ARKANSAS DEPARTMENT OF HEALTH AND HUMAN SERVICES et al. v. AHLBORN

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Syllabus
ARKANSAS DEPARTMENT OF HEALTH AND HUMAN
SERVICES et al. v. AHLBORN
certiorari to the united states court of appeals for
the eighth circuit
No. 04–1506. Argued February 27, 2006—Decided May 1, 2006
Federal Medicaid law requires participating States to “ascertain the legal
liability of third parties . . . to pay for [an individual benefits recipient’s]
care and services available under the [State’s] plan,” 42 U. S. C.
§ 1396a(a)(25)(A); to “seek reimbursement for [medical] assistance to the
extent of such legal liability,” § 1396a(a)(25)(B); to enact “laws under
which, to the extent that payment has been made . . . for medical as
sistance for health care items or services furnished to an individual,
the State is considered to have acquired the rights of such individual
to payment by any other party for such health care items or
services,” § 1396a(a)(25)(H); to “provide that, as a condition of [Medicaid]
eligibility . . . , the individual is required . . . (A) to assign the State any
rights . . . to payment for medical care from any third party; . . . (B) to
cooperate with the State . . . in obtaining [such] payments . . . and . . .
(C) . . . in identifying, and providing information to assist the State in
pursuing, any third party who may be liable,” § 1396k(a)(1). Finally,
“any amount collected by the State under an assignment made” as de
scribed above “shall be retained by the State . . . to reimburse it for
[Medicaid] payments made on behalf of ” the recipient. § 1396k(b).
“[T]he remainder of such amount collected shall be paid” to the recipi
ent. Ibid. Acting pursuant to its understanding of these provisions,
Arkansas passed laws under which, when a state Medicaid recipient ob
tains a tort settlement following payment of medical costs on her behalf,
a lien is automatically imposed on the settlement in an amount equal to
Medicaid’s costs. When that amount exceeds the portion of the settle
ment representing medical costs, satisfaction of the State’s lien requires
payment out of proceeds meant to compensate the recipient for damages
distinct from medical costs, such as pain and suffering, lost wages, and
loss of future earnings.
Following respondent Ahlborn’s car accident with allegedly negligent
third parties, petitioner Arkansas Department of Health and Human
Services, then named Arkansas Department of Human Services
(ADHS), determined that Ahlborn was eligible for Medicaid and paid
providers $215,645.30 on her behalf. She filed a state-court suit against
the alleged tortfeasors seeking damages for past medical costs and for

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other items including pain and suffering, loss of earnings and working
time, and permanent impairment of her future earning ability. The
case was settled out of court for $550,000, which was not allocated be
tween categories of damages. ADHS did not participate or ask to par
ticipate in the settlement negotiations, and did not seek to reopen the
judgment after the case was dismissed, but did intervene in the suit and
assert a lien against the settlement proceeds for the full amount it had
paid for Ahlborn’s care. She filed this action in Federal District Court
seeking a declaration that the State’s lien violated federal law insofar
as its satisfaction would require depletion of compensation for her inju
ries other than past medical expenses. The parties stipulated, inter
alia, that the settlement amounted to approximately one-sixth of the
reasonable value of Ahlborn’s claim and that, if her construction of fed
eral law was correct, ADHS would be entitled to only the portion of
the settlement ($35,581.47) that constituted reimbursement for medical
payments made. In granting ADHS summary judgment, the court held
that under Arkansas law, which it concluded did not conflict with federal
law, Ahlborn had assigned ADHS her right to recover the full amount
of Medicaid’s payments for her benefit. The Eighth Circuit reversed,
holding that ADHS was entitled only to that portion of the settlement
that represented payments for medical care.
Held: Federal Medicaid law does not authorize ADHS to assert a lien on
Ahlborn’s settlement in an amount exceeding $35,581.47, and the federal
anti-lien provision affirmatively prohibits it from doing so. Arkansas’
third-party liability provisions are unenforceable insofar as they compel
a different conclusion. Pp. 280–292.
(a) Arkansas’ statute finds no support in the federal third-party liabil
ity provisions. That ADHS cannot claim more than the portion of
Ahlborn’s settlement that represents medical expenses is suggested by
§ 1396k(a)(1)(A), which requires that Medicaid recipients, as a condition
of eligibility, “assign the State any rights . . . to payment for medical
care from any third party” (emphasis added), not their rights to payment
for, e. g., lost wages. The other statutory language ADHS relies on is
not to the contrary, but reinforces the assignment provision’s implicit
limitation. First, statutory context shows that § 1396a(a)(25)(B)’s re
quirement that States “seek reimbursement for [medical] assistance to
the extent of such legal liability” refers to “the legal liability of third
parties . . . to pay for care and services available under the plan,”
§ 1396a(a)(25)(A) (emphasis added). Here, because the tortfeasors ac
cepted liability for only one-sixth of Ahlborn’s overall damages, and
ADHS has stipulated that only $35,581.47 of that sum represents com
pensation for medical expenses, the relevant “liability” extends no fur

