is that a state has no more authority to prevent h h s from collecting a risk adjustment charge from an insurer that the team insolvent and went out of business and it would have from an well under the mccarran ferguson statute congress saved state laws enacted for the purpose of regulating the business of insurance and it saves them from preemption by general in the state case in which the plaintiffs have a legalized the only question was was the state law and acted for the purpose of regulating the business of insurance and it was a hard question that had generated a circu s because the insurer had gone out of business and was in the supreme court nonetheless said still regulating the liquidation the distribution of assets can be regarded as the regulation of the business of is because the affordable care act specifically relates to the business of insurance and karen ferguson acts reverse transition provision by its terms is not complicated when collected colorado a health risk adjustment payment for the two thousand and fifteen benefit year and what it did was applying a netting regulation promulgated under the affordable  of collecting a sum of money from colorado health under the risk adjustment program and making a separate payment under the affordable care act reinsurance program h h s netted out the two which meant that colorado health wasn't entitled to any payment and that enabled this is just more if colorado actually had a no netting statute no netting statute across the board not just or preempted the colorado statute yes on both points so the affordable care act specifically contemplated that h h s would administer various affordable care act programs including on behalf of state brief that's a broad grant of authority for h h s to fill gaps as consistent with the statutory policy and a valid ac a regulation prevents contrary state law as illustrated by the nd circuit decision recently in united health care and the older a circuit decision in the st louis case the more recent sec this is judge ch n the question i have about the nature of this netting regulation and its origins is that it appears from the federal register notice to emanate from a desire for convenience and efficiency and it's more like a payment mechanism convenience much more than that been implementation of some core criteria core substantive criteria of the affordable whether it's actually coming up with some methodology related to risk adjustment or reinsurance which was much more what that nd circuit case as well as the th circuit case seemed to me about i didn't see anything in the federal register notice that discussed the need for a netting regulation beyond mere administrative convenience and i'm missing something it issued the netting regulation if you just think about the risk adjustment program by itself there are a huge number of payment transfers that h h s to make every year roughly five billion dollars worth of is part and parcel of the purpose of the program which is just stabilizing insurers that are entitled to this pain but as i understand the federal register notice i understand there may be billions of transactions going on and and so the idea behind the netting regulation is ok instead of two billion transactions we'll just do one billion transactions because we'll have this netting still have a one billion transaction well it is absolutely its disposal to expeditiously collect and distribute these billions and billions of dollars that insurers count on for their own  an invoice to an insurer a state has no authority to tell the insurer don't pay less pay later council that's a separate counsel counsel counsel if the insurer is in an insolvency proceeding doesn't the state have to follow state insolvency law which in this case prioritizes the creditors that are coming after money so while the state doesn't say don't pay the government the state does say st pay out all the liquidation establish priority etc and there's established that if you just had a general attitude that you're telling me your position the government's position now is so much further than i understood it to be because you're telling me the government becomes the st creditor in title to top priority simply because this is an ac a transaction and it trumps state insolvency law which otherwise makes the government the rd collector in line even relate to the business of insurance so the reason that the supreme court decision in shade is totally off the table here is because we have the affordable care act establishing the insurers substantive government's arguments i had not fully appreciated them till i started reading their letters seem to be directed at something entirely different than what was held or what was explained in this case the government thinks that steps are not subject to state insolvency law and that's simply controlling frame where the deciding collections of federal debt that are leaving law the bottom line here on the collection of federal debt in any case involving insolvency are priorities whether it is insurance or otherwise and that's why mccarren is fairly irrelevant here the bottom line is that the collection of federal debt in less there is a federal statute that provides a priority or create limitation that is subject to the same priority rules the same limitations as apply to any other creditor those priority rules can be from federal bankruptcy law when federal bankruptcy law clearly indicate that when the federal priority statute doesn't apply the federal debt is subject to state law and we cited to you in that letter of november th we cited it to the government the cook county versus national bank case reminded that i have two minutes the crews case and the government's arguments that they threw in and under the claims courts jurisdictional statutes weren't raised by the government the law in any form and i would like to tie up that loose and at the end so i'm going to try to do that but let me go back to preemption the government's argument the most basic aspects of the legal framework here the priority statute that ordinarily gives federal debts a priority that allows them to take set offs doesn't apply here we