Court Opinion

ID: 2963967
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:18:15.908344+00
Date Added: 2024-06-11T11:42:48.431769
License: Public Domain

USCA1 Opinion

	

                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                                     
                                 ____________________

        No. 95-1964

                              UNITED STATES OF AMERICA,

                                 Plaintiff, Appellee,

                                          v.

                        RHODE ISLAND INSURERS' INSOLVENCY FUND

                                Defendant, Appellant.

                                                     
                                 ____________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                           FOR THE DISTRICT OF RHODE ISLAND

                 [Hon. Francis J. Boyle, Senior U.S. District Judge]
                                         __________________________

                                                     
                                 ____________________

                               Torruella, Chief Judge,
                                          ___________

                            Cyr and Stahl, Circuit Judges.
                                           ______________

                                                     
                                 ____________________

             Margaret  A. Robbins,  with whom Joseph  C. Tanski  and Hutchins,
             ____________________             _________________      _________
        Wheeler & Dittmar were on brief for appellant.
        _________________
             Clifford M.  Pierce, Assistant  Regional  Counsel, Department  of
             ___________________
        Health and Human Services, with whom Sheldon Whitehouse, United States
                                             __________________
        Attorney, and  Michael P. Iannotti, Assistant  United States Attorney,
                       ___________________
        were on brief for appellee.

                                                     
                                 ____________________

                                    April 5, 1996
                                                     
                                 ____________________

                    CYR,  Circuit Judge.   The question  in this  appeal is
                    CYR,  Circuit Judge.
                          _____________

          whether  section 1395y(b)(2)(a)  of the  Medicare Secondary-Payer

          Act, 42  U.S.C.   1395y(b)(2)(a) (the  "MSP provision"), preempts

          various sections  of the  Rhode Island Insurers'  Insolvency Fund

          Act  (the "RIIIFA")  which purport  to shift  financial responsi-

          bility  for "primary"  insurance coverage  from the  Rhode Island

          Insurers' Insolvency  Fund (the  "Fund") to the  federal Medicare

          program.   The district  court held the  challenged RIIIFA provi-

          sions preempted, the Fund appealed, and we now affirm.

                                          I
                                          I

                                      BACKGROUND
                                      BACKGROUND
                                      __________

                    Enacted by  the Rhode  Island Legislature in  1988, the

          RIIIFA requires all insurers licensed in Rhode Island to make pro
                                                                        ___

          rata  monetary contributions to the Fund to meet certain types of
          ____

          insurance claims  lodged against licensed  Rhode Island  insurers

          which have  become insolvent, R.I.  Gen. Laws    27-34-3 (listing

          excluded classes  of insurance  claims).   Upon a declaration  of

          insolvency  by  a  licensed  Rhode Island  insurer,  the  Fund is

          "deemed  [to be]  the insurer  to the  extent of  the obligations

          [under the policy] on  the covered claims," id.    27-34-8(a)(2),
                                                      ___

          subject  to specified limitations on the amount of coverage, see,
                                                                       ___

          e.g., id.   27-34-8(a)(1)(iii)  (setting $300,000 cap per claim).
          ____  ___

          The RIIIFA  defines the  term  "covered claim"  as "an[y]  unpaid

          [insurance] claim  . . . submitted  by a claimant," id.    27-34-
                                                              ___

          5(8), but excludes  any amount "due any . .  . [other] insurer as

          subrogation recoveries or otherwise," id.   27-34-5(8)(ii)(C).  A
                                                ___

                                          2

          "nonduplication of  recovery" provision requires all  Fund claim-

          ants  to exhaust in the first instance  any "claim or legal right

          of recovery under any  governmental insurance or guaranty program

          which  is also a covered  claim," and permits  the Fund to reduce

          its  payments on covered  claims by the  amount thus recoverable.

          Id.   27-34-12(b).
          ___

                    In  1989-90, the  federal  Medicare  program  disbursed

          approximately  $14,000  in  medical benefits  to  three  Medicare

          beneficiaries who had sustained injuries in automobile accidents.