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270 ARKANSAS DEPT. OF HEALTH AND HUMAN SERVS. v.
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Syllabus
ther than that amount. Second, § 1396a(a)(25)(H)’s requirement that
the State enact laws giving it the right to recover from liable third
parties “to the extent [it made] payment . . . for medical assistance for
health care items or services furnished to an individual” does not limit
the State’s recovery only by the amount it paid out on the recipient’s
behalf, since the rest of the provision makes clear that the State must
be assigned “the rights of [the recipient] to payment by any other party
for such health care items or services.” (Emphasis added.) Finally,
§ 1396k(b)’s requirement that, where the State actively pursues recovery
from the third party, Medicaid be reimbursed fully from “any amount
collected by the State under an assignment” before “the remainder of
such amount collected” is remitted to the recipient does not show that
the State must be paid in full from any settlement. Rather, because
the State’s assigned rights extend only to recovery of medical payments,
what § 1396k(b) requires is that the State be paid first out of any dam
ages for medical care before the recipient can recover any of her own
medical costs. Pp. 280–282.
(b) Arkansas’ statute squarely conflicts with the federal Medicaid
law’s anti-lien provision, § 1396p(a)(1), which prohibits States from im
posing liens “against the property of any individual prior to his death
on account of medical assistance paid . . . on his behalf under the State
plan.” Even if the State’s lien is assumed to be consistent with federal
law insofar as it encumbers proceeds designated as medical payments,
the anti-lien provision precludes attachment or encumbrance of the re
mainder of the settlement. ADHS’ attempt to avoid the anti-lien provi
sion by characterizing the settlement proceeds as not Ahlborn’s “prop
erty,” but as the State’s, fails for two reasons. First, because the
settlement is not “received from a third party,” as required by the state
statute, until Ahlborn’s chose in action has been reduced to proceeds in
her possession, the assertion that any of the proceeds belonged to the
State all along lacks merit. Second, the State’s argument that Ahl
born lost her property rights in the proceeds the instant she applied for
medical assistance is inconsistent with the creation of a statutory lien
on those proceeds: ADHS would not need a lien on its own property.
Pp. 283–286.
(c) The Court rejects as unpersuasive ADHS’ and the United States’
arguments that a rule permitting a lien on more than medical damages
ought to apply here either because Ahlborn breached her duty to “coop
erate” with ADHS or because there is an inherent danger of manipula
tion in cases where the parties to a tort case settle without judicial
oversight or input from the State. As § 1396k(a)(1)(C) demonstrates,
the duty to cooperate arises principally, if not exclusively, in proceedings
initiated by the State to recover from third parties. In any event, the

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aspersions cast upon Ahlborn are entirely unsupported; all the record
reveals is that ADHS neither asked to be nor was involved in the settle
ment negotiations. Whatever the bounds of the duty to cooperate,
there is no evidence that it was breached here. Although more color
able, the alternative argument that a rule of full reimbursement is
needed generally to avoid the risk of settlement manipulation also fails.
The risk that parties to a tort suit will allocate away the State’s interest
can be avoided either by obtaining the State’s advance agreement to
an allocation or, if necessary, by submitting the matter to a court for
decision. Pp. 287–288.
(d) Also rejected is ADHS’ contention that the Eighth Circuit ac
corded insufficient weight to two decisions by the Departmental Appeals
Board (Board) of the federal Department of Health and Human Services
(HHS) rejecting appeals by two States from denial of reimbursement
for costs they paid on behalf of Medicaid recipients who had settled tort
claims. Although HHS generally has broad regulatory authority in the
Medicaid area, the Court declines to treat the Board’s reasoning in those
cases as controlling because they address a different question from the
one posed here, make no mention of the anti-lien provision, and rest on
a questionable construction of the federal third-party liability provi
sions. Pp. 289–292.
397 F. 3d 620, affirmed.
Stevens, J., delivered the opinion for a unanimous Court.
Lori Freno, Assistant Attorney General of Arkansas, ar
gued the cause for petitioners. With her on the briefs was
Mike Beebe, Attorney General.
Patricia A. Millett argued the cause for the United States
as amicus curiae urging reversal. With her on the brief
were Solicitor General Clement, Assistant Attorney Gen
eral Keisler, Deputy Solicitor General Kneedler, William
Kanter, and Anne Murphy.
H. David Blair argued the cause for respondent. With
him on the brief was Phillip Farris.*
*A brief of amici curiae urging reversal was filed for the State of Wash
ington et al. by Rob McKenna, Attorney General of Washington, William
L. Williams, Senior Assistant Attorney General, and Kimberly D. Frinell,
Assistant Attorney General, and by the Attorneys General for their re
spective jurisdictions as follows: David W. Ma´ rquez of Alaska, Terry God

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272 ARKANSAS DEPT. OF HEALTH AND HUMAN SERVS. v.
AHLBORN
Opinion of the Court
Justice Stevens delivered the opinion of the Court.
When a Medicaid recipient in Arkansas obtains a tort set
tlement following payment of medical costs on her behalf by
Medicaid, Arkansas law automatically imposes a lien on the
settlement in an amount equal to Medicaid’s costs. When
that amount exceeds the portion of the settlement that rep
resents medical costs, satisfaction of the State’s lien requires
payment out of proceeds meant to compensate the recipient
for damages distinct from medical costs—like pain and suf
fering, lost wages, and loss of future earnings. The Court
of Appeals for the Eighth Circuit held that this statutory
lien contravened federal law and was therefore unenforce
able. Ahlborn v. Arkansas Dept. of Human Servs., 397
F. 3d 620 (2005). Other courts have upheld similar lien pro
visions. See, e. g., Houghton v. Department of Health, 2002
UT 101, 57 P. 3d 1067; Wilson v. Washington, 142 Wash. 2d
40, 10 P. 3d 1061 (2000) (en banc). We granted certiorari to
resolve the conflict, 545 U. S. 1165 (2005), and now affirm.
I
On January 2, 1996, respondent Heidi Ahlborn, then a 19
year-old college student and aspiring teacher, suffered se
dard of Arizona, John W. Suthers of Colorado, Richard Blumenthal of
Connecticut, Robert J. Spagnoletti of the District of Columbia, Thurbert
E. Baker of Georgia, Mark J. Bennett of Hawaii, Lawrence G. Wasden of
Idaho, Lisa Madigan of Illinois, Phill Kline of Kansas, Gregory D. Stumbo
of Kentucky, G. Steven Rowe of Maine, J. Joseph Curran, Jr., of Maryland,
Thomas F. Reilly of Massachusetts, Michael A. Cox of Michigan, Jeremiah
W. (Jay) Nixon of Missouri, Mike McGrath of Montana, Kelly A. Ayotte
of New Hampshire, Peter C. Harvey of New Jersey, Eliot Spitzer of New
York, Wayne Stenehjem of North Dakota, Jim Petro of Ohio, Hardy Myers
of Oregon, Patrick Lynch of Rhode Island, Henry McMaster of South
Carolina, Lawrence E. Long of South Dakota, Mark L. Shurtleff of Utah,
Peggy A. Lautenschlager of Wisconsin, and Patrick J. Crank of Wyoming.
Louis M. Bograd, Ned Miltenberg, and Kenneth M. Suggs filed a brief
for the Association of Trial Lawyers of America as amicus curiae urg
ing affirmance.

