Illinois Insurance Guaranty F v. Xavier Becerra, 33 F.4th 916

Background

Plaintiff: Illinois Insurance Guaranty Fund (state-created insolvency insurer) steps into obligations of insolvent Illinois insurers but only for "covered claims" under Illinois law.
Medicare Secondary Payer (MSP) regime: Medicare may make conditional payments and then recoup from responsible "primary plans;" CMS enforces recoupment through administrative demands and a defined appeals process.
Section 111 (42 U.S.C. §1395y(b)(7)–(8)) requires certain primary plans (group health plans and "applicable plans") to report claim/beneficiary data to CMS; penalties may follow for noncompliance.
After the Ninth Circuit held the California guaranty association (CIGA) was not a primary plan, Illinois Fund asked CMS whether it too was exempt; CMS replied it was not and would not confirm exemption in writing.
Fund sued for declaratory and APA relief, arguing it is not an "applicable plan" and the CMS letter was final agency action; the district court dismissed for lack of subject-matter jurisdiction (no exhaustion under 42 U.S.C. §405(g)/(h)).
Seventh Circuit affirmed: §405(h) bars federal-question jurisdiction absent presentment/exhaustion (or waiver); Fund must pursue administrative appeals (or secure waiver) and may challenge its status as a primary plan in that process.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does §405(h) bar this suit because Fund failed to exhaust administrative remedies under §405(g)?	§405(h) should not bar review because no administrative mechanism exists to resolve §111 reporting status, so judicial review would be completely foreclosed.	Fund can seek review by using CMS’s existing appeals process for conditional-payment demands; exhaustion is required.	§405(h) bars suit; Fund must present claim and exhaust administrative remedies (or obtain waiver).
Is the August 2020 CMS letter a final agency action under the APA that permits direct judicial review?	The letter is final and arbitrary/capricious, entitling Fund to immediate judicial relief.	Even if the letter expresses a position, Fund still has an administrative path via repayment demands and appeals; jurisdiction is lacking.	Court did not reach APA merits; dismissed for lack of jurisdiction because exhaustion required.
Can the Fund avoid exhaustion by invoking Michigan Academy exception (no alternative route to judicial review)?	Michigan Academy permits review where enforcement of exhaustion would wholly preclude judicial review; applies here because no finalized §111 rule/procedure exists for reporting disputes.	The exception is narrow; Fund can challenge primary-plan status during administrative appeals of repayment demands, so the exception does not apply.	Exception not met; administrative channeling does not completely preclude review.
Should the court resolve standing before jurisdictional exhaustion?	Fund alleges present compliance costs and risk of penalties give Article III standing now.	§405(h) is jurisdictional; exhaustion determines availability of federal-court review before addressing standing.	Court declined to decide standing because §405(h) exhaustion failure was dispositive.

Key Cases Cited

Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (2000) (§405(h) bars federal-question jurisdiction; Michigan Academy exception is narrow)
Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667 (1986) (narrow exception permitting judicial review where Congress left no review route)
Mathews v. Eldridge, 424 U.S. 319 (1976) (distinguishes presentment from exhaustion under §405(g))
California Ins. Guar. Ass'n v. Azar, 940 F.3d 1061 (9th Cir. 2019) (Ninth Circuit held CIGA was not a primary plan)
United States v. Baxter Int'l, Inc., 345 F.3d 866 (11th Cir. 2003) (history and purpose of Medicare Secondary Payer Act)
Ancillary Affiliated Health Servs., Inc. v. Shalala, 165 F.3d 1069 (7th Cir. 1999) (exhaustion under Medicare framework defeats jurisdiction)