          When  their Rhode  Island-licensed automobile  insurance carrier,

          the  American Universal Insurance  Company ("AUIC"), was declared

          insolvent, the three Medicare beneficiaries filed claims  against

          the Fund.  The Fund allowed their claims but deducted the $14,000

          previously disbursed to them  under the federal Medicare program,

          citing RIIIFA     27-34-5(8)(ii)(C) and 27-34-12(b).   The United

          States  promptly challenged  the  deductions on  the ground  that

          RIIIFA      27-34-5(8)(ii)(C) and  27-34-12(b), which  purport to

          shift "primary" insurance coverage from the Fund to Medicare, are

          inconsistent with federal law, and thus preempted.

                    The pertinent  MSP provision,  found in Title  XVIII of

          the Social  Security Act, 42  U.S.C.    1395y(b) (Omnibus  Budget

          Reconciliation  Act of  1980), was  enacted by  Congress  for the

          express purpose  of lowering  overall federal  Medicare disburse-

          ments by  requiring Medicare beneficiaries to  exhaust all avail-

          able  private automobile insurance  coverage before  resorting to

          their  Medicare coverage.  See H.R. Rep. No. 1167, 96th Cong., 2d
                                     ___

                                          3

          Sess. 389, reprinted in 1980 U.S.C.C.A.N. 5526; infra note 3.  To
                     _________ __                         _____

          that  end, the  MSP provision  prohibits Medicare  payments to  a

          beneficiary for  medical expenses if  "payment has been  made, or

          can  reasonably be expected to be made promptly (as determined in

          accordance with regulations) under . . . an automobile or liabil-

          ity insurance policy or  plan (including a self-insured plan)  or

          under no-fault insurance."  42 U.S.C.    1395y(b)(2)(A); see also
                                                                   ___ ____

          42  C.F.R.     411.32(a)  ("Medicare benefits  are  secondary  to

          benefits payable by a third party  payer even if the State law or
                                                   ____ __ ___ _____ ___

          the third party payer  states that its benefits are  secondary to
                                 ______ ____ ___ ________ ___  _________

          Medicare benefits  or otherwise  limits its payments  to Medicare
                             __ _________  ______ ___ ________  __ ________

          beneficiaries.") (emphasis added).1  Moreover, once the  Medicare
          _____________

          program  makes a payment on a claim covered by private insurance,

          the United States  becomes subrogated  to the rights  of the  in-

          sured,  id.    1395y(b)(2)  (B)(iii), and  may  sue the  "primary
                  ___

          [insurance] plan" for reimbursement in the  form of double damag-

          es, id.   1395y(b)(2)(B) (ii) & (b)(3)(A). 
              ___

                    When  the Fund balked  at voluntary  reimbursement, the

          United States  filed suit in federal district  court for $28,000,

          see id.   The United States  alleged that the MSP  provision does
          ___ ___

          not  permit the 1989-90 Medicare payments  to be characterized as

          "primary"  liability payments,  since the  injuries to  the three

          Medicare  beneficiaries were  covered under  a "primary  plan"   

                              
          ____________________

               1The Medicare  regulations define a "plan"  as "any arrange-
          ment, oral or written, by one or more entities, to provide health
          benefits  or medical care or assume legal liability for injury or
          illness."  42 C.F.R.   411.21.

                                          4

          their  AUIC automobile  insurance policies     and  therefore the

          Fund, as  the "deemed"  insurer, must  meet the  maximum $300,000

          primary  AUIC  insurance coverage  cap  under  each beneficiary's

          policy  before Medicare could be held liable.  See R.I. Gen. Laws
                                                         ___

            27-34-8(a)(2).   The United  States moved for  judgment on  the

          pleadings,  based  on its  preemption claim.    The Fund  filed a

          cross-motion for judgment on  the pleadings, arguing, among other

          things,  that the first  clause of the  McCarran-Ferguson Act, 15

          U.S.C.    1012(b), see  infra note  2, forecloses  the preemption
                             ___  _____

          claim. 