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vere and permanent injuries as a result of a car accident.
She was left brain damaged, unable to complete her college
education, and incapable of pursuing her chosen career. Al
though she possessed a claim of uncertain value against the
alleged tortfeasors who caused her injuries, Ahlborn’s liquid
assets were insufficient to pay for her medical care. Peti
tioner Arkansas Department of Health and Human Services
(ADHS) 1 accordingly determined that she was eligible for
medical assistance and paid providers $215,645.30 on her be
half under the State’s Medicaid plan.
ADHS required Ahlborn to complete a questionnaire
about her accident, and sent her attorney periodic letters
advising him about Medicaid outlays. These letters noted
that, under Arkansas law, ADHS had a claim to reimburse
ment from “any settlement, judgment, or award” obtained
by Ahlborn from “a third party who may be liable for” her
injuries, and that no settlement “shall be satisfied without
first giving [ADHS] notice and a reasonable opportunity to
establish its interest.” 2 ADHS has never asserted, how
ever, that Ahlborn has a duty to reimburse it out of any
other subsequently acquired assets or earnings.
On April 11, 1997, Ahlborn filed suit against two alleged
tortfeasors in Arkansas state court seeking compensation for
the injuries she sustained in the January 1996 car accident.
She claimed damages not only for past medical costs, but also
for permanent physical injury; future medical expenses; past
and future pain, suffering, and mental anguish; past loss of
earnings and working time; and permanent impairment of
the ability to earn in the future.
ADHS was neither named as a party nor formally notified
of the suit. Ahlborn’s counsel did, however, keep ADHS
informed of details concerning insurance coverage as they
became known during the litigation.
1 ADHS was then named Arkansas Department of Human Services.
2 Affidavit of Wayne E. Olive, Exhs. 5 and 6 (Mar. 6, 2003).

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In February 1998, ADHS intervened in Ahlborn’s lawsuit
to assert a lien on the proceeds of any third-party recovery
Ahlborn might obtain. In October 1998, ADHS asked Ahl
born’s counsel to notify the agency if there was a hearing in
the case. No hearing apparently occurred, and the case was
settled out of court sometime in 2002 for a total of $550,000.
The parties did not allocate the settlement between catego
ries of damages. ADHS did not participate or ask to partici
pate in settlement negotiations. Nor did it seek to reopen
the judgment after the case had been dismissed. ADHS
did, however, assert a lien against the settlement proceeds
in the amount of $215,645.30—the total cost of payments
made by ADHS for Ahlborn’s care.
On September 30, 2002, Ahlborn filed this action in the
United States District Court for the Eastern District of Ar
kansas seeking a declaration that the lien violated the fed
eral Medicaid laws insofar as its satisfaction would require
depletion of compensation for injuries other than past medi
cal expenses. To facilitate the District Court’s resolution
of the legal questions presented, the parties stipulated
that Ahlborn’s entire claim was reasonably valued at
$3,040,708.12; that the settlement amounted to approxi
mately one-sixth of that sum; and that, if Ahlborn’s construc
tion of federal law was correct, ADHS would be entitled to
only the portion of the settlement ($35,581.47) that con
stituted reimbursement for medical payments made. See
App. 17–20.
Ruling on cross-motions for summary judgment, the Dis
trict Court held that under Arkansas law, which it concluded
did not conflict with federal law, Ahlborn had assigned to
ADHS her right to any recovery from the third-party tort
feasors to the full extent of Medicaid’s payments for her
benefit. Accordingly, ADHS was entitled to a lien in the
amount of $215,645.30.

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The Eighth Circuit reversed. It held that ADHS was
entitled only to that portion of the judgment that repre
sented payments for medical care. For the reasons that fol
low, we affirm.
II
The crux of the parties’ dispute lies in their competing
constructions of the federal Medicaid laws. The Medicaid
program, which provides joint federal and state funding of
medical care for individuals who cannot afford to pay their
own medical costs, was launched in 1965 with the enactment
of Title XIX of the Social Security Act (SSA), as added, 79
Stat. 343, 42 U. S. C. § 1396 et seq. (2000 ed. and Supp. III).
Its administration is entrusted to the Secretary of Health
and Human Services (HHS), who in turn exercises his au
thority through the Centers for Medicare and Medicaid Serv
ices (CMS).3
States are not required to participate in Medicaid, but all
of them do. The program is a cooperative one; the Federal
Government pays between 50% and 83% of the costs the
State incurs for patient care,4 and, in return, the State pays
its portion of the costs and complies with certain statutory
requirements for making eligibility determinations, collect
ing and maintaining information, and administering the pro
gram. See § 1396a.
One such requirement is that the state agency in charge of
Medicaid (here, ADHS) “take all reasonable measures to as
certain the legal liability of third parties . . . to pay for care
and services available under the plan.” § 1396a(a)(25)(A)
3 Until 2001, CMS was known as the Health Care Financing Administra
tion or HCFA. See 66 Fed. Reg. 35437.
4 The exact percentage of the federal contribution is calculated pursuant
to a formula keyed to each State’s per capita income. See 42 U. S. C.
§ 1396d(b).

