FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

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.

Nos. 17-56526

17-56528

D.C. No.

2:15-cv-01113-

ODW-FFM

OPINION

Appeal from the United States District Court

for the Central District of California

Otis D. Wright II, District Judge, Presiding

Argued and Submitted May 16, 2019

Pasadena, California

Filed October 10, 2019
2 CAL. INS. GUARANTEE ASS’N V. AZAR

Before: Jacqueline H. Nguyen and John B. Owens, Circuit 

Judges, and Michael M. Baylson,* District Judge.

Opinion by Judge Nguyen

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 

* The Honorable Michael M. Baylson, United States District Judge 

for the Eastern District of Pennsylvania, sitting by designation.

** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
CAL. INS. GUARANTEE ASS’N V. AZAR 3

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.

COUNSEL

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 DefendantsAppellants/Cross-Appellees.

Steven T. Whitmer (argued), Hugh S. Balsam, and Julie L. 

Young, Locke Lord LLP, Chicago, Illinois, for PlaintiffAppellee/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 
4 CAL. INS. GUARANTEE ASS’N V. AZAR

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.

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 
CAL. INS. GUARANTEE ASS’N V. AZAR 5

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.
6 CAL. INS. GUARANTEE ASS’N V. AZAR

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. Code § 1033). After 

paying the covered claims, CIGA applies any 

reimbursements from the liquidator and unused member 

premiums “to reduce future premium charges.” Cal. Ins. 

Code § 1063.5(g).

As an insolvency insurer, CIGA “provides a limited form 

of protection for the public, and not for the protection of 

insurers.” Interstate Fire & Cas. Ins. Co. v. CIGA, 178 Cal. 

Rptr. 673, 677 (Ct. App. 1981). CIGA “does not assume 

responsibility for claims where there is any other insurance 
CAL. INS. GUARANTEE ASS’N V. AZAR 7

available,” and is thus “an insurer of last resort.” R. J. 

Reynolds Co. v. CIGA, 1 Cal. Rptr. 2d 405, 408 (Ct. App. 

1991); see Cal. Ins. Code § 1063.1(c)(9)(A). In addition, 

CIGA’s obligation is generally limited to “a claim by . . . the 

original claimant under the insurance policy in his or her 

own name.” Cal. Ins. Code § 1063.1(c)(9)(B). CIGA does 

not cover “a claim asserted by an assignee or one claiming 

by right of subrogation,” id., or “any obligations to insurers, 

insurance pools, or underwriting associations, [or] their 

claims for contribution, indemnity, or subrogation,” id.

§ 1063.1(c)(5).

In particular, CIGA is prohibited from paying “any 

obligations to a state or to the federal government.” Id.

§ 1063.1(c)(4). If a person has “a claim or legal right of 

recovery under any governmental insurance or guaranty 

program that is also a covered claim,” the person must “first 

exhaust his or her right under the program” before seeking a 

recovery from CIGA for any remaining unpaid portion of the 

claim. Id. § 1063.2(e).

B. The Medicare Act and Secondary Payer Provisions

Medicare is a federally funded health insurance program 

that primarily benefits aged and disabled persons. Palomar 

Med. Ctr. v. Sebelius, 693 F.3d 1151, 1154–55 (9th Cir. 

2012). Since its 1965 enactment, Medicare has paid claims 

covered by workers’ compensation on a secondary basis. 

The Medicare Act provides that when “payment has been 

made, or can reasonably be expected to be made . . . under a 

workmen’s compensation law or plan,” any payment by 

Medicare for the medical service “shall be conditioned on 

reimbursement.” Health Insurance for the Aged Act, Pub. 

L. No. 89-97, § 1862(b), 79 Stat. 286, 325 (1965) (codified 

at 42 U.S.C. § 1395y(b)(2)(A)(ii), (b)(2)(B)(i)).
8 CAL. INS. GUARANTEE ASS’N V. AZAR

Other than medical services covered by workers’ 

compensation insurance, Medicare was originally the 

primary payer of its beneficiaries’ medical costs, “even 

when such services were covered by other insurance.” 

