PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT 

_____________

No. 11-3439

_____________

ZACKERY D. LEWIS, by his next friends; RICHARD 

YOUNG; LYNN G. HAINER, Administratrix of the Estate of 

ADDIE SMITH; 

SUSAN W. COLEMAN; KATHY A. BURGER; TRACY 

PALMER; KENNY ATKINSON, by his next friend;

BERNICE TATE, by her next friend; 

MARY WAGNER; MICHAEL BIDZILYA, by his next 

friend; WILLIAM ALGAR, by his next friend; ANTHONY 

GALE, by his next friends; 

THE ARC COMMUNITY TRUST OF PENNSYLVANIA; 

THE FAMILY TRUST, on their own behalf and on behalf of 

all other persons similarly situated

v.

GARY ALEXANDER, in official capacity as Secretary of 

Department of Public Welfare of the Commonwealth of 

Pennsylvania;

ERIC ROLLINS, in official capacity as Executive Director of 

the Erie County Assistance Office,

 Appellants

_____________
2

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

District Court No. 2-06-cv-03963

District Judge: The Honorable Jan E. Dubois

Argued March 26, 2012

Before: FUENTES, SMITH, and JORDAN, Circuit Judges

(Filed: June 20, 2012)

Stephen A. Feldman, Esq. (Argued)

Feldman & Feldman

820 Homestead Road

Jenkintown, PA 19046

Counsel for Appellee

Jason W. Manne, Esq. (Argued)

Office of General Counsel

Department of Public Welfare

301 Fifth Avenue

Suite 430

Pittsburgh, PA 15222

Counsel for Appellant
3

Shirley B. Whitenack, Esq.

Schenck, Price, Smith & King

220 Park Avenue

P.O. Box 991

Florham Park, NJ 07932

Counsel for Amicus Appellees

________________

 OPINION

________________

SMITH, Circuit Judge,

I

This case involves the interaction between state and 

federal law under the Medicaid system, a cooperative 

program between the state and federal governments to 

provide medical assistance to those with limited financial 

resources. Seeking to stamp out abusive manipulation of 

trusts to hide assets and thereby manufacture Medicaid 

eligibility, Congress created a comprehensive system of rules 

mandating that trusts be counted as assets. But Congress also 

exempted from these rules certain trusts intended to provide 

disabled individuals with necessities and comforts not 

covered by Medicaid. Seeking to ensure that these trusts 

were not abused, Pennsylvania enacted Section 9 of 

Pennsylvania Act 42 of 2005, codified at 62 Pa. Stat. Ann. § 

1414 (Section 1414), to regulate these special needs trusts. 
4

Plaintiffs brought a putative class action in the Eastern 

District of Pennsylvania challenging Section 1414‟s validity. 

Plaintiffs allege Section 1414 is preempted by the federal 

statute governing Medicaid eligibility, 42 U.S.C. 

§ 1396p(d)(4). They seek injunctive and declaratory relief 

barring its enforcement. The District Court granted that 

relief, holding all but one of the challenged provisions of 

Section 1414 preempted. In reaching that holding, the 

District Court concluded that Plaintiffs‟ case was justiciable 

and that Plaintiffs had a private right of action under both 

Section 1983 and the Supremacy Clause. The District Court 

also held that Section 1414 was severable, certified a class of 

plaintiffs, and appointed class counsel.

This appeal followed. The parties do not challenge the 

District Court‟s decision to uphold the remaining provision of 

Section 1414 or the District Court‟s decisions on severability, 

certification, and appointment of class counsel. We conclude 

that Plaintiffs‟ case is justiciable and that they have a private 

right of action under both Section 1983 and the Supremacy 

Clause of the Constitution. On the merits of Plaintiffs‟

challenge, we conclude that the District Court was correct in 

its determination that Section 1414‟s 50% repayment 

provision, “special needs” provision, expenditure provision, 

and age restriction are all preempted by federal law. 

However, we conclude that the enforcement provision of 

Section 1414 – when used to enforce provisions not otherwise 

preempted by federal law – is a reasonable exercise of the 

Commonwealth‟s retained authority to regulate trusts. We 

will affirm in part and reverse in part.