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(2000 ed.).5 The agency’s obligation extends beyond mere
identification, however;
“in any case where such a legal liability is found to exist
after medical assistance has been made available on be
half of the individual and where the amount of reim
bursement the State can reasonably expect to recover
exceeds the costs of such recovery, the State or local
agency will seek reimbursement for such assistance to
the extent of such legal liability.” § 1396a(a)(25)(B).
To facilitate its reimbursement from liable third parties, the
State must,
“to the extent that payment has been made under the
State plan for medical assistance in any case where a
third party has a legal liability to make payment for
such assistance, [have] in effect laws under which, to the
extent that payment has been made under the State plan
for medical assistance for health care items or services
furnished to an individual, the State is considered to
have acquired the rights of such individual to payment
by any other party for such health care items or serv
ices.” § 1396a(a)(25)(H).
The obligation to enact assignment laws is reiterated in an
other provision of the SSA, which reads as follows:
“(a) For the purpose of assisting in the collection of
medical support payments and other payments for medi
cal care owed to recipients of medical assistance under
the State plan approved under this subchapter, a State
plan for medical assistance shall—
“(1) provide that, as a condition of eligibility for medi
cal assistance under the State plan to an individual who
5 A “third party” is defined by regulation as “any individual, entity or
program that is or may be liable to pay all or part of the expenditures for
medical assistance furnished under a State plan.” 42 CFR § 433.136
(2005).

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has the legal capacity to execute an assignment for him
self, the individual is required—
“(A) to assign the State any rights . . . to support
(specified as support for the purpose of medical care by
a court or administrative order) and to payment for
medical care from any third party;
“(B) to cooperate with the State . . . in obtaining sup
port and payments (described in subparagraph (A)) for
himself . . . ; and
“(C) to cooperate with the State in identifying, and
providing information to assist the State in pursuing,
any third party who may be liable to pay for care and
services available under the plan . . . .” § 1396k(a).
Finally, “any amount collected by the State under an assign
ment made” as described above “shall be retained by the
State as is necessary to reimburse it for medical assist
ance payments made on behalf of ” the Medicaid recipient.
§ 1396k(b). “[T]he remainder of such amount collected shall
be paid” to the recipient. Ibid.
Acting pursuant to its understanding of these third-party
liability provisions, the State of Arkansas passed laws that
purport to allow both ADHS and the Medicaid recipient,
either independently or together, to recover “the cost of ben
efits” from third parties. Ark. Code Ann. §§ 20–77–301
through 20–77–309 (2001). Initially, “[a]s a condition of eligi
bility” for Medicaid, an applicant “shall automatically assign
his or her right to any settlement, judgment, or award which
may be obtained against any third party to [ADHS] to the
full extent of any amount which may be paid by Medicaid for
the benefit of the applicant.” § 20–77–307(a). Accordingly,
“[w]hen medical assistance benefits are provided” to the re
cipient “because of injury, disease, or disability for which an
other person is liable,” ADHS “shall have a right to recover
from the person the cost of benefits so provided.” § 20–77–

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301(a).6 ADHS’ suit “shall” not, however, “be a bar to any
action upon the claim or cause of action of the recipient.”
§ 20–77–301(b). Indeed, the statute envisions that the recip
ient will sometimes sue together with ADHS, see § 20–77–
303, or even alone. If the latter, the assignment described
in § 20–77–307(a) “shall be considered a statutory lien on any
settlement, judgment, or award received . . . from a third
party.” § 20–77–307(c); see also § 20–77–302(a) (“When an
action or claim is brought by a medical assistance recipient
. . . , any settlement, judgment, or award obtained is sub
ject to the division’s claim for reimbursement of the bene
fits provided to the recipient under the medical assistance
program”).7
The State, through this statute, claims an entitlement to
more than just that portion of a judgment or settlement that
represents payment for medical expenses. It claims a right
to recover the entirety of the costs it paid on the Medicaid
recipient’s behalf. Accordingly, if, for example, a recipient
sues alone and settles her entire action against a third-party
tortfeasor for $20,000, and ADHS has paid that amount or
more to medical providers on her behalf, ADHS gets the
whole settlement and the recipient is left with nothing.
This is so even when the parties to the settlement allocate
damages between medical costs, on the one hand, and other
injuries like lost wages, on the other. The same rule also
6 Under the Arkansas statute, ADHS’ right to recover medical costs ap
pears to be broader than that of the recipient. When ADHS sues, “no
contributory or comparative fault of a recipient shall be attributed to the
state, nor shall any restitution awarded to the state be denied or reduced
by any amount or percentage of fault attributed to a recipient.” § 20–77–
301(d)(1) (2001).
7 The Arkansas Supreme Court has held that ADHS has an independent,
nonderivative right to recover the cost of benefits from a third-party tort
feasor under § 20–77–301 even when the Medicaid recipient also sues for
recovery of medical expenses. See National Bank of Commerce v.
Quirk, 323 Ark. 769, 792–794, 918 S. W. 2d 138, 151–152 (1996).

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would apply, it seems, if the recovery were the result not of
a settlement but of a jury verdict. In that case, under the
Arkansas statute, ADHS could recover the full $20,000 in the
face of a jury allocation of, say, only $10,000 for medical
expenses.8
That this is what the Arkansas statute requires has been
confirmed by the State’s Supreme Court. In Arkansas
Dept. of Human Servs. v. Ferrel, 336 Ark. 297, 984 S. W. 2d
807 (1999), the court refused to endorse an equitable, nontex
tual interpretation of the statute. Rejecting a Medicaid re
cipient’s argument that he ought to retain some of a settle
ment that was insufficient to cover both his and Medicaid’s
expenses, the court explained:
“Given the clear, unambiguous language of the statute,
it is apparent that the legislature intended that ADHS’s
ability to recoup Medicaid payments from third parties
or recipients not be restricted by equitable subrogation
principles such as the ‘made whole’ rule stated in
[Franklin v. Healthsource of Arkansas, 328 Ark. 163,
942 S. W. 2d 837 (1997)]. By creating an automatic legal
assignment which expressly becomes a statutory lien,
[Ark. Code Ann. § 20–77–307 (1991)] makes an unequivo
cal statement that the ADHS’s ability to recover Med
icaid payments from insurance settlements, if it so
chooses, is superior to that of the recipient even when
the settlement does not pay all the recipient’s medical
costs.” Id., at 308, 984 S. W. 2d, at 811.
Accordingly, the Arkansas statute, if enforceable against
Ahlborn, authorizes imposition of a lien on her settlement
proceeds in the amount of $215,645.30. Ahlborn’s argument
before the District Court, the Eighth Circuit, and this Court
8 ADHS denies that it would actually demand the full $20,000 in such a
case, see Brief for Petitioners 49, n. 13, but points to no provision of the
Arkansas statute that would prevent it from doing so.

