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Friday, October 11, 2019

CMS Cannot Seek Reimbursement from Insurance Guarantee Fund

The US 9th Circuit Court of Appeals has ruled that The Centers for Medicare and Medicaid [CMS] cannot not seek reimbursement from from the California Insurance Guarantee Association for workers' compensation payments.

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.

CALIFORNIA INSURANCE GUARANTEE V. ALEX M. AZAR, II 17-56526 Decided October 10, 2019

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (West-Thomson-Reuters). For over 4 decades the Law Offices of Jon L Gelman 1.973.696.7900 has been representing injured workers and their families who have suffered occupational accidents and illnesses.