                    The district  court  granted judgment  for  the  United

          States.  United States v. Rhode Island Insurers' Insolvency Fund,
                   _____________    ______________________________________

          892  F. Supp.  370 (D.R.I.  1995).   First, the  court  ruled the

          McCarran-Ferguson Act's  anti-preemption presumption inapplicable

          because  the MSP  provision  is a  federal statute  "specifically

          relat[ing] to the business  of insurance," thus coming  within an

          express  exception to  the anti-preemption  presumption.   Id. at
                                                                     ___

          374-79.  Employing conventional preemption analysis, the district

          court  went on to conclude that the MSP provision, ordaining that

          Medicare  provides  "secondary"  medical  coverage  only,  cannot

          coexist  with RIIIFA's shift of primary  liability to the federal

          Medicare program as a subrogee-insurer.  Id. at 379-80.
                                                   ___

                                          II
                                          II

                                      DISCUSSION
                                      DISCUSSION
                                      __________

          A.   Standard of Review
          A.   Standard of Review
               __________________

                                          5

                    We review judgments on the pleadings de novo, accepting
                                                         __ ____

          all  allegations  and  reasonable  inferences  favorable  to  the

          appellant.   See Santiago de  Castro v. Morales  Medina, 943 F.2d
                       ___ ___________________    _______________

          129, 130 (1st Cir. 1991).  Similarly, a federal preemption ruling

          presents a pure  question of law subject to plenary  review.  See
                                                                        ___

          New  Hampshire Motor Transp. Ass'n  v. Town of  Plaistow, 67 F.3d
          __________________________________     _________________

          326, 329 (1st Cir. 1995). 

          B.  The McCarran-Ferguson Act
          B.  The McCarran-Ferguson Act
              _________________________

                    As  this court  has  recognized, "[f]ederal  preemption

          under the Supremacy  Clause, see U.S. Const. art. VI, cl. 2, will
                                       ___

          be found only  if there  is `clear' evidence  of a  congressional

          intent to preempt state law, or we are persuaded that the federal

          and state statutes, by their very terms, cannot coexist."  Summit
                                                                     ______

          Inv. and  Dev. Corp. v. Leroux, 69 F.3d 608, 610 (1st Cir. 1995);
          ____________________    ______

          see  also Louisiana Pub. Servs. Comm'n v. FCC, 476 U.S. 355, 368-
          ___  ____ ____________________________    ___

          69  (1986).  In the  field of insurance  regulation, however, the

          McCarran-Ferguson Act,  15 U.S.C.    1011-1015,  may preclude the

          application  of  normal  federal preemption  principles  provided

          three conditions are met.2  
                              
          ____________________

               2 The McCarran-Ferguson Act provides, in pertinent part:

                    (a)  The business of  insurance, and  every person
               engaged therein, shall  be subject to  the laws of  the
               several States which relate  to the regulation or taxa-
               tion of such business.

                    (b)  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:  Provided, That . . . [the Sher-

                                          6

                    First, the  federal statute    here,  the MSP provision

          in Title XVIII    must not "specifically relat[e] to the business

          of insurance."  Second, the state law    here, the RIIIFA    must

          have  been enacted "for the purpose of regulating the business of

          insurance."   Third, the MSP provision  must "invalidate, impair,

          or  supersede" the  RIIIFA provisions  which purport to  make the

          United  States the "primary" insurer.  See United States Dep't of
                                                 ___ ______________________

          the  Treasury v. Fabe, 113  S. Ct. 2202,  2208 (1993); Villafane-
          _____________    ____                                  __________

          Nerez v. FDIC, 75 F.3d 727, 735 (1st Cir. 1996).
          _____    ____

                    The  district court  ruled  the  McCarran-Ferguson  Act

          inapplicable because the first precondition recited above was not

          met;  that is, it found that the MSP provision does "specifically

          relat[e]  to the  business of  insurance."   See Barnett  Bank of
                                                       ___ ________________

          Marion  County v. Nelson,  1996 WL 130728, at  *12 (U.S. Mar. 26,
          ______________    ______

          1996)  (holding that  a federal  statute, 12  U.S.C.    92, which

          expressly  permits  national banks  to  sell  insurance in  small

          towns, is a  statute which "specifically relates to  the business

          of insurance," and preempts a state statute which prohibits banks

          from selling   insurance).  On  appeal, the Fund argues  that the

          MSP provision does  not come  within the definition  of the  term

          "business of insurance" set  forth in United Labor Life  Ins. Co.
                                                ___________________________

          v. Pireno, 458 U.S. 119 (1982).   The United States responds that
             ______

          Pireno,  a case decided under the second or "antitrust" clause of
          ______                            ______
                              
          ____________________

               man, Clayton, and FTC antitrust acts] shall be applica-
               ble to the  business of  insurance to  the extent  that
               such business is not regulated by State law.