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has been that Arkansas law goes too far. We agree. Ar
kansas’ statute finds no support in the federal third-party
liability provisions, and in fact squarely conflicts with the
anti-lien provision of the federal Medicaid laws.
III
We must decide whether ADHS can lay claim to more than
the portion of Ahlborn’s settlement that represents medical
expenses.9 The text of the federal third-party liability pro
visions suggests not; it focuses on recovery of payments for
medical care. Medicaid recipients must, as a condition of eli
gibility, “assign the State any rights . . . to payment for med
ical care from any third party,” 42 U. S. C. § 1396k(a)(1)(A)
(emphasis added), not rights to payment for, for example,
lost wages. The other statutory language that ADHS relies
upon is not to the contrary; indeed, it reinforces the limita
tion implicit in the assignment provision.
First, ADHS points to § 1396a(a)(25)(B)’s requirement that
States “seek reimbursement for [medical] assistance to the
extent of such legal liability” (emphasis added) and suggests
that this means that the entirety of a recipient’s settlement
is fair game. In fact, as is evident from the context of the
emphasized language, “such legal liability” refers to “the
legal liability of third parties . . . to pay for care and serv
ices available under the plan.” § 1396a(a)(25)(A) (emphasis
added). Here, the tortfeasor has accepted liability for only
one-sixth of the recipient’s overall damages, and ADHS has
stipulated that only $35,581.47 of that sum represents com
pensation for medical expenses. Under the circumstances,
9 The parties here assume, as do we, that a State can fulfill its obligations
under the federal third-party liability provisions by requiring an “assign
ment” of part of, or placing a lien on, the settlement that a Medicaid recipi
ent procures on her own. Cf. §§ 1396k(a)(1)(B)–(C) (the recipient has a
duty to identify liable third parties and to “provid[e] information to assist
the State in pursuing” those parties (emphasis added)).

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the relevant “ liability” extends no further than that
amount.10
Second, ADHS argues that the language of § 1396a(a)
(25)(H) favors its view that it can demand full reimburse
ment of its costs from Ahlborn’s settlement. That provi
sion, which echoes the requirement of a mandatory assign
ment of rights in § 1396k(a), says that the State must have
in effect laws that, “to the extent that payment has been
made under the State plan for medical assistance for health
care items or services furnished to an individual,” give the
State the right to recover from liable third parties. This
must mean, says ADHS, that the agency’s recovery is limited
only by the amount it paid out on the recipient’s behalf—
and not by the third-party tortfeasor’s particular liability for
medical expenses. But that reading ignores the rest of the
provision, which makes clear that the State must be assigned
“the rights of [the recipient] to payment by any other party
for such health care items or services.” § 1396a(a)(25)(H)
(emphasis added). Again, the statute does not sanction an
assignment of rights to payment for anything other than
medical expenses—not lost wages, not pain and suffering,
not an inheritance.
Finally, ADHS points to the provision requiring that,
where the State actively pursues recovery from the third
party, Medicaid be reimbursed fully from “any amount col
lected by the State under an assignment” before “the re
mainder of such amount collected” is remitted to the recipi
ent. § 1396k(b). In ADHS’ view, this shows that the State
must be paid in full from any settlement. See Brief for Peti
tioners 13. But, even assuming the provision applies in
cases where the State does not actively participate in the
litigation, ADHS’ conclusion rests on a false premise: The
10 The effect of the stipulation is the same as if a trial judge had found
that Ahlborn’s damages amounted to $3,040,708.12 (of which $215,645.30
were for medical expenses), but because of her contributory negligence,
she could only recover one-sixth of those damages.

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“amount recovered . . . under an assignment” is not, as
ADHS assumes, the entire settlement; as explained above,
under the federal statute the State’s assigned rights extend
only to recovery of payments for medical care. Accordingly,
what § 1396k(b) requires is that the State be paid first out of
any damages representing payments for medical care before
the recipient can recover any of her own costs for medical
care.11
At the very least, then, the federal third-party liability
provisions require an assignment of no more than the right
to recover that portion of a settlement that represents pay
ments for medical care.12 They did not mandate the enact
ment of the Arkansas scheme that we have described.
11 Implicit in ADHS’ interpretation of this provision is the assumption
that there can be no “remainder” to remit to the Medicaid recipient if all
the State has been assigned is the right to damages for medical expenses.
That view in turn seems to rest on an assumption either that Medicaid
will have paid all the recipient’s medical expenses or that Medicaid’s ex
penses will always exceed the portion of any third-party recovery ear
marked for medical expenses. Neither assumption holds up. First, as
both the Solicitor General and CMS acknowledge, the recipient often will
have paid medical expenses out of her own pocket. See Brief for United
States as Amicus Curiae 12 (under § 1396k(b), “the beneficiary retains the
right to payment for any additional medical expenses personally incurred
either before or subsequent to Medicaid eligibility and for other dam
ages”); CMS, State Medicaid Manual § 3907, available at https://www.lexis.
com>Legal>Secondary Legal>CCH>Health Law>CMS Program Manu
als>CCH CMS Program Manuals P 3907 (as updated Mar. 25, 2006, and
available in Clerk of Court’s case file) (envisioning that “medical insurance
payments,” for example, will be remitted to the recipient if possible).
Second, even if Medicaid’s outlays often exceed the portion of the recovery
earmarked for medical expenses in tort cases, the third-party liability pro
visions were not drafted exclusively with tort settlements in mind. In
the case of health insurance, for example, the funds available under the
policy may be enough to cover both Medicaid’s costs and the recipient’s
own medical expenses.
12 ADHS concedes that, had a jury or judge allocated a sum for medical
payments out of a larger award in this case, the agency would be entitled
to reimburse itself only from the portion so allocated. See Brief for Peti