Zinman v. Shalala, 67 F.3d 841, 843 (9th Cir. 1995). During 

the 1980s, to cut the program’s burgeoning costs, Congress 

amended the Medicare Act several times by expanding the 

situations in which Medicare was a secondary payer and 

facilitating Medicare’s ability to seek reimbursement from 

primary payers.1 See Haro v. Sebelius, 747 F.3d 1099, 1105 

(9th Cir. 2014).

The statute now “forbid[s] Medicare payments when a 

primary plan . . . is reasonably expected to make payment for 

the same medical care.” Id. (citing 42 U.S.C. 

§ 1395y(b)(2)(A)–(B)). As relevant here, “the term ‘primary 

plan’ means . . . a workmen’s compensation law or plan, an 

automobile or liability insurance policy or plan (including a 

1 See Omnibus Budget Reconciliation Act of 1980, Pub. L. No. 96-

499, § 953, 94 Stat. 2599, 2647 (making Medicare the secondary payer 

for services covered under “under an automobile or liability insurance 

policy or plan . . . or under no fault insurance”); Deficit Reduction Act 

of 1984, Pub. L. No. 98-369, § 2344, 98 Stat. 494, 1095 (authorizing the 

United States to bring an action against a primary payer to recover 

payments); Omnibus Budget Reconciliation Act of 1986, Pub. L. No. 99-

509, § 9319, 100 Stat. 1874, 2010–11 (making Medicare the secondary 

payer for certain disabled employees covered by large group health plans 

and authorizing a private cause of action against primary payers that fail 

to pay beneficiaries); Omnibus Budget Reconciliation Act of 1989, Pub. 

L. No. 101-239, § 6202, 103 Stat. 2106, 2225–32 (introducing 

“secondary payer” terminology and improving the mechanism for 

Medicare to determine when it is a secondary payer).
CAL. INS. GUARANTEE ASS’N V. AZAR 9

self-insured plan) or no fault insurance.”2 42 U.S.C. 

§ 1395y(b)(2)(A).

“[W]hen a primary insurer cannot reasonably be 

expected to pay promptly,” the statute permits Medicare to 

make a conditional payment that later must be reimbursed. 

Haro, 747 F.3d at 1105 (citing 42 U.S.C. 

§ 1395y(b)(2)(B)(i)–(ii)). Medicare is entitled to recover 

this payment by filing a lawsuit against the primary plan. Id.

(citing 42 U.S.C. § 1395y(b)(2)(B)(iii)). If the primary plan 

has already disbursed the funds at issue, Medicare can 

recover them from any entity that currently possesses them, 

including the plan beneficiary or an attorney. See 42 U.S.C. 

§ 1395y(b)(2)(B)(iii); Haro, 747 F.3d at 1105.

C. Procedural History

CIGA administers the workers’ compensation claims of 

several Medicare beneficiaries whose insurers became 

insolvent. CIGA alerted Medicare’s administrator, the 

Center for Medicare Services (“CMS”), that these 

individuals may be Medicare beneficiaries. CMS, which 

contends that CIGA is a primary payer of medical expenses 

related to these individuals’ work injuries, demanded that 

CIGA reimburse it for conditional payments that CMS had 

made on the Medicare beneficiaries’ behalf. When the 

parties could not resolve their dispute over CIGA’s liability 

for the conditional payments, CIGA filed suit against CMS 

and related government defendants seeking declaratory and 

injunctive relief.

2 In certain circumstances, a “primary plan” also includes “a group 

health plan or large group health plan.” 42 U.S.C. § 1395y(b)(2)(A).
10 CAL. INS. GUARANTEE ASS’N V. AZAR

The district court determined that under the Medicare 

Act, CIGA is a primary plan for the workers’ compensation 

claims it was administering and that CMS was entitled to 

reimbursement for the conditional payments it had made 

because any contrary provisions in the Guarantee Act were 

preempted. After the district court’s resolution of subsidiary 

issues,3 the parties stipulated to entry of judgment, from 

which both sides appeal.