II
5

Medicaid is a joint federal-state program providing 

medical assistance to the needy.1 Enacted under Congress‟ 

Spending Clause authority, Medicaid is voluntary. No State 

is obligated to join Medicaid, but if they do join, they are 

subject to federal regulations governing its administration. 

See Roloff v. Sullivan, 975 F.2d 333, 335 (7th Cir. 1992). 

Pennsylvania has elected to participate in Medicaid.

Generally, Medicaid provides assistance for two types 

of individuals: the categorically needy and the medically 

needy. The categorically needy are those who qualify for 

public assistance under the Supplemental Security Income 

(SSI) program or other federal programs. See Roach v. 

Morse, 440 F.3d 53, 59 (2d Cir. 2006) (Sotomayor, J.); 

Roloff, 975 F.2d at 335. The medically needy are those who 

would qualify as categorically needy (because they are 

disabled, etc.) but whose income and/or assets are substantial 

 

1

The Supreme Court has noted, echoing Judge Friendly, 

that Medicaid‟s “Byzantine construction . . . makes the 

Act „almost unintelligible to the uninitiated.‟” Schweiker

v. Gray Panthers, 453 U.S. 34, 43 (1981) (quoting 

Friedman v. Berger, 547 F.2d 724, 727 n.7 (2d Cir. 

1976)). The District Court in Friedman, which the 

Supreme Court quoted, was even more direct: “The 

Medicaid statute . . . is an aggravated assault on the 

English language, resistant to attempts to understand it.” 

Friedman v. Berger, 409 F. Supp. 1225, 1225-26 

(S.D.N.Y. 1976), quoted by Schweiker, 453 U.S. at 43 

n.14.
6

enough to disqualify them. Roloff, 975 F.2d at 335.2 Every 

State participating in Medicaid must provide assistance to the 

categorically needy. States need not provide assistance to the 

medically needy. See id. If States choose to make medical 

assistance available to the medically needy, they are subject 

to various statutory restrictions in determining to whom 

medical assistance should be extended.

Congress has created a comprehensive system of assetcounting rules for determining who qualifies for Medicaid. 

Under Medicaid‟s original asset-counting rules, individuals 

could put large sums of money in trust, thereby vesting legal 

title to those assets in the trust and reducing (on paper) the 

amount of assets owned by the individual.

A trust is a legal instrument in which assets are held in 

the name of the trust and managed by a trustee for the benefit

of a beneficiary. Black’s Law Dictionary 1546 (8th ed. 2004)

(definition of “trust”). This structure means that the 

beneficiary does not actually own the assets of the trust, but

 

2

“[T]he medically needy may qualify for financial 

assistance for medical expenses if they incur such

expenses in an amount that effectively reduces their 

income to the eligibility level. Only when they „spend 

down‟ the amount by which their income exceeds that 

level, are they in roughly the same position as [the 

categorically needy]: any further expenditures for 

medical expenses then would have to come from funds 

required for basic necessities.” Atkins v. Rivera, 477 

U.S. 154, 158 (1986) (footnote and citation omitted).
7

instead has an equitable right to derive benefits from them. 

(The benefits vary according to the terms of the trust.) The 

trust has long been a tool for evading the rigid strictures of 

the law, which has generally been a positive development. 

For example, in feudal England – the trust‟s birthplace – the 

trust allowed younger sons and daughters to inherit land 

despite strict rules at law against devising land by will. See

Joseph A. Rosenberg, Supplemental Needs Trusts for People 

with Disabilities: The Development of a Private Trust in the 

Public Interest, 10 B.U. Pub. Int. L.J. 91, 101 (2000) (citing 

Austin Wakeman Scott, Abridgment of the Law of Trusts 11 

(1960)). And the trust‟s unique structure makes it useful for 

countless salutary purposes in modern society.