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IV
If there were no other relevant provisions in the federal
statute, the State might plausibly argue that federal law sup
plied a recovery “floor” upon which States were free to build.
In fact, though, the federal statute places express limits on
the State’s powers to pursue recovery of funds it paid on
the recipient’s behalf. These limitations are contained in 42
U. S. C. §§ 1396a(a)(18) and 1396p. Section 1396a(a)(18) re
quires that a state Medicaid plan comply with § 1396p, which
in turn prohibits States (except in circumstances not relevant
here) from placing liens against, or seeking recovery of bene
fits paid from, a Medicaid recipient:
“(a) Imposition of lien against property of an individ
ual on account of medical assistance rendered to him
under a State plan
“(1) No lien may be imposed against the property of
any individual prior to his death on account of medical
assistance paid or to be paid on his behalf under the
State plan, except—
“(A) pursuant to the judgment of a court on account
of benefits incorrectly paid on behalf of such individual,
or
“(B) [in certain circumstances not relevant here]
. . . . .
“(b) Adjustment or recovery of medical assistance
correctly paid under a State plan
“(1) No adjustment or recovery of any medical assist
ance correctly paid on behalf of an individual under the
tioners 49, n. 13; see also Brief for United States as Amicus Curiae 22,
n. 14 (noting that the Secretary of HHS “ordinarily accepts” a jury alloca
tion of medical damages in satisfaction of the Medicaid debt, even where
smaller than the amount of Medicaid’s expenses). Given the stipulation
between ADHS and Ahlborn, there is no textual basis for treating the
settlement here differently from a judge-allocated settlement or even a
jury award; all such awards typically establish a third party’s “liability”
for both “payment for medical care” and other heads of damages.

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State plan may be made, except [in circumstances not
relevant here].” § 1396p.
Read literally and in isolation, the anti-lien prohibition con
tained in § 1396p(a) would appear to ban even a lien on that
portion of the settlement proceeds that represents payments
for medical care.13 Ahlborn does not ask us to go so far,
though; she assumes that the State’s lien is consistent with
federal law insofar as it encumbers proceeds designated as
payments for medical care. Her argument, rather, is that
the anti-lien provision precludes attachment or encumbrance
of the remainder of the settlement.
We agree. There is no question that the State can require
an assignment of the right, or chose in action, to receive pay
ments for medical care. So much is expressly provided for
by §§ 1396a(a)(25) and 1396k(a). And we assume, as do the
parties, that the State can also demand as a condition of Med
icaid eligibility that the recipient “assign” in advance any
payments that may constitute reimbursement for medical
costs. To the extent that the forced assignment is expressly
authorized by the terms of §§ 1396a(a)(25) and 1396k(a), it is
an exception to the anti-lien provision. See Washington
State Dept. of Social and Health Servs. v. Guardianship
Estate of Keffeler, 537 U. S. 371, 383–385, and n. 7 (2003).
But that does not mean that the State can force an assign
ment of, or place a lien on, any other portion of Ahlborn’s
property. As explained above, the exception carved out by
13 Likewise, subsection (b) would appear to forestall any attempt by the
State to recover benefits paid, at least from the “individual.” See, e. g.,
Martin ex rel. Hoff v. Rochester, 642 N. W. 2d 1, 8, n. 6 (Minn. 2002);
Wallace v. Estate of Jackson, 972 P. 2d 446, 450 (Utah 1998) (Durham, J.,
dissenting) (reading § 1396p to “prohibi[t] not only liens against Medicaid
recipients but also any recovery for medical assistance correctly paid”).
The parties here, however, neither cite nor discuss the antirecovery provi
sion of § 1396p(b). Accordingly, we leave for another day the question of
its impact on the analysis.

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§§ 1396a(a)(25) and 1396k(a) is limited to payments for medi
cal care. Beyond that, the anti-lien provision applies.
ADHS tries to avoid the anti-lien provision by characteriz
ing the settlement proceeds as not Ahlborn’s “property.” 14
Its argument appears to be that the automatic assignment
effected by the Arkansas statute rendered the proceeds
the property of the State.15 See Brief for Petitioners 31
(“[U]nder Arkansas law, the lien does not attach to the recip
ient’s ‘property’ because it attaches only to those proceeds
already assigned to the Department as a condition of Med
icaid eligibility”). That argument fails for two reasons.
First, ADHS insists that Ahlborn at all times until judgment
retained her entire chose in action—a right that included her
claim for medical damages. The statutory lien, then, cannot
have attached until the proceeds materialized. That much
is clear from the text of the Arkansas statute, which says
that the “assignment shall be considered a statutory lien on
any settlement . . . received by the recipient from a third
party.” Ark. Code Ann. § 20–77–307(c) (2001) (emphasis
added). The settlement is not “received” until the chose in
action has been reduced to proceeds in Ahlborn’s possession.
Accordingly, the assertion that any of the proceeds belonged
to the State all along lacks merit.
Second, the State’s argument that Ahlborn lost her prop
erty rights in the proceeds the instant she applied for medi
cal assistance is inconsistent with the creation of a statutory
14 “Property” is defined by regulation as “the homestead and all other
personal and real property in which the recipient has a legal interest.”
42 CFR § 433.36(b) (2005).
15 The United States as amicus curiae makes the different argument
that the proceeds never became Ahlborn’s “property” because “to the ex
tent the third party’s payment passes through the recipient’s hands en
route to the State, it comes with the State’s lien already attached.” Brief
as Amicus Curiae 18. Even if that reading were consistent with the Ar
kansas statute (and it is not, see infra this page), the United States’ char
acterization of the “assignment” simply reinforces Ahlborn’s point: This is
a lien that attaches to the property of the recipient.