          15 U.S.C.   1012. 

                                          7

          15  U.S.C.   1012(b), see supra note  2, is not applicable in the
                                ___ _____

          present case.  Because  we conclude that the  MSP provision is  a

          statute  "specifically  relating to  the business  of insurance,"

          irrespective of any  formal application of  the Pireno test,  see
                                                          ______        ___

          Pireno, 458  U.S. at 129 (noting  that no one factor  is disposi-
          ______

          tive, and  that the three-part standard  contemplates a balancing

          test),  we need not reach this issue.   See Barnett Bank, 1996 WL
                                                  ___ ____________

          130728,  at  *9  (citing  Pireno as  "context[],"  but  foregoing
                                    ______

          extended three-factor  analysis); Owensboro Nat'l Bank  v. Steph-
                                            ____________________     ______

          ens, 44 F.3d  388, 391 (6th Cir. 1994), petition for cert. filed,
          ___                                     ________ ___ _____ _____

          64 U.S.L.W. 3069 (U.S. July 13, 1995)  (No. 95-74); infra note 5.
                                                              _____

          The relevant inquiry under the first clause of section 1012(b) of

          the  McCarran-Ferguson Act focuses on  two basic elements:  "spe-

          cific relation" and "business of insurance."

               1.   "Specific Relation"
               1.   "Specific Relation"
                     _________________

                      The  import of  the  "specific  relation" element  is

          readily discernible from its pre-enactment history.  Before 1944,

          the United  States Supreme Court  consistently had held  that the

          Dormant Commerce Clause of the United States Constitution did not
          _______

          invalidate  state  insurance  laws  which  imposed  impermissible

          burdens on  interstate commerce.  However,  when first confronted

          with an  affirmative congressional enactment purporting  to regu-
                   ___________

          late  the interstate  business of  insurance directly,  the Court

          ruled  that the  business  of insurance  is  part of  "interstate

          commerce" and  subject  to regulation  (hence, preemption)  under

                                          8

          Congress's commerce-clause  powers.  See United  States v. South-
                                               ___ ______________    ______

          Eastern Underwriters Ass'n, 322 U.S. 533, 544 (1944).  
          __________________________

                    Congress  promptly  repudiated  the holding  in  South-
                                                                     ______

          Eastern  Underwriters, by  enacting the  first clause  of section
          _____________________

          1012(b), see supra note 2,  which restored immunity from  dormant
                   ___ _____

          commerce-clause challenges to State  insurance laws.  See Pruden-
                                                                ___ _______

          tial Ins. Co. v. Benjamin, 328 U.S. 408, 429-30 (1946); Silver v.
          _____________    ________                               ______

          Garcia,  760 F.2d  33,  36-37 (1st  Cir.  1985).   Congress  went
          ______

          further, however, by providing  that even statutes enacted pursu-

          ant to Congress's commerce-clause powers, for general application

          to interstate  commerce, would  not preempt state  insurance laws

          unless the federal statute expressly announced Congress's specif-

          ic  intention to inject itself  into the area  of state insurance

          law.  See Barnett Bank, 1996 WL 130728, at *10 ("[T]he [McCarran]
                ___ ____________

          Act does not seek to insulate state insurance regulation from the

          reach of  all federal  law.   Rather, it  seeks to  protect state

          regulation primarily  against  inadvertent federal  intrusion  --

          say, through  enactment of  a federal  statute that  describes an

          affected activity in broad, general terms, of which the insurance

          business happens  to comprise  one part.").   Thus, McCarran-Fer-

          guson  Act   1012 imposes  no substantive constraint  on the con-

          gressional power  to regulate  insurance, but simply  "creates `a

          form  of  inverse  preemption,  letting state  law  prevail  over

          general federal rules    those that do not "specifically relate[]

          to the business of insurance."'"  Villafane-Nerez, 75 F.3d at 735
                                            _______________

          (quoting  NAACP v. American Family  Mut. Ins. Co.,  978 F.2d 287,
                    _____    ______________________________

                                          9

          293 (7th Cir.1992), cert. denied, 113 S. Ct. 2335 (1993)).   That
                              _____ ______

          is to say, section 1012 "`impos[es] what is, in effect, a clear--

          statement  rule.'"  Id.  (quoting Fabe, 113 S.  Ct. at 2211); see
                              ___           ____                        ___

          Barnett Bank,  1996 WL  130728, at  *12 (rejecting argument  that
          ____________

          Fabe's "clear-statement" rule imposed any  heightened requirement
          ____

          that a  federal statute referring  to "insurance" must  also "use

          the words 'state law is pre-empted,' or the like").

