9th Circuit Holds Guarantee Association not a Primary Payer Under MSP

In the case of California Insurance Guarantee Association v. Azar, the 9th Circuit Court of Appeal recently held that a Guarantee Fund is not a “primary plan” under the Medicare Secondary Payer statute. The court reasoned that CIGA pays for medical care only if the insurer is insolvent and as such a workers’ compensation claim does not trigger coverage automatically. Rather, CIGA is an insolvency insurer of last resort. The court further noted that insurance regulation is an area traditionally occupied by states, and that the Court must presume that federal MSP law does not preempt state insurance laws unless Congress clearly manifested its intent to do so. They went on to reason that nothing in the Act or its implementing regulations suggests that Congress meant to interfere with state schemes designed to protect against insurer insolvencies. The 9th Circuit held that a guarantee association is not a primary plan because their authority to disperse funds to the insured is limited to “covered claims” and therefore, it “does not ‘stand in the shoes’ of the insolvent insurer for all purposes.”