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lien on those proceeds. Why, after all, would ADHS need a
lien on its own property? A lien typically is imposed on the
property of another for payment of a debt owed by that
other. See Black’s Law Dictionary 922 (6th ed. 1990).
Nothing in the Arkansas statute defines the term otherwise.
That the lien is also called an “assignment” does not alter
the analysis. The terms that Arkansas employs to describe
the mechanism by which it lays claim to the settlement pro
ceeds do not, by themselves, tell us whether the statute vio
lates the anti-lien provision. See United States v. Craft, 535
U. S. 274, 279 (2002); Drye v. United States, 528 U. S. 49,
58–61 (1999). Although denominated an “assignment,” the
effect of the statute here was not to divest Ahlborn of all
her property interest; instead, Ahlborn retained the right to
sue for medical care payments, and the State asserted a right
to the fruits of that suit once they materialized. In effect,
and as at least some of the statutory language recognizes,
Arkansas has imposed a lien on Ahlborn’s property.16 Since
none of the federal third-party liability provisions excepts
that lien from operation of the anti-lien provision, its imposi
tion violates federal law.
16 Because ADHS insists that “Arkansas law did not require Ahlborn to
assign her claim or her right to sue,” Brief for Petitioners 33 (emphasis in
original), we need not reach the question whether a State may force a
recipient to assign a chose in action to receive as much of the settlement
as is necessary to pay Medicaid’s costs. The Eighth Circuit thought this
would be impermissible because the State cannot “circumvent the restric
tions of the federal anti-lien statute simply by requiring an applicant for
Medicaid benefits to assign property rights to the State before the appli
cant liquidates the property to a sum certain.” App. to Pet. for Cert. 6.
Indeed, ADHS acknowledges that Arkansas cannot, for example, require
a Medicaid applicant to assign in advance any right she may have to re
cover an inheritance or an award in a civil case not related to her injuries
or medical care. This arguably is no different; as with assignment of
those other choses in action, assignment of the right to compensation for
lost wages and other nonmedical damages is nowhere authorized by the
federal third-party liability provisions.

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V
ADHS and its amici urge, however, that even if a lien on
more than medical damages would violate federal law in
some cases, a rule permitting such a lien ought to apply here
either because Ahlborn breached her duty to “cooperate”
with ADHS or because there is an inherent danger of ma
nipulation in cases where the parties to a tort case settle
without judicial oversight or input from the State. Neither
argument is persuasive.
The United States proposes a default rule of full reim
bursement whenever the recipient breaches her duty to “co
operate,” and asserts that Ahlborn in fact breached that
duty.17 But, even if the Government’s allegations of ob
struction were supported by the record, its conception of the
duty to cooperate strays far beyond the text of the statute
and the relevant regulations. The duty to cooperate arises
principally, if not exclusively, in proceedings initiated by
the State to recover from third parties. See 42 U. S. C.
§ 1396k(a)(1)(C) (recipients must “cooperate with the State in
identifying . . . and providing information to assist the State
in pursuing” third parties). Most of the accompanying fed
eral regulations simply echo this basic duty; all they add is
that the recipient must “[p]ay to the agency any support or
medical care funds received that are covered by the assign
ment of rights.” 42 CFR § 433.147(b)(4) (2005).
In any event, the aspersions the United States casts upon
Ahlborn are entirely unsupported; all the record reveals is
that ADHS, despite having intervened in the lawsuit and
17 See, e. g., Brief for United States as Amicus Curiae 14 (alleging that
Ahlborn “omitt[ed] or understat[ed] the medical damages claim from her
lawsuit and attempt[ed] to horde for herself the third-party liability pay
ments”); id., at 15 (“[H]aving forsaken her federal and state statutory
duties of candid and forthcoming cooperation[,] respondent, rather than
the taxpayers, must bear the financial consequences of her actions”); id.,
at 21, 24 (referring to Ahlborn’s “backdoor settlement” and “obstruction
and attrition,” as well as her “calculated evasion of her legal obligations”).

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asked to be apprised of any hearings, neither asked to be nor
was involved in the settlement negotiations. Whatever the
bounds of the duty to cooperate, there is no evidence that it
was breached here.
ADHS’ and the United States’ alternative argument that
a rule of full reimbursement is needed generally to avoid
the risk of settlement manipulation is more colorable, but
ultimately also unpersuasive. The issue is not, of course,
squarely presented here; ADHS has stipulated that only
$35,581.47 of Ahlborn’s settlement proceeds properly are
designated as payments for medical costs. Even in the ab
sence of such a postsettlement agreement, though, the risk
that parties to a tort suit will allocate away the State’s inter
est can be avoided either by obtaining the State’s advance
agreement to an allocation or, if necessary, by submitting the
matter to a court for decision.18 For just as there are risks
in underestimating the value of readily calculable damages
in settlement negotiations, so also is there a countervailing
concern that a rule of absolute priority might preclude set
tlement in a large number of cases, and be unfair to the recip
ient in others.19
18 As one amicus observes, some States have adopted special rules and
procedures for allocating tort settlements in circumstances where, for ex
ample, private insurers’ rights to recovery are at issue. See Brief for
Association of Trial Lawyers of America 20–21. Although we express
no view on the matter, we leave open the possibility that such rules
and procedures might be employed to meet concerns about settlement
manipulation.
19 The point is illustrated by state cases involving the recovery of work
ers’ compensation benefits paid to an employee (or the family of an em
ployee) whose injuries were caused by a third-party tortfeasor. In Flani
gan v. Department of Labor and Industry, 123 Wash. 2d 418, 869 P. 2d 14
(1994), for example, the court concluded that the state agency could not
satisfy its lien out of damages the injured worker’s spouse recovered as
compensation for loss of consortium. The court explained that the depart
ment could not “share in damages for which it has provided no compensa
tion” because such a result would be “absurd and fundamentally unjust.”
Id., at 426, 869 P. 2d, at 17.

