diff --git a/litellm/proxy/batches_endpoints/endpoints.py b/litellm/proxy/batches_endpoints/endpoints.py
index aef1c5ac17e..e442cefa360 100644
--- a/litellm/proxy/batches_endpoints/endpoints.py
+++ b/litellm/proxy/batches_endpoints/endpoints.py
@@ -715,7 +715,7 @@ async def list_batches(
                 operation_context="batch listing",
             )
 
-            data.update(credentials)
+            prepare_data_with_credentials(data=data, credentials=credentials)
 
             response = await litellm.alist_batches(
                 custom_llm_provider=credentials["custom_llm_provider"],
@@ -948,9 +948,10 @@ async def cancel_batch(
 
         # SCENARIO 3: Fallback to custom_llm_provider (uses env variables)
         else:
+            body_custom_llm_provider = data.pop("custom_llm_provider", None)
             custom_llm_provider: Final = (
                 provider
-                or data.pop("custom_llm_provider", None)
+                or body_custom_llm_provider
                 or get_custom_llm_provider_from_request_headers(request=request)
                 or get_custom_llm_provider_from_request_query(request=request)
                 or "openai"
diff --git a/litellm/proxy/openai_files_endpoints/files_endpoints.py b/litellm/proxy/openai_files_endpoints/files_endpoints.py
index 0acaac3bf5d..d2432ea3729 100644
--- a/litellm/proxy/openai_files_endpoints/files_endpoints.py
+++ b/litellm/proxy/openai_files_endpoints/files_endpoints.py
@@ -1352,7 +1352,7 @@ async def list_files(
 
         if should_route and credentials is not None:
             # Use model-based routing with credentials from config
-            data.update(credentials)
+            prepare_data_with_credentials(data=data, credentials=credentials)
             response = await litellm.afile_list(
                 custom_llm_provider=credentials["custom_llm_provider"],
                 purpose=purpose,
diff --git a/tests/test_litellm/proxy/batches_endpoints/test_endpoints.py b/tests/test_litellm/proxy/batches_endpoints/test_endpoints.py
index f9193db143e..a80c19f0708 100644
--- a/tests/test_litellm/proxy/batches_endpoints/test_endpoints.py
+++ b/tests/test_litellm/proxy/batches_endpoints/test_endpoints.py
@@ -1510,26 +1510,14 @@ async def test_list__managed_files_beats_model_param(list_harness):
 
 
 # --------------------------------------------------------------------------- #
-# Branch 2 - model from body/query/header. CURRENTLY BROKEN: the endpoint
-# forwards custom_llm_provider both explicitly and via **data (it calls
-# data.update(credentials) but never pops custom_llm_provider the way
-# create/retrieve do through prepare_data_with_credentials), so every call
-# raises "multiple values for keyword argument 'custom_llm_provider'".
-#
-# The strict xfail below encodes the INTENDED contract (litellm seam fires,
-# creds resolved for the body model, response ids encoded). It xfails today on
-# the duplicate-kwarg TypeError; the day that branch is fixed it will XPASS and
-# strict-mode turns the green into a failure, forcing whoever fixes it to drop
-# the marker and adopt this as a live regression test.
+# Branch 2 - model from body/query/header. The endpoint resolves credentials
+# for the body model, forwards custom_llm_provider once (it pops it from data
+# via prepare_data_with_credentials the way create/retrieve do), and encodes
+# the response ids. Regression guard for the duplicate-kwarg
+# "multiple values for keyword argument 'custom_llm_provider'" bug.
 # --------------------------------------------------------------------------- #
 
 
-@pytest.mark.xfail(
-    strict=True,
-    raises=ProxyException,
-    reason="list_batches model branch passes custom_llm_provider twice "
-    "(explicit kwarg + **data after data.update(credentials)); remove when fixed",
-)
 @pytest.mark.asyncio
 async def test_list__model_from_body_routes_and_encodes(list_harness):
     list_harness.litellm_alist.return_value = FakeListPage([make_batch(id="batch-1"), make_batch(id="batch-2")])
@@ -1991,19 +1979,11 @@ async def test_cancel__fallback_provider_from_query(cancel_harness):
     assert cancel_harness.acancel_kwargs()["custom_llm_provider"] == "azure"
 
