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Appeal doomed by party’s own conduct

Where a party argued that it should not be required to exhaust administrative remedies because the administrative process would effectively result in a complete preclusion of review, but then admitted that it was currently participating in an administrative appeal where it was able to present its arguments, that concession was fatal to its claims.


This case stems from a request by the North Carolina Insurance Guaranty Association to the Center for Medicare and Medicaid Services, or CMS, seeking an advisory opinion about whether appellant is required to reimburse Medicare for certain medical bills that Medicare pays on behalf of insured individuals. CMS declined to issue the requested opinion. Dissatisfied with this response, appellant filed this action against Alex M. Azar II, in his official capacity as Secretary of the United States Department of Health and Human Services.

The district court determined that appellant lacked standing because it failed to sufficiently allege an injury-in-fact, and even if appellant did have standing, the court did not have federal question jurisdiction over the action because appellant failed to exhaust its administrative remedies as required by the Medicare Act.


Even assuming appellant has standing, the district court determined that it did not have jurisdiction over this case because 42 U.S.C. § 405(h) precludes federal question jurisdiction for claims against the United States or its agents if such claims arise under the Medicare Act. However, there is one narrow exception to § 405(h)’s channeling requirement. This exception stems from the Supreme Court’s decision in Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 680 (1986), and allows a plaintiff to escape the channeling requirement “where application of § 405(h) would not simply channel review through the agency, but would mean no review at all.”

Appellant maintains that the Michigan Academy exception applies because its principal claim — that it is not a primary plan — cannot be channeled through the administrative review process, and thus, requiring it to comply with § 405(h)’s channeling requirement would result in a complete preclusion of review. This position, however, is belied by the fact that it is currently challenging its status as a primary plan in at least one administrative appeal.

Appellant does not dispute the government’s assertion that it has presented the arguments that it raises here in its administrative appeal. Accordingly, the court concludes that the existence of the administrative appeal is fatal to appellant’s claim that it is completely precluded from seeking review of its argument that it is not a primary plan through the administrative process.

Additionally, the court agrees with the district court that the ordinary exceptions to the exhaustion requirement are inapplicable here. Lastly, the court notes that this decision is consistent with the Seventh Circuit’s recent decision in Illinois Insurance Guaranty Fund v. Becerra, 33 F.4th 916 (7th Cir. 2022) and the Ninth Circuit’s decision in California Insurance Guarantee Ass’n v. Azar, 940 F.3d 1061 (9th Cir. 2019).


North Carolina Insurance Guarantee Association v. Becerra, Case No. 21-2185, Dec. 14, 2022. 4th Cir. (Thacker), from EDNC at Raleigh (Flanagan). Christopher J. Blake for Appellant. Neal Fowler for Appellees. VLW 022-2-263. 15 pp.