II. Jurisdiction and Standard of Review

The district court had jurisdiction under 28 U.S.C. 

§ 1331. We have jurisdiction under 28 U.S.C. § 1291.4 We 

review de novo the district court’s ruling that CIGA is a 

primary payer liable for the conditional payments CMS 

made on behalf of Medicare beneficiaries. See Allied 

3 CIGA challenges the district court’s ruling that the federal 

government as sovereign is immune from the Guarantee Act’s claimfiling deadline, and CMS disputes the court’s ruling that its billing 

practices were potentially unlawful. We need not reach either issue in 

light of our conclusion that CIGA is not a primary payer.

4 We considered the parties’ supplemental briefs and agree with the 

parties that the district court’s judgment was final. Although the court 

did not resolve all issues necessary to determine whether CMS’s billing 

practices were unlawful in three instances, CIGA abandoned its claims 

for declaratory and injunctive relief beyond that which the district court 

had already provided when it stipulated to entry of judgment on the 

court’s extant orders. See Golan v. Pingel Enter., Inc., 310 F.3d 1360, 

1366 n.3 (Fed. Cir. 2002) (applying Ninth Circuit law); James v. Price 

Stern Sloan, Inc., 283 F.3d 1064, 1070 (9th Cir. 2002) (“We . . . hold that 

when a party that has suffered an adverse partial judgment subsequently 

dismisses remaining claims without prejudice with the approval of the 

district court, and the record reveals no evidence of intent to manipulate 

our appellate jurisdiction, the judgment entered after the district court 

grants the motion to dismiss is final and appealable under 28 U.S.C. 

§ 1291.”).
CAL. INS. GUARANTEE ASS’N V. AZAR 11

Concrete & Supply Co. v. Baker, 904 F.3d 1053, 1060 (9th 

Cir. 2018).

III. Discussion

A. Legal Principles Governing Preemption

Every preemption case is guided by two jurisprudential 

cornerstones. First, “the purpose of Congress is the ultimate 

touchstone.” Wyeth v. Levine, 555 U.S. 555, 565 (2009). 

Second, courts “start with the assumption that the historic 

police powers of the States were not to be superseded by the 

Federal Act unless that was the clear and manifest purpose 

of Congress,” “particularly in those [cases] in which 

Congress has ‘legislated . . . in a field which the States have 

traditionally occupied.’” Id. Insurance is such a field. See, 

e.g., Galilea, LLC v. AGCS Marine Ins. Co., 879 F.3d 1052, 

1058 (9th Cir. 2018); see also McCarran-Ferguson Act, Pub. 

L. No. 79-15, § 2(b), 59 Stat. 33, 34 (1945) (“No Act of 

Congress shall be construed to invalidate, impair, or 

supersede any law enacted by any State for the purpose of 

regulating the business of insurance, or which imposes a fee 

or tax upon such business, unless such Act specifically 

relates to the business of insurance . . . .”) (codified at 

15 U.S.C. § 1012(b)).5

Congressional intent “primarily is discerned from the 

language of the preemption statute and the statutory 

framework surrounding it.” Omnipoint Commc’ns, Inc. v. 

City of Huntington Beach, 738 F.3d 192, 193 (9th Cir. 2013) 

5 The district court concluded—and we assume without deciding—

that the McCarran-Ferguson Act is inapplicable to the preemption 

question here because Medicare’s secondary payer provisions 

specifically relate to insurance. See United States v. R.I. Insurers’ 

Insolvency Fund (“RIIIF”), 80 F.3d 616, 622 (1st Cir. 1996).
12 CAL. INS. GUARANTEE ASS’N V. AZAR

(quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 486 (1996)). 