But this same bifurcated ownership structure has been 

used to manufacture eligibility for government welfare 

programs like Medicaid. As with many government 

programs, eligibility for Medicaid is partially dependent on 

the claimant‟s income and assets. Wealthy individuals are 

expected to exhaust their own resources before turning to the 

public for assistance. But trusts can enable these same

individuals to technically “own” nothing at all, even though 

they may have access to substantial wealth. Such claimants 

may then qualify for Medicaid. See Johnson v. Guhl, 357 

F.3d 403, 405 (3d. Cir. 2004) (“Because Medicaid is available 

to the needy, creative lawyers and financial planners have 

devised various ways to „shield‟ wealthier claimants‟ assets in 

determining Medicaid eligibility.”). Individuals have gained 

access to taxpayer-funded healthcare while retaining the 

benefit of their wealth and the ability to pass that wealth to 

their heirs.
8

Congress understandably viewed this as an abuse and 

began addressing the problem with statutory standards 

enacted in 1986. See Consolidated Omnibus Budget 

Reconciliation Act of 1985, Pub. L. No. 99-272, § 9506(a), 

100 Stat. 82 (Apr. 7, 1986). These standards were repealed 

and replaced in 1993 by the current trust-counting rules. See

Omnibus Budget Reconciliation Act of 1993, Pub. L. No.

103-66, Title XIII § 13611(d)(1)(c), 107 Stat. 312 (Aug. 10, 

1993) (OBRA 1993). Those rules are at issue in this case.

In the 1993 OBRA amendments, Congress established 

a general rule that trusts would be counted as assets for the 

purpose of determining Medicaid eligibility. But Congress 

also excepted from that rule three types of trusts meeting 

certain specific requirements. Taken together, these are 

generally called “special needs trusts” or “supplemental needs 

trusts.” “A supplemental needs trust is a discretionary trust 

established for the benefit of a person with a severe and 

chronic or persistent disability and is intended to provide for 

expenses that assistance programs such as Medicaid do not 

cover.” Sullivan v. Cnty. of Suffolk, 174 F.3d 282, 284 (2d 

Cir. 1999) (internal quotation marks omitted). These 

expenses – books, television, Internet, travel, and even such 

necessities as clothing and toiletries – would rarely be 

considered extravagant.

One type of special needs trust – the one at issue in 

this case – is the pooled special needs trust. “A „pooled trust‟ 

is a special arrangement with a non-profit organization that 

serves as trustee to manage assets belonging to many disabled 

individuals, with investments being pooled, but with separate 

trust „accounts‟ being maintained for each disabled 
9

individual.” Jan P. Myskowski, Special Needs Trusts in the 

Era of the Uniform Trust Code, 46 N.H. Bar J., Spring 2005, 

at 16. The pooled special needs trust was intended for 

individuals with a relatively small amount of money. By 

pooling these small accounts for investment and management 

purposes, overhead and expenses are reduced and more 

money is available to the beneficiary.

The Medicaid statute says the following regarding 

pooled trusts:

(4) This subsection [the rules counting trusts as 

available assets for purposes of Medicaid 

eligibility] shall not apply to any of the 

following trusts:

. . . .

(C) A trust containing the assets of an 

individual who is disabled (as defined in 

section 1382c(a)(3) of this title) that 

meets the following conditions:

(i) The trust is established and 

managed by a non-profit 

association.

(ii) A separate account is 

maintained for each beneficiary of 

the trust, but, for purposes of 

investment and management of 
10

funds, the trust pools these 

accounts.

(iii) Accounts in the trust are 

established solely for the benefit 

of individuals who are disabled 

(as defined in section 1382c(a)(3) 

of this title) by the parent, 

grandparent, or legal guardian of 

such individuals, by such 

individuals, or by a court.

(iv) To the extent that amounts 

remaining in the beneficiary‟s 

account upon the death of the 

beneficiary are not retained by the 

trust, the trust pays to the State 

from such remaining amounts in 

the account an amount equal to 

the total amount of medical 

assistance paid on behalf of the 

beneficiary under the State plan 

under this subchapter.

42 U.S.C. § 1396p(d)(4).

In 2005, Pennsylvania sought to regulate pooled trusts 

(and special needs trusts more generally) by passing Section 

1414, which states:

Section 1414. Special Needs Trusts. –
11

(a) A special needs trust must be approved by a 

court of competent jurisdiction if required by 

rules of court.

(b) A special needs trust shall comply with all 

of the following:

(1) The beneficiary shall be an individual 

under the age of sixty-five who is 

disabled, as that term is defined in Title 

XVI of the Social Security Act (49 Stat. 