know that that was the only significance of mccarren ferguson because it knocks out the priority stature beyond that nobody realized mccarran until we get way down into therefore there is no conflict with state laws on this point there afterward there is no preemption that's true as a matter of basic legal principle and as a matter of on pro can present the president and the president of the ones i cited earlier deal with a situation where there is more than one creditor that has a meritorious claim on somebody and that's better does not have enough money to go around that's why we have in south and the law that's why we have y law answers the question of who wins who gets priority how money is to be divided when there is not enough money to go around to satisfy every legal obligation and that is the issue here who gets this money the policyholders who bought the health insurance who get a priority on the colorado insurance liquidation law the federal government for all of its clients the government is now telling us allow the government to win all the time doesn't apply so the government is spending a lot of time jesting with the arguments that were part of joe turner's decision and are not part of our decision we know what kind of statu with take to create a product or to allow a set off the federal super priority statute has been in effect for over two hundred years that is such a law it's part of the debt collection act and that's where the government gets its priority and it's right to take set off to its heart the light but it doesn't apply here when it's a claim i think that's where it was going by claiming that it had a priority but yes this is just i should let me ask  something that just to make sure i understand your position suppose that netting regulation had been in the statute itself in the way do you think this would be a different case now because the  the statute specifically said with respect to the quotation or otherwise absolutely would apply absolutely would apply that is the point here it doesn't say that  here the rhode island guarantee fund was a case where the federal statute thickly just as us judge bryson dealt with the priority of federal liens and it said well the federal statute applies it deals with priorities of course it's going to preempt the state law but none of that has to do with what takes place in an insolvency when the government does not have a statute that deals with with priority does not have a statute that creates it and to respond to a question judge chen asked my colleague the netting regulation is purely of the same form as all administrative set off regulations are and as the so literally the holding it for fifty two dollars re the cook county bank case so that's what the controlling circumstance here is and you know really when you get right down to it the controlling issue as i said conflicting claims on a piece of property is a state lien and a federally kember fruits actually says that all of these issues of collection of federal money federal issues however they say look to the state of the situation to decide those issues and the united states is always subject to the applicable insolvency law if it was in bankruptcy law there are a couple of limitations on how they could assert their right of set off one is the mutuality rule there's another one about timing and in a insurance insolvency that has been accepted from the federal bankruptcy law statutes say and mean is the government has a right to assert a set off and there is certainly jurisdiction to consider the counter claims or the set off in the claims court that's why we we are here that is the general rule in all many cases say that the baker person is gold seal liquors is one that's a supreme court case and seventy four dollars but the ability to research the argument of the set off does is what determines whether you win is jurisdiction wise to assert a counter claim it said in passing that the government had pursued its counter claim bankruptcy court it might only be paid a small portion of the distribution you know the worst that could be a different result depending on whether you're in the claims court it would have to go back to the bankruptcy court to collect and then it would be subject to the priority law or the priority rules that apply in the bankruptcy court well that happened at the federal bankruptcy court that was a produce here it is different we are excluded from federal bankruptcy court and therefore the insolvency law that applies is the law that comes into place when you have to go  scope who's covered it doesn't program it's any health plan that provides coverage in the individual or small group market within the state the only statutory exception being for grandfathered plans which are plans that are not subject to the a c s community rating and guaranteed issue reforms and other market reforms and this makes perfect sense because if you had an implicit exception for a defunct insurer the consequence would be that the defunct insurer would be siphoning off risk adjustment fines that are designed to stabilize the surviving insurer and as i said in the opening the whole point of the risk adjustment and other stabilization programs is to stabilize the market of the insurers that are actually in this mess so almost nothing that was just said there is on our i could go on and talk about the separate federal common law point but that's an independent basis or preemption here that is derived from a long standing supreme court recognition that the government has the same set off rights of other very quickly a question just for clarification when you were making the argument about the issue a provision on preemption that depends i take it on your assertion that the  regulation is treated as if it has the same status as a statutory provision rights not exactly because recall i said even if  if we were to conclude that the statute in the a ca that refers to the statute itself even if we were complicit that did not include the knitting regulation you would still prevail so you don't need that statute in effect correct your so well ok ok i think both counsel the cases taken under submission