IIGF is Not a Primary Payer Under the Medicare Secondary Payer Act

by P. Czuprynski

In IIGF v. Becerra^[1] the United States District court for the Northern District of Illinois determined conditional payments alleged by Medicare, did not require reimbursement by IIGF under the Medicare Secondary Payer (MSP) Act. The Centers for Medicare & Medicaid Services (CMS) did not appeal this decision.

In Illinois, state law requires solvent workers compensation and liability insurance carriers to pay a set amount to the state government. This fund is called the Illinois Insurance Guarantee Fund (IIGF). The IIGF is required to cover certain claims associated with insurance carriers that have liquidated.

All 50 states have a similar guaranty fund, and each state has their own statutes governing the operation of the fund.

Because IIGF has a set budget every year, Illinois statute limits the claims that can be covered by IIGF.

Under the MSP Act, a “primary plan” may be required to reimburse conditional payments. “Primary Plan” is defined in 42 U.S.C. §1395y(b)(2)(A)(ii):

In this subsection, the term “primary plan” means a group health plan or large group health plan, to the extent that clause (i) applies, and a workmen’s compensation law or plan, an automobile or liability insurance policy or plan (including a self-insured plan) or no fault insurance, to the extent that clause (ii) applies. An entity that engages in a business, trade, or profession shall be deemed to have a self-insured plan if it carries its own risk (whether by a failure to obtain insurance, or otherwise) in whole or in part.

IIGF argued that the MSP Act’s definition of primary payer did not include claims associated with the Illinois Guaranty Fund. IIGF argued Illinois statute made IIGF a “payer of last resort” and did not qualify as one of the plans or insurance types identified above. Since IIGF was not a primary payer under the MSP Act, reimbursement should not be required for conditional payments.

In finding IIGF was not a primary payer, the District Court determined that as a matter of state law, the Seventh Circuit had previously found that IIGF was a “payer of last resort.” IIGF v. Becerra^[2].

The court found that “insurance insolvency funds designed to be sources of last resort do not fit the statutory definition of ‘primary plan’ in the MSP.”

Although the District Court’s determination was based on a single conditional payment recovery, the decision impacts Medicare’s ability to collect other matters against IIGF. Similarly, CMS has confirmed guaranty funds in California, Idaho, Alaska, Washington, Hawaii, Montana, and Arizona, are not primary payers under the MSP Act.

Any outstanding matters should be resolved or rescinded as IIGF is not a primary plan required to reimburse conditional payments to Medicare.

While the above decision interprets Illinois laws, this argument could apply to other states depending on the governing state statutes. For example, in United States v. Rhode Island Insurers’ Insolvency Fund,^[3] the federal court found Rhode Island statute designated the insolvency fund as a primary plan under the MSP Act.

In California Insurance Guaranty Association (CIGA) v. Burwell^[4], the Ninth Circuit Court of Appeals found CIGA as a “payer of last resort” and not a primary plan under the MSP Act.

IMPAXX has also had success with this argument and can assist guaranty funds through the administrative appeal process leading up to federal court review. We also provide background support to the attorneys handling the matter while the matter is being litigated.

We recommend that other guaranty funds review their cases and state laws to determine if they also should be excluded from reimbursement of conditional payments, section 111 reporting obligations, and other requirements of the MSP Act.

If you have questions regarding primary payers and the MSP Act or would like to learn more about how IMPAXX can guide you through the administrative appeal process, please contact us at [email protected].

[1] 2025 U.S. Dist. LEXIS 9461 (N.D. Ill. 1/17/25)
[2] 33 F.4th 916, 919 (Seventh Cir. 2022)
[3] 80 F.3d 616 (First Cir. 1996)
[4] 940 F.3d 1061 (Nineth Cir. 2019)