In addition, courts consider “the structure and purpose of the 

statute as a whole,” including “the way in which Congress 

intended the statute and its surrounding regulatory scheme 

to affect . . . the law and parties whose actions are affected 

by the statute.” Id. (quoting Lohr, 518 U.S. at 486) (internal 

quotation mark omitted). Agency regulations that 

reasonably interpret the statute are accorded Chevron

deference when determining the statute’s preemptive effect. 

See Reid v. Johnson & Johnson, 780 F.3d 952, 964 (9th Cir. 

2015) (citing Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, 

Inc., 467 U.S. 837, 843–44 (1984)).

When determining the meaning of a particular term, 

courts “look to the ordinary meaning.” Ass’n des Éleveurs 

de Canards et d’Oies du Quebec v. Becerra, 870 F.3d 1140, 

1147 (9th Cir. 2017), cert. denied, 139 S. Ct. 862 (2019). In 

both express and conflict preemption, “when the text of a 

pre-emption clause is susceptible of more than one plausible 

reading, courts ordinarily ‘accept the reading that disfavors 

pre-emption.’” McClellan v. I-Flow Corp., 776 F.3d 1035, 

1039 (9th Cir. 2015) (quoting Altria Grp., Inc. v. Good, 

555 U.S. 70, 77 (2008)).

B. Medicare’s Secondary Payer Provisions do not Apply 

to CIGA 

The district court ruled that the Medicare Act’s 

secondary payer provisions applied to CIGA because they 

preempted the Guarantee Act both expressly and through an 

implied conflict. Both preemption analyses turned on the 

district court’s conclusion that CIGA is a “primary plan,” 

making it impossible for CIGA to comply with both 
CAL. INS. GUARANTEE ASS’N V. AZAR 13

Medicare’s demand for reimbursement and the Guarantee 

Act’s prohibition of paying a government agency.6

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.

California categorizes insurance into various “classes,” 

see Cal. Ins. Code § 100, such as workers’ compensation 

insurance, id. § 109, automobile insurance, id. § 116, and 

liability insurance, id. § 108. While the Guarantee Act 

protects against defaults by insurers of these three classes,7

see CD Inv. Co. v. CIGA, 101 Cal. Rptr. 2d 806, 810 (Ct. 

App. 2000) (citing Cal. Ins. Code § 1063(a)), CIGA itself is 

not one of them. Rather, it falls within the class of 

insolvency insurance. See Cal. Ins. Code § 119.5; Isaacson, 

750 P.2d at 303.

6 Though the Medicare Act’s secondary payer provisions do not 

contain a preemption clause, the agency’s regulations do: “Medicare 

benefits are secondary to benefits payable by a primary payer even if 

State law or the primary payer states that its benefits are secondary to 

Medicare benefits or otherwise limits its payments to Medicare 

beneficiaries.” 42 C.F.R. § 411.32(a)(1).

7 A similar statutory scheme governs life and health insurance. See

Cal. Ins. Code §§ 1067–1067.19; Penn. Health & Life Ins. Guar. Ass’n 

v. Superior Court, 27 Cal. Rptr. 2d 507, 510 n.5 (Ct. App. 1994).
14 CAL. INS. GUARANTEE ASS’N V. AZAR

This distinction is reflected in California’s two separate 

statutory schemes for workers’ compensation and insurer 

insolvencies. See Cal. Labor Code §§ 3200–6149 (workers’ 

compensation); Cal. Ins. Code §§ 1063–1063.18 (Guarantee 

Act); see also Richards D. Barger, California Insurance 

Guarantee Association, 45 State Bar J. 475, 476 (1971) 

(pointing out that “Article 14.2 creating [CIGA] is 

physically adjacent to those relevant sections relating to 

proceedings in cases of insolvencies and delinquencies”). It 

is also reflected in state court decisions distinguishing CIGA 

from a workers’ compensation carrier.