                    The parties dispute whether the Medicare program itself
                                                             _______

          specifically relates to insurance,  since it was established long

          after  the  1945 enactment  of  the  McCarran-Ferguson Act,  and,

          arguably at  least, is  not the  typical insurer  contemplated by

          section  1012 (i.e., a private insurance  carrier).  For example,

          the  Fund points  to the  recent decision  in Kachanis  v. United
                                                        ________     ______

          States, 844 F. Supp. 877 (D.R.I. 1994), which held that a Federal
          ______

          Employees' Compensation Act ("FECA")  provision, which allows the

          United States to  recover in subrogation  from any "third  party"

          liable to  an injured  employee, is not  a statute  "specifically

          relating to the  business of  insurance."  Id.  at 882  ("[W]hile
                                                     ___

          FECA does provide insurance-like  benefits to employees, there is

          no specific  mention of  insurance in  the statute.").   However,

          unlike  the  plainly generic  "third  party"  reference in  FECA,

          connoting a regulation of  general application which might encom-

          pass both insurers and  non-insurers (e.g., tortfeasors), the MSP

          provision  in the  Medicare Act  specifically adverts  to "insur-

          ance,"  see  42  U.S.C.     1395y(b)(2)(A)  (precluding  Medicare
                  ___

          coverage if "payment has been made, or can reasonably be expected

                                          10

          to be made promptly . . . under . . . an automobile  or liability

          insurance policy or plan") (emphasis added), as does its legisla-
          _________

          tive history.3  Whether the Medicare program or any other govern-
                              
          ____________________

               3The House Report provides, in relevant part:

                    Under Title VIII, Medicare will have residual
                    rather than primary liability for the payment
                    of services required  by a  beneficiary as  a
                    result of an injury  or illness sustained  in
                    an auto accident where payment for the provi-
                    sion of such services  can also be made under
                    an automobile insurance  policy.  Under  this
                                  _________  ______
                    provision, it is  expected that Medicare will
                    ordinarily pay for the beneficiary's  care in
                    the  usual manner and then seek reimbursement
                    from the private insurance carrier after, and
                                     _________ _______
                    to the extent that, such  carrier's liability
                    under the private policy for the services has
                    been determined.  Under present law, Medicare
                    is the  primary payor  (except where  a work-
                    men's compensation program  is determined  to
                    be responsible for payment for needed medical
                    services) for hospital  and medical  services
                    received by beneficiaries.  This is true even
                    in cases  in which  a beneficiary's  need for
                    services is  related to an  injury or illness
                    sustained in an auto accident and the servic-
                    es  could have  been  paid for  by a  private
                    insurance carrier under the terms of an auto-
                    _________ _______                       _____
                    mobile insurance  policy.  As a result, Medi-
                    ______ _________  ______
                    care has  served to relieve  private insurers
                                                 _______ ________
                    of obligations  to pay  the costs  of medical
                    care in cases where there would otherwise  be
                    liability  under  the private  insurance con-
                                          _______  _________ ____
                    tract.   The original  concerns that prompted
                    _____
                    inclusion of this  program policy in the  law
                        the administrative  difficulties involved
                    in  ascertaining private  insurance liability
                                     _______  _________ _________
                    and  the attendant  delays in  payment     no
                    longer justify retaining the policy, particu-
                    larly  if  it  is  understood  that immediate
                    payment may be made by Medicare with recovery
                    attempts  undertaken  only subsequently  when
                    liability is  established.  In order to avoid
                    excessive administrative costs and efforts in
                    pursuing  minor   recoveries,  the  committee
                    expects the Secretary of HHS to establish  in
                    regulations   rules  regarding   the  minimum

                                          11

          mental "insurer" technically is  considered part of the "business

          of insurance" is not  material. Barnett Bank, 1996 WL  130728, at
                                          ____________

