whose workers' compensation benefits CIGA was administering. The district court ruled in favor of Medicare, concluding that federal law preempted California law to the extent it prohibited CIGA from reimbursing Medicare. We reverse.

         As a "secondary payer," Medicare is entitled to seek reimbursement from a beneficiary's "primary payer," typically private insurance. But CIGA is not a primary plan, and specifically not a "workmen's compensation law or plan." 42 U.S.C. § 1395y(b)(2)(A)(ii). Instead, it is an insolvency insurer of last resort. Insurance regulation is a field traditionally occupied by the states, and we must presume that the Medicare secondary payer provisions do not preempt state insurance laws unless Congress clearly manifested its intent to do so. Nothing in the Medicare statute or its implementing regulations suggests that Congress meant to interfere with state schemes designed to protect against insurer insolvencies. We therefore remand for further proceedings.

         I. Background

         A. California's Guarantee Act

         Beginning in the 1930s, individual states experimented with insurance guaranty funds to address the problem of insurer insolvencies. See, e.g., Carpenter v. Pac. Mut. Life Ins. Co. of Cal., 74 P.2d 761, 773 (Cal. 1937) (recognizing California's "comprehensive statutory scheme" regarding "the rehabilitation and liquidation of insurance companies"), aff'd sub nom. Neblett v. Carpenter, 305 U.S. 297 (1938); see also Michael P. Duncan, The NAIC Model Property and Casualty Post-Assessment Guaranty Funds, in American Bar Association, Law and Practice of Insurance Company Insolvency 460 (David M. Spector ed., 1986). At first, these funds concerned a single type of insurance, such as workers' compensation or taxicab liability. Duncan, supra, at 460. Following a spate of insolvencies by automobile insurers in the 1950s and 60s, Congress entertained various legislative proposals that would have created a nationwide scheme. Id. The first proposed bill was limited to automobile insurance, but a later proposal would have covered virtually all property and casualty insurance. See Linda M. Lasley et al., Insurance Guaranty Funds: The New "Money Pit"?, in Practicing Law Institute, Insolvency and Solidity of Insurance Companies 115-18 (1987).

         Under the threat of federal regulation, the insurance industry in the late 1960s successfully lobbied individual states to enact guaranty funds, most based on the National Association of Insurance Commissioners' model act. Id. at 116-19. Congress dropped plans to legislate in this area, and today every state has some form of insurer insolvency scheme. Id. at 119. California's scheme, CIGA, was established in 1969 by the Guarantee Act, Cal. Ins. Code §§ 1063-1063.18, to insure against "loss arising from the failure of an insolvent insurer to discharge its obligations under its insurance policies." Isaacson v. CIGA, 750 P.2d 297, 303 (Cal. 1988) (quoting Biggs v. CIGA, 179 Cal.Rptr. 16, 17 (Ct. App. 1981)).

         An insurer's participation in CIGA is mandatory. See id. (citing Cal. Ins. Code §§ 1063(a), 1063.1(a)). When a member insurer becomes insolvent, the Guarantee Act authorizes CIGA to discharge certain of the defunct insurer's obligations referred to as "covered claims." Middleton v. Imperial Ins. Co., 666 P.2d 1, 3 (Cal. 1983). CIGA funds the covered claims in part by collecting premiums from its member insurers in proportion to their market share. See id. (citing Cal. Ins. Code §§ 1063.1(c), 1063.5). Policyholders of the insolvent insurer who opt to proceed through CIGA "assign their claims against the estate of the insolvent insurer to CIGA." Id. (citing Cal. Ins. Code § 1063.4). CIGA then becomes a creditor in the insolvency proceeding and "share[s] in the assets of the insolvent company on final distribution." Id. (citing Cal. Ins. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.