CIGA is “an insurer of last resort” and thus “assumes 

responsibility for claims only when no secondary insurer is 

available.” Denny’s Inc. v. Workers’ Comp. Appeals Bd., 

129 Cal. Rptr. 2d 53, 59 (Ct. App. 2003); see also R. J. 

Reynolds Co. v. CIGA, 1 Cal. Rptr. 2d 405, 408 (Ct. App. 

1991) (“[W]here an insured has overlapping insurance 

policies and one insurer becomes insolvent, the other insurer, 

even if only a secondary or excess insurer, is responsible for 

paying the claim [rather than CIGA].”). Denny’s

distinguished CIGA’s obligation to provide “insolvency 

insurance” from a workers’ compensation insurer’s 

obligation to provide “insurance against loss from liability 

imposed by law upon employers to compensate employees

. . . for injury . . . arising out of and in the course of the 

employment.” 129 Cal. Rptr. 2d at 56–58.

In CIGA v. Workers’ Compensation Appeals Board, 39 

Cal. Rptr. 3d 721 (Ct. App. 2006), the court confronted a 

dispute over CIGA’s responsibility to reimburse another 

government agency—California’s Employment 

Development Department (“EDD”). After providing 

temporary disability benefits to two individuals while their 

workers’ compensation claims were pending, EDD filed lien 
CAL. INS. GUARANTEE ASS’N V. AZAR 15

claims for reimbursement from the Workers’ Compensation 

Appeals Board. Id. at 722–23 & 723 n.1. Because the 

workers’ compensation carriers were insolvent, CIGA had 

been administering the workers’ compensation claims. Id.

at 723. EDD argued “that CIGA is required to provide 

workers’ compensation benefits and, therefore, it is bound to 

reimburse EDD.” Id. at 725. The court disagreed. While 

EDD was “[u]ndisputedly . . . entitled to reimbursement . . . 

when the employer’s insurance company [was] solvent,” 

EDD was not entitled to reimbursement from CIGA because 

“CIGA’s obligations are not coextensive with those of 

solvent insurers.” Id.

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.” 

42 C.F.R. § 411.21 (emphasis added). The qualifying 

phrase “that is primary to Medicare” implies the existence of 

coverage that is not primary to Medicare. Indeed, the agency 

has acknowledged one such example: “Medicare is [the] 

primary payer with respect to Medicaid” because Medicaid 

is “the payer of last resort.” Final Rule: Medicare as 

Secondary Payer and Medicare Recovery Against Third 

Parties, 54 Fed. Reg. 41,716, 41,721 (Oct. 11, 1989).

Medicare regulations do not define “a workers’ 

compensation law or plan.” They do, however, provide 

illuminating examples. The term “includes the workers’ 

compensation plans of the 50 States, the District of 

Columbia, American Samoa, Guam, Puerto Rico, and the 

Virgin Islands, as well as the systems provided under the 
16 CAL. INS. GUARANTEE ASS’N V. AZAR

Federal Employees’ Compensation Act and the 

Longshoremen’s and Harbor Workers’ Compensation Act.” 

42 C.F.R. § 411.40(a). While these examples are not meant 

to be exhaustive, CIGA, an insurer insolvency scheme, is 

dissimilar to all of them, suggesting that it is not a workers’ 

compensation plan. See In re W. States Wholesale Nat. Gas 

Antitr. Litig., 715 F.3d 716, 733 n.13 (9th Cir. 2013) 

(“Noscitur a sociis means that ‘a word is known by the 

company it keeps,’ and this canon is applied ‘where a word 

is capable of many meanings in order to avoid the giving of 

unintended breadth to the Acts of Congress.’” (quoting 

Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 (1961))).

The agency first adopted this regulation in 1966. See

Rules and Regulations: Exclusions, Recovery of 

Overpayment, and Liability of a Certifying Officer, 31 Fed. 

