DocketNumber： 95-1964
Filed Date： 4/5/1996
Status： Precedential
Modified Date： 9/21/2015
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
Leonard J. Silver v. Juan Antonio Garcia, Commissioner , 760 F.2d 33 ( 1985 )
Rosemary Fortin v. F. Ray Marshall, Secretary, Department ... , 608 F.2d 525 ( 1979 )
Hanover Insurance Company, Successor in Interest to ... , 598 F.2d 1211 ( 1979 )
Ramonita Santiago De Castro v. Victor Morales Medina , 943 F.2d 129 ( 1991 )
Summit Investment and Development Corporation v. Edward G. ... , 69 F.3d 608 ( 1995 )
Miguel Villafane-Neriz, Insurance Commissioner of Puerto ... , 75 F.3d 727 ( 1996 )
Texas Employers' Insurance Association v. Leroy Jackson , 820 F.2d 1406 ( 1987 )
COLONIAL PENN INSURANCE COMPANY, Appellant, v. Margaret ... , 721 F.2d 431 ( 1983 )
The National Association for the Advancement of Colored ... , 978 F.2d 287 ( 1992 )
Varacalli v. State Farm Mut. Auto. Ins. Co. , 763 F. Supp. 205 ( 1990 )
United States v. Blue Cross and Blue Shield of Michigan , 726 F. Supp. 1517 ( 1989 )
Abrams v. Heckler , 582 F. Supp. 1155 ( 1984 )
Kachanis v. United States , 844 F. Supp. 877 ( 1994 )
United States v. Rhode Island Insurers' Insolvency Fund , 892 F. Supp. 370 ( 1995 )
Prudential Insurance v. Benjamin , 66 S. Ct. 1142 ( 1946 )
Atlantic Cleaners & Dyers, Inc. v. United States , 52 S. Ct. 607 ( 1932 )
United States v. South-Eastern Underwriters Assn. , 64 S. Ct. 1162 ( 1944 )
Zobel v. Williams , 102 S. Ct. 2309 ( 1982 )
Union Labor Life Insurance v. Pireno , 102 S. Ct. 3002 ( 1982 )
Securities & Exchange Commission v. National Securities, ... , 89 S. Ct. 564 ( 1969 )