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VI
Finally, ADHS contends that the Court of Appeals’ deci
sion below accords insufficient weight to two decisions by
the Departmental Appeals Board of HHS (Board) rejecting
appeals by the States of California and Washington from de
nial of reimbursement for costs those States paid on behalf
of Medicaid recipients who had settled tort claims. See
App. to Pet. for Cert. 45–67 (reproducing In re Washington
State Dept. of Social & Health Servs., Dec. No. 1561, 1996
WL 157123 (HHS Dept. App. Bd., Feb. 7, 1996)); App. to Pet.
for Cert. 68–86 (reproducing In re California Dept. of
Health Servs., Dec. No. 1504, 1995 WL 66334 (HHS Dept.
App. Bd., Jan. 5, 1995)). Because the opinions in those cases
address a different question from the one posed here, make
no mention of the anti-lien provision, and, in any event, rest
on a questionable construction of the federal third-party lia
bility provisions, we conclude that they do not control our
analysis.
Normally, if a State recovers from a third party the cost
of Medicaid benefits paid on behalf of a recipient, the Federal
Government owes the State no reimbursement, and any
funds already paid by the Federal Government must be re
turned. See 42 CFR § 433.140(a)(2) (2005) (federal financial
participation “is not available in Medicaid payments if . . .
[t]he agency received reimbursement from a liable third
party”); § 433.140(c). Washington and California both had
adopted schemes according to which the State refrained from
claiming full reimbursement from tort settlements and in
stead took only a portion of each settlement. (In California,
the recipient typically could keep at least 50% of her settle
ment, see App. to Pet. for Cert. 72; in Washington, the pro
portion varied from case to case, see id., at 48–51.) Each
scheme resulted in the State’s having to pay a portion of the
recipient’s medical costs—a portion for which the State
sought partial reimbursement from the Federal Government.
CMS (then called HCFA) denied this partial reimbursement

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on the ground that the States had an absolute duty to
seek full payment of medical expenses from third-party
tortfeasors.
The Board upheld CMS’ determinations. In California’s
appeal, which came first, the Board concluded that the
State’s duty to seek recovery of benefits “from available
third party sources to the fullest extent possible” included
demanding full reimbursement from the entire proceeds of a
Medicaid recipient’s tort settlement. Id., at 76. The Board
acknowledged that § 1396k(a) “refers to assignment only of
‘payment for medical care,’ ” but thought that “the statutory
scheme as a whole contemplates that the actual recovery
might be greater and, if it is, that Medicaid should be paid
first.” Ibid. The Board gave two other reasons for siding
with CMS: First, the legislative history of the third-party
liability evinced a congressional intent that “the Medicaid
program . . . be reimbursed from available third party
sources to the fullest extent possible,” ibid.; and, second, Cal
ifornia had long been on notice that it would not be reim
bursed for any shortfall resulting from failure to fully recoup
Medicaid’s costs from tort settlements, see id., at 77. The
Board also opined that the State could not escape its duty to
seek full reimbursement by relying on the Medicaid recipi
ent’s efforts in litigating her claims. See id., at 79–80.
Finally, responding to the State’s argument that its
scheme gave Medicaid recipients incentives to sue third
party tortfeasors and thus resulted in both greater recovery
and lower costs for the State, the Board observed that
“a state is free to allow recipients to retain the state’s share”
of any recovery, so long as it does not compromise the Fed
eral Government’s share. Id., at 85.
The Board reached the same conclusion, by the same
means, in the Washington case. See id., at 53–64.
Neither of these adjudications compels us to conclude that
Arkansas’ statutory lien comports with federal law. First,
the Board’s rulings address a different question from the one

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presented here. The Board was concerned with the Federal
Government’s obligation to reimburse States that had, in its
view, failed to seek full recovery of Medicaid’s costs and had
instead relied on recipients to act as private attorneys gen
eral. The Board neither discussed nor even so much as cited
the federal anti-lien provision.
Second, the Board’s acknowledgment that the assignment
of rights required by § 1396k(a) is limited to payments for
medical care only reinforces the clarity of the statutory lan
guage. Moreover, its resort to “the statutory scheme as a
whole” as justification for muddying that clarity is nowhere
explained. Given that the only statutory provisions CMS
relied on are §§ 1396a(a)(25), 1396k(a), and 1396k(b), see id.,
at 75–76; id., at 54–55, and given the Board’s concession that
the first two of these limit the State’s assignment to pay
ments for medical care, the “statutory scheme” must mean
§ 1396k(b). But that provision does not authorize the State
to demand reimbursement from portions of the settlement
allocated or allocable to nonmedical damages; instead, it
gives the State a priority disbursement from the medical
expenses portion alone. See supra, at 282. In fact, in its
adjudication in the Washington case, the Board conceded as
much: “[CMS] may require a state to assert a collection pri
ority over funds obtained by Medicaid recipients in [third
party liability] suits even though the distribution methodol
ogy set forth in section [1396k(b)] refers only to payments
collected pursuant to assignments for medical care.” App.
to Pet. for Cert. 54 (emphasis added). The Board’s reason
ing therefore is internally inconsistent.
Third, the Board’s reliance on legislative history is mis
placed. The Board properly observed that Congress, in
crafting the Medicaid legislation, intended that Medicaid be
a “payer of last resort.” S. Rep. No. 99–146, p. 313 (1985).
That does not mean, however, that Congress meant to au
thorize States to seek reimbursement from Medicaid recipi
ents themselves; in fact, with the possible exception of a lien

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on payments for medical care, the statute expressly prohibits
liens against the property of Medicaid beneficiaries. See 42
U. S. C. § 1396p(a). We recognize that Congress has dele
gated “broad regulatory authority to the Secretary [of HHS]
in the Medicaid area,” Wisconsin Dept. of Health and Fam
ily Servs. v. Blumer, 534 U. S. 473, 496, n. 13 (2002), and that
agency adjudications typically warrant deference. Here,
however, the Board’s reasoning couples internal inconsist
ency with a conscious disregard for the statutory text.
Under these circumstances, we decline to treat the agency’s
reasoning as controlling.
VII
Federal Medicaid law does not authorize ADHS to assert
a lien on Ahlborn’s settlement in an amount exceeding
$35,581.47, and the federal anti-lien provision affirmatively
prohibits it from doing so. Arkansas’ third-party liability
provisions are unenforceable insofar as they compel a differ
ent conclusion. The judgment of the Court of Appeals is
affirmed.
It is so ordered.