          *9 ("The word  'relates' is  highly general, and  this Court  has

          interpreted it  broadly in other pre-emption  contexts.").  Thus,

          for  example, the  Internal Revenue  Service is  not part  of the

          "business of insurance,"  and yet  we have held  that a  Treasury

          Regulation,  which  resulted in  a  tax  on insurance  companies,

          rendered  the  McCarran-Ferguson  Act "inapplicable  by  its  own

          terms."  See  Hanover Ins.  Co. v. Commissioner,  598 F.2d  1211,
                   ___  _________________    ____________

          1219  (1st Cir.),  cert. denied,  444 U.S.  915 (1979);  see also
                             _____ ______                          ___ ____

          Texas Employers'  Ins. Ass'n v.  Jackson, 820 F.2d  1406, 1414-15
          ____________________________     _______

          (5th Cir. 1987), cert. denied, 490 U.S. 1035 (1989) (holding that
                           _____ ______

          the Longshore and  Harbor Workers' Compensation  Act specifically

          relates to "business of insurance").  Therefore  we conclude that

          Congress expressly and deliberately injected itself into the area

          of state insurance law  with its enactment of the  MSP provision.

          See Barnett  Bank, 1996 WL  130728, at *11 ("The  language of the
          ___ _____________

          Federal Statute before us is not general.  It refers specifically

          to insurance.  Its state regulatory implications are not surpris-

          ing, nor do we believe them inadvertent.").

               2.   "Business of Insurance"
               2.   "Business of Insurance"
                     _____________________
                              
          ____________________

                    amounts  estimated  as  recoverable  and  the
                    procedures for seeking recovery  from private
                                                          _______
                    carriers.   Such procedures are to be similar
                    ________
                    to  those currently  employed by  Medicare in
                    seeking  recovery  in workmen's  compensation
                    cases.  

          H.R. Rep. No. 1167,  96th Cong., 2d Sess. 389,  reprinted in 1980
                                                          _________ __
          U.S.C.C.A.N. 5526 (emphasis added).

                                          12

                    The second element    that the federal statute actually

          pertain  to activities that are  part of the  "business of insur-

          ance"    is satisfied as  well.  The MSP provision regulates  the

          core  relationship between  a  private insurer  and its  insured.

          "`Statutes aimed  at protecting or  regulating th[e] relationship

          [between insurer  and insured], directly or  indirectly, are laws

          regulating  the "business of insurance."'"   Fabe, 113  S. Ct. at
                                                       ____

          2208  (quoting  SEC v.  National Sec.,  Inc.,  393 U.S.  453, 460
                          ___     ____________________

          (1969)).  The  "core" matters encompassed within  the term "busi-

          ness of insurance"  may include "the  type of [insurance]  policy

          that  could  be  issued,  its  reliability,  interpretation,  and

          enforcement,"  cf. id. at 2211,4 as well as the standards govern-
                         ___ ___

          ing performance under insurance contracts, cf. id. at 2212.  See,
                                                     ___ ___           ___

          e.g., Barnett Bank, 1996 WL 130728, at *9  (noting that 12 U.S.C.
          ____  ____________

            12 "specifically relates to the business of insurance" because,

          inter  alia, it  "sets forth  certain specific  rules prohibiting
          _____  ____

          banks  from guaranteeing the 'payment of any premium on insurance

          policies issued  through its agency'").   The MSP  provision, and

          its  implementing regulations, explicitly prohibit private insur-

          ers from  negotiating or  enforcing  any insurance-contract  term

                              
          ____________________

               4Fabe  defines the  activities encompassed  within the  term
                ____
          "business of  insurance," albeit in  the process of  applying the
          second prong of   1012(b), i.e., whether a state priority statute
          is a law enacted "for  the purpose of regulating the  business of
          insurance."   Nonetheless,  Fabe is  apposite to the  extent that
                                      ____
          "business of  insurance" is a term  common to both the  first and
          second prongs under   1012(b).  See Atlantic  Cleaners & Dyers v.
                                          ___ __________________________
          United States, 286 U.S. 427, 433 (1932) (same word or phrase used
          _____________
          repeatedly in statute  is presumed to have same  meaning); Fortin
                                                                     ______
          v. Marshall, 608 F.2d 525, 528 (1st Cir. 1979).   
             ________