Reg. 13,534, 13536 (Oct. 20, 1966). Almost all states 

adopted insurance guaranty funds shortly thereafter. See

Lasley et al., supra, at 119. More than half a century later, 

the agency has expanded its examples of a “workers 

compensation law or plan” to include the workers’ 

compensation plans of American Samoa, Guam, and the 

Virgin Islands, yet the regulation continues to omit any 

mention of the state insurer solvency schemes. Given a 

state’s “important and vital interest in the liquidation or 

reorganization of [insurance companies],” Carpenter, 

74 P.2d at 774, the five decades of Congressional and agency 

inaction regarding insurer insolvency schemes further 

suggests that their omission from the Medicare statute and 

regulations was deliberate.

Other parts of the Medicare statute confirm that 

Congress did not intend to disrupt state laws governing 

insurer solvency. The Medicare Act contains a preemption 

provision that Medicare standards “shall supersede any State 
CAL. INS. GUARANTEE ASS’N V. AZAR 17

law or regulation” regarding Medicare Advantage plans 

under Part C and prescription drug plans under Part D. Do 

Sung Uhm v. Humana, Inc., 620 F.3d 1134, 1148 (9th Cir. 

2010) (quoting 42 U.S.C. § 1395w-26(b)(3)); see 42 U.S.C. 

§ 1395w-112(g). This preemption provision originally 

applied broadly to any state law that was inconsistent with 

federal requirements. See H.R. Rep. No. 108-391, at 556–

57 (Conf. Rep.). In 2003, after “some confusion in recent 

court cases,” id. at 557, Congress clarified that the 

preemption provision did not apply to “State laws relating to 

plan solvency.” 42 U.S.C. § 1395w-26(b)(3).

Insurance is “[a] contract by which one party . . . 

undertakes to indemnify another party . . . against risk of 

loss, damage, or liability arising from the occurrence of 

some specified contingency.” Insurance, Black’s Law 

Dictionary (11th ed. 2019). As the district court correctly 

recognized, “in the case of a workers’ compensation 

insurance plan,” the “specified contingency . . . is the insured 

employee’s work-related injury.” And, as the court 

acknowledged, CIGA “is an arrangement through which 

other California insurers provide health benefits or medical 

care for [the insured’s illness, injury, or loss] when one of its 

member insurance companies become insolvent” (emphasis 

added). See also Olivier v. Merritt Dredging Co., 979 F.2d 

827, 830 (11th Cir. 1992) (explaining that insurance 

guarantee funds “aid and benefit numerous citizens who 

have suffered losses due to the insolvency of their insurers” 

(emphasis added)). Thus, CIGA’s obligations are triggered 

by an entirely different contingency—an insurer’s 

insolvency—than are those of a workers’ compensation 

plan. Because an insured employee’s work-related injury is 

insufficient to trigger CIGA’s obligations, CIGA is not a 

workers’ compensation insurer.
18 CAL. INS. GUARANTEE ASS’N V. AZAR

By focusing on CIGA’s obligation to pay for medical 

care, the district court improperly classified it as a workers’ 

compensation plan based on the benefits it provides rather 

than the loss it protects against. See Mason v. Am. Tobacco 

Co., 346 F.3d 36, 40 (2d Cir. 2003) (rejecting argument that 

corporations were “primary plans” just “because the 

corporate structure through which each conducts its business 

has the purpose and legal effect, in part, to assume legal 

liability for injury”). This mode of analysis would lead to 

strange results.

For example, legal malpractice insurance, which is not a 

“primary plan” under the Medicare Act, typically does not 

cover physical injuries that an attorney causes. It is distinct 

from personal liability insurance, which is a “primary plan.” 

Yet if an attorney mishandles a physically injured client’s 

case and the attorney’s legal malpractice insurer pays the 

client money as damages for the client’s unrecovered 

medical expenses, the legal malpractice insurance does, in 

some sense, “assume legal liability for injury.” 42 C.F.R. 