 
-@pytest.mark.xfail(
-    strict=True,
-    raises=ProxyException,
-    reason="cancel SCENARIO 3: `provider or data.pop('custom_llm_provider')` "
-    "short-circuits when provider (path param) is set, so a body "
-    "custom_llm_provider is left in data and forwarded twice -> duplicate-kwarg "
-    "TypeError. Intended: path param wins cleanly. Remove marker when fixed.",
-)
 @pytest.mark.asyncio
 async def test_cancel__fallback_provider_precedence_path_over_body(cancel_harness):
     """Intended contract: provider path param beats a body custom_llm_provider.
-    CURRENTLY raises because the `or` short-circuit skips the data.pop, leaving
-    the body value to collide with the explicit kwarg."""
+    Regression guard: the body value is popped from data before the fallback
+    chain, so it never collides with the explicit kwarg."""
     await call_cancel(
         cancel_harness,
         "batch-raw-xyz",
diff --git a/tests/test_litellm/proxy/openai_files_endpoint/test_files_endpoint.py b/tests/test_litellm/proxy/openai_files_endpoint/test_files_endpoint.py
index e68e7102fce..f27c8dfd2f4 100644
--- a/tests/test_litellm/proxy/openai_files_endpoint/test_files_endpoint.py
+++ b/tests/test_litellm/proxy/openai_files_endpoint/test_files_endpoint.py
@@ -2346,6 +2346,59 @@ def test_list_files_resolves_wildcard_deployment_credentials(
     proxy_logging_obj.post_call_failure_hook.assert_not_called()
 
 
+def test_list_files_model_routing_does_not_forward_custom_llm_provider_twice(
+    mocker: MockerFixture, monkeypatch, llm_router: Router
+):
+    import litellm.proxy.proxy_server as ps
+    from litellm.proxy._types import LitellmUserRoles
+
+    proxy_logging_obj = setup_proxy_logging_object(monkeypatch, llm_router)
+    monkeypatch.setattr("litellm.proxy.proxy_server.master_key", None)
+    monkeypatch.setattr("litellm.proxy.proxy_server.prisma_client", None)
+    monkeypatch.setattr("litellm.proxy.proxy_server.llm_router", llm_router)
+    proxy_logging_obj.post_call_success_hook = mocker.AsyncMock(return_value=[])
+    proxy_logging_obj.post_call_failure_hook = mocker.AsyncMock()
+
+    captured_kwargs: dict = {}
+
+    async def _mock_afile_list(**kwargs):
+        captured_kwargs.update(kwargs)
+        return []
+
+    monkeypatch.setattr(litellm, "afile_list", _mock_afile_list)
+    monkeypatch.setattr(
+        "litellm.proxy.openai_files_endpoints.files_endpoints.handle_model_based_routing",
+        lambda **kwargs: (
+            True,
+            "azure-gpt-4o",
+            None,
+            {
+                "custom_llm_provider": "azure",
+                "api_key": "azure-key",
+            },
+        ),
+    )
+
+    app.dependency_overrides[ps.user_api_key_auth] = lambda: UserAPIKeyAuth(
+        api_key="test-key",
+        user_role=LitellmUserRoles.PROXY_ADMIN,
+        user_id="test-user",
+    )
+
+    try:
+        response = client.get(
+            "/v1/files",
+            headers={"Authorization": "Bearer test-key"},
+        )
+    finally:
+        app.dependency_overrides.pop(ps.user_api_key_auth, None)
+
+    assert response.status_code == 200, response.text
+    assert captured_kwargs["custom_llm_provider"] == "azure"
+    assert captured_kwargs["api_key"] == "azure-key"
+    proxy_logging_obj.post_call_failure_hook.assert_not_called()
+
+
 def test_list_files_without_target_model_names_uses_team_openai_deployment(
     mocker: MockerFixture, monkeypatch
 ):