                                          13

          which purports to make  Medicare the primary-insurance obligor in

          lieu of  a private insurance  carrier, even though  authorized by

          state law.   See 42  C.F.R.   411.32(a)  ("Medicare benefits  are
                       ___

          secondary  to benefits payable by a third party payer even if the
                                                                ____ __ ___

          State law or the third party payer  states [otherwise].") (empha-
          _____ ___                           ______  _________

          sis added).  This overt federal intervention    directly control-

          ling the core contract  relationship at both the  negotiation and

          performance stages      establishes that the MSP  provision "spe-

          cifically  relat[es] to  the  business of  insurance," and  fully

          explains the litany  of unanimous decisions  that reach the  same

          conclusion      many  without  extended analysis  of  the  Pireno
                                                                     ______

          factors.5  See Colonial Penn. Ins. Co. v. Heckler, 721 F.2d  431,
                     ___ _______________________    _______
                              
          ____________________

               5The more specific challenges made by the Fund, based on the
          three-factor Pireno  test,  gain it  nothing.   First,  the  Fund
                       ______
          contends that the MSP provision does not involve a practice which
          has  the effect  of  transferring or  spreading a  policyholders'
          risk,  see Pireno,  458 U.S.  at 129,  because the  MSP provision
                 ___ ______
          merely shifts risk between the Medicare program and the Fund, not
          between the insured and the Fund.   We do not think Pireno is  to
                      _______                                 ______
          be read so narrowly.  It held only that  purely peripheral insur-
          ance  company activities, such as  an insurer's use  of a medical
          peer review  committee  to consider  whether  claimants'  medical
          bills were "reasonable," are  not part of the rough and tumble of
          risk  allocation in  insurance  contracts.   Id.  at 130-31.    A
                                                       __
          federal statute  prohibiting a private insurer  from imposing the
          primary insurance obligation on  the Medicare program clearly and
          directly affects the allocation of risk  to the policyholder, who
          is likely to  have to pay higher premiums to offset the insurer's
          increased liability exposure.   The same consideration attends to
          the  second Pireno factor as well.   Id. at 129 (second factor is
                      ______                   ___
          "whether  the [regulated]  practice is  an integral  part of  the
          policy  relationship between  the [private]  insurer and  the in-
          sured").   Finally, despite  the  MSP provision  that the  United
          States can  pursue "any entity" for reimbursement, see id. (third
                                                             ___ __
          factor is "whether  the [regulated] practice is  limited to enti-
          ties within  the insurance  industry"), the MSP  provision limits
          reimbursement to  recoveries from "primary plans,"  whose defini-
          tion lists only entities which are clearly "within" the insurance
          industry.   See 42 U.S.C.    1395y(b)(2)(A) ("primary plan" means
                      ___

                                          14

          442 n.6 (3d  Cir. 1983); Varacalli v. State  Farm Mut. Auto. Ins.
                                   _________    ___________________________

          Co., 763  F. Supp.  205, 209   (E.D.  Mich. 1990) (citing  United
          ___                                                        ______

          States  v. Blue Cross  and Blue Shield of  Michigan, 726 F. Supp.
          ______     ________________________________________

          1517,  1523 (E.D. Mich. 1989));  Abrams v. Heckler,  582 F. Supp.
                                           ______    _______

          1155, 1165 n.8 (S.D.N.Y. 1984).  As  the Medicare Secondary-Payer

          Statute  is a  federal  statute "specifically  relat[ing] to  the

          business of insurance," the McCarran-Ferguson Act is inapplicable

          and the  preemptive effect of   the MSP provision upon  the Rhode

          Island Insurers'  Insolvency Fund Act therefore  must be reviewed

          under conventional preemption principles.

          C.   Conventional Preemption Analysis
          C.   Conventional Preemption Analysis
               ________________________________

                    Notwithstanding  the  inapplicability of  the McCarran-

          Ferguson Act, the Fund  argues that the priority mandated  by the

          MSP provision does not trump the RIIIFA,  even under conventional

          preemption analysis,  because the priority provisions  in the two

          statutes  are compatible. See Summit Inv. and Dev. Corp., 69 F.3d
                                    ___ __________________________

          at  610.   First,  the Fund  points  out that  the MSP  provision

          permits the United  States to seek reimbursement  only if another

          insurer has made  a payment  to the Medicare  beneficiary, or  if

          such payment can  "reasonably be  expected to be  made."   Conse-

          quently, it  argues, it would  be unreasonable  for any  Medicare
                                            ____________

          beneficiary to  expect reimbursement  from the Fund,  because the

                              
          ____________________

          "a group health plan  or large group health plan,  . . . a  work-
          men's  compensation  law  or  plan, an  automobile  or  liability
          insurance  policy  or plan  . .  .  or no-fault  insurance"); cf.
                                                                        ___
          Kachanis, 844 F. Supp. 877 (D.R.I. 1994) (holding   1012 applica-
          ________
          ble  to FECA provision allowing United States to recover from any
          "third party"). 