620, 42 U.S.C. § 1381 et seq.)

(2) The beneficiary shall have special 

needs that will not be met without the 

trust.

(3) The trust shall provide:

(i) That all distributions from the 

trust must be for the sole benefit 

of the beneficiary.

(ii) That any expenditure from the 

trust must have a reasonable 

relationship to the needs of the 

beneficiary.

(iii) That, upon the death of the 

beneficiary or upon the earlier 

termination of the trust, the 

department and any other state 

that provided medical assistance 
12

to the beneficiary must be 

reimbursed from the funds 

remaining in the trust up to an

amount equal to the total medical 

assistance paid on behalf of the 

beneficiary before any other 

claimant is paid: Provided, 

however, That in the case of an 

account in a pooled trust, the trust 

shall provide that no more than 

fifty percent of the amount 

remaining in the beneficiary‟s 

pooled trust account may be 

retained by the trust without any 

obligation to reimburse the 

department.

. . . .

(c) If at any time it appears that any of the 

requirements of subsection (b) are not satisfied 

or the trustee refuses without good cause to 

make payments from the trust for the special 

needs of the beneficiary and, provided that the 

department or any other public agency in this 

Commonwealth has a claim against trust 

property, the department or other public agency 

may petition the court for an order terminating 

the trust.

. . . .
13

(f) As used in this section, the following words 

and phrases shall have the following meanings:

. . . .

“Special needs” means those items, products or 

services not covered by the medical assistance 

program, insurance or other third-party liability 

source for which a beneficiary of a special 

needs trust or his parents are personally liable 

and that can be provided to the beneficiary to 

increase the beneficiary‟s quality of life and to 

assist in and are related to the treatment of the 

beneficiary‟s disability. The term may include

medical expenses, dental expenses, recreational 

therapy, occupational therapy, physical therapy, 

vocational therapy, durable medical needs, 

prosthetic devices, special rehabilitative 

services or equipment, disability-related 

training, education, transportation and travel 

expenses, dietary needs and supplements, 

related insurance and other goods and services 

specified by the department.

62 Pa. Stat. Ann. § 1414.

Plaintiffs challenge Section 1414 as preempted by the 

Medicaid statute. Stripped down to its essentials, their 

argument is that the requirements for a pooled special needs 

trust are set forth at 42 U.S.C. § 1396p(d)(4), that those are 

the only requirements, and that Section 1414‟s attempt to 

graft additional requirements onto pooled special needs trusts 
14

is not permissible. The District Court agreed. For the most 

part, we agree as well. We part company with the District 

Court only insofar as we believe it gave insufficient weight to 

Pennsylvania‟s retained authority to regulate trusts.

III

There are two types of named plaintiffs in this 

proposed class action: the Individual Plaintiffs and the Trust 

Plaintiffs.3 The Individual Plaintiffs are Zackery Lewis, 

Richard Young, Lynn Hainer, Susan Coleman, Kathy Burger, 

Tracy Palmer, Kenny Atkinson, Bernice Tate, Mary Wagner, 

Michael Bidzilya, William Algar, and Anthony Gale. With 

the exception of Lynn Hainer, all the Individual Plaintiffs are 

domiciled in the State of Pennsylvania, are disabled, and have 

received medical assistance under Medicaid.4 Lynn Hainer 

brings suit as administratix for the estate of her deceased 

niece Addie Smith. At the time of her death, Addie was 

domiciled in Pennsylvania, disabled, and receiving medical 

 

3

The parties have stipulated to the facts. The stipulation 

was filed with the District Court in advance of the motion 

for summary judgment. We have seen nothing in the 

record to suggest that we lack jurisdiction or that the 

stipulation is obviously inaccurate in any other respect. 

We accept it as true for the purposes of this appeal and 

have included relevant facts below.