§ 411.21 (defining “plan”).8 But the legal malpractice 

insurance “does not have primary responsibility to pay for 

the claimant’s medical injuries. That primary responsibility 

falls on the insurers who insure the parties involved in the 

incident.” Or. State Bar Prof’l Liab. Fund v. U.S. Dep’t of 

Health & Human Servs., No. 3:10-cv-01392-HZ, 2012 WL 

1071127, at *5 (D. Or. Mar. 29, 2012) (emphasis added); cf.

Thompson v. Goetzmann, 337 F.3d 489, 499 (5th Cir. 2003) 

(rejecting “unreasonably broad interpretation” that tortfeasor 

who settled with beneficiary was self-insured and thus liable 

8 The parties dispute whether CIGA is a “plan” under this regulation. 

We need not decide the issue, however, because the Medicare Act covers 

only certain specified plans, and CIGA is not among them.
CAL. INS. GUARANTEE ASS’N V. AZAR 19

to Medicare because the statute “explicitly speaks in terms 

of insurance plans that provide primary medical 

coverage”).9 The legal malpractice insurer does not become 

obligated for medical expenses without the occurrence of 

some intervening event—the attorney’s negligence—that 

has nothing to do with the medical injuries.

CMS cites to the First Circuit’s decision in RIIIF, in 

which Rhode Island’s analogue to CIGA argued that it is 

neither a “plan,” “because an insurance insolvencyguarantor statute . . . is not an insurance ‘policy,’” nor a 

primary plan, “because it is not the Medicare beneficiaries’

private insurance carrier, but rather a non-profit 

governmental agency.” 80 F.3d at 623. The First Circuit 

summarily rejected both arguments: “The [Rhode Island 

statute] itself provides that, upon a declaration of insolvency, 

the Fund is ‘deemed the insurer to the extent of the 

obligations [under the policy] on the covered claims,’ 

subject solely to specified limitations on the amount of 

coverage. Thus, the Fund is deemed the private insurer, and 

hence a ‘primary plan’ . . . .” Id. (alteration in original) 

(citation omitted) (quoting R.I. Gen. Laws § 27-34-8(a)(2)).

We agree with RIIIF that an insurer insolvency fund’s 

status as a statutorily created nonprofit government entity is 

irrelevant to whether it is a primary plan. If a state agency 

functions like an insurance company, then it is treated like 

one. See, e.g., 42 C.F.R. § 411.40(a). Unlike the scheme at 

issue in RIIIF, however, “CIGA is not, and was not created 

to act as, an ordinary insurance company.” Isaacson, 

750 P.2d at 304. Because CIGA’s authority to disperse 

9 The statute was amended at the end of 2003 to make tortfeasors 

liable. See Bio-Med. Applications of Tenn., Inc. v. Cent. States Se. & Sw. 

Areas Health & Welfare Fund, 656 F.3d 277, 289–90 (6th Cir. 2011).
20 CAL. INS. GUARANTEE ASS’N V. AZAR

funds to the insured is limited to “covered claims,” see Cal. 

Ins. Code § 1063.2, it “does not ‘stand in the shoes’ of the 

insolvent insurer for all purposes.” Isaacson, 750 P.2d 

at 304–05 (quoting Biggs v. CIGA, 179 Cal. Rptr. 16, 18 

(Ct. App. 1981)). For example, unlike a private carrier, 

CIGA is not liable to an insured for tortiously mishandling a 

covered claim. See id. at 306.

Finally, even if CIGA could be construed as a workers’ 

compensation law or plan, and hence a primary payer, a 

contrary interpretation is more than plausible. Wellestablished preemption principles favor upholding state law 

if it can plausibly coexist with the federal statute. See Altria 

Grp., 555 U.S. at 77.

IV. Conclusion

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, we reverse and 

remand for further proceedings consistent with this opinion.

REVERSED and REMANDED.