                                          15

          RIIIFA  exhaustion provision  explicitly  requires  claimants  to

          exhaust  all governmental  insurance before  receiving Fund  pay-

          ments.    This argument  altogether  disregards  the function  of

          federal preemption,  however,  by implicitly  assuming  that  the

          RIIIFA  exhaustion provision  continues in  force notwithstanding

          the  mutually  inconsistent   allocations  of  primary  insurance

          liability as  denoted in the MSP provision and the RIIIFA.  Thus,

          the Fund's argument is fatally circular: the Medicare beneficiary

          could "reasonably expect" the Fund  to take the primary insurance

          risk if and because the MSP provision preempts the Fund's exhaus-
               __     _______

          tion provisions.

                    Second, the  Fund contends that  it is  not a  "primary

          plan,"  as  defined  by  the  MSP  provision,  see  42  U.S.C.   
                                                         ___

          1395y(b)(2)(B)(ii),  (b)(3)(A)  ("an   automobile  or   liability

          insurance  policy  or  plan"), because  it  is  not  the Medicare

          beneficiaries' private insurance carrier, but rather a non-profit

          governmental agency.   The Fund  further argues that it  is not a

          "plan," as defined by  Medicare regulations, because an insurance

          insolvency-guarantor statute like the  RIIIFA is not an insurance

          "policy," and therefore is not  an "arrangement, oral or written,

          by  one or more entities,  to provide health  benefits or medical

          care or assume legal liability for injury of illness."  42 C.F.R.

            411.21; see supra note 1.  Neither contention is tenable.  
                    ___ _____

                    The RIIIFA 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," see R. I.
                                                                  ___

                                          16

          Gen.  Laws    27-34-8(a)(2) (emphasis  added), subject  solely to

          specified  limitations on the amount of coverage.  Thus, the Fund

          is deemed the private  insurer, and hence a "primary  plan" under

          the MSP provision and its regulations.6   

                                         III
                                         III

                                      CONCLUSION
                                      CONCLUSION
                                      __________

                    For the foregoing reasons,  the district court judgment
                                                ___ ________ _____ ________

          is affirmed, with costs to plaintiff-appellee.
          __ ________  ____ _____ __ __________________

                              
          ____________________

               6Finally,  the  Fund  raises  a puzzling  challenge  to  the
          implicit district court ruling that RIIIFA's preempted provisions
          are severable from its non-preempted  provisions.  It argues that
          no part of  RIIIFA can  be struck down  because the Rhode  Island
          Legislature  envisioned  the Fund  only  as a  "last  resort" for
          insolvent  insurers' policyholders,  and that  it would  not have
          enacted RIIIFA at all had it known that its core  "covered claim"
          definition was going to be so severely restricted with respect to
          Medicare  benefits.   Aside  from  its  conjectural nature,  this
          contention  seems counterproductive  from the  Fund's standpoint.
          If the preempted  RIIIFA provision is  not severable, of  course,
          the  proper  relief is  not, as  the  Fund apparently  assumes, a
          holding that the entire RIIIFA stands as enacted, but the invali-
                                                                    _______
          dation of the  entire RIIIFA, which  would result in  appellant's
          ______         ______
          extinction.  See, e.g., Hooper v. Bernalillo County Assessor, 472
                       ___  ____  ______    __________________________
          U.S. 612,  624 (1985).  Beyond this, no more need be said, howev-
          er,  as  any nonseverability  decision  is for  the  Rhode Island
                       ___
          courts.  See Zobel v. Williams, 457 U.S. 55, 65  (1982) (striking
                   ___ _____    ________
          down  portion of  state statute,  but  leaving ultimate  issue of
          nonseverability for state-court resolution).
          ___

                                          17