4 Kenny Atkinson and Bernice Tate passed away during 

the pendency of this suit.
15

assistance through Medicaid. The Individual Plaintiffs all 

have accounts in pooled trusts, with balances ranging from $0 

(Richard Young)5to $1.26 million (Zackery Lewis).6 In 

general, the Individual Plaintiffs‟ balances are quite low, 

usually a few hundred to a few thousand dollars. The 

Individual Plaintiffs use or intend to use the balances in their 

accounts for a variety of purposes, including personal items, 

furnishings, therapy sessions, cell phone and cable service, 

and travel expenses. With the exception of Michael Bidzilya 

and William Algar, who at the time of filing were 80 years 

old and 69 years old respectively, all the individual plaintiffs 

are under the age of 65. (At the time of her death, Addie

Smith was 72 years old.)

The Trust Plaintiffs are ARC-CT (ARC) and The 

Family Trust. ARC is a charitable organization managing 

trust accounts, with approximately $23 million in funds under 

management. It currently manages approximately 117 pooled 

trust accounts. It has managed approximately 130 pooled 

trust accounts since its inception. All its trust beneficiaries 

 

5 Richard Young exhausted his account, but continues to 

be paid benefits from account funds retained by the trust 

after the deaths of the respective account beneficiaries. 

He appears to be the only Plaintiff with such an 

arrangement.

6

The current balance in Lewis‟ account is not provided 

in the stipulation, but it is being funded with annuities 

purchased from the $1.26 million net proceeds of a 

settlement reached in a medical malpractice lawsuit.
16

are disabled, Medicaid-eligible individuals. It does not open 

pooled trust accounts for beneficiaries over the age of 65.

Disabled individuals seeking to establish an account in 

ARC‟s pooled trust sign an agreement providing that the 

trustee has sole discretion in disbursing funds and will do so 

for the beneficiary‟s “supplemental and life enhancing needs 

and care.” The agreement further provides that the trustee 

“may interpret liberally the term „supplemental needs‟ but all 

distributions shall be made solely for the benefit of the 

disabled beneficiary.” ARC has not approved the use of trust 

funds for luxury items and Pennsylvania has never informed 

ARC that any of its expenditures are unallowable.

Prior to enactment of Section 1414, ARC‟s agreements

provided that all funds in trust would be retained by ARC 

upon the death of the beneficiary and would be used for the 

benefit of other beneficiaries. In 2002, the Social Security 

Administration and the Pennsylvania Department of Public 

Welfare (DPW) informed ARC that its trust documents met 

the requirements of 42 U.S.C. § 1396p(d)(4)(C). Following 

the enactment of Section 1414, DPW informed ARC that its 

trust agreements did not comply with the new Pennsylvania 

statute. In response, ARC amended its trust agreements to 

provide that funds would be retained “to the maximum extent 

allowed by law.” Since enactment of Section 1414, ARC has 

retained the funds in the accounts of several deceased 

beneficiaries and paid some of those funds out for the benefit 

of other beneficiaries. In 2006, Pennsylvania sought a portion 

of the funds retained by ARC following the death of Thomas 

Johnstone, but it has since withdrawn that request.
17

The Family Trust is a charitable organization 

managing trust accounts, with approximately $20 million in 

funds under management. It currently manages 

approximately 1,122 pooled trust accounts. It has managed 

approximately 1,248 pooled trust accounts since its inception. 

Unlike ARC, the Family Trust does open pooled trust 

accounts for beneficiaries over the age of 65, with fourteen 

individuals permitted to do so since the enactment of Section 

1414. All of The Family Trust‟s beneficiaries are disabled,

Medicaid-eligible individuals.

Disabled individuals seeking to establish an account in 

the pooled trust sign an agreement providing that the trustee 

has sole discretion in disbursing funds and will do so for the 

beneficiary‟s “extra and supplemental care.” When the 

Family Trust inquired whether it was permitted to use funds 

in a beneficiary‟s account to pay for her funeral expenses, it 

was informed that it was not permitted to do so.

The Family Trust‟s agreements provide that all funds

in trust are retained by The Family Trust upon the death of 

the beneficiary and used to provide “support for individuals 

with disabilities to live safe, meaningful and productive 

lives.” The Family Trust has used retained funds for general 

charitable purposes, not solely for other beneficiaries of its 

trust accounts. In 2000, DPW informed The Family Trust 

that its trust documents met the requirements of 42 U.S.C. 

§ 1396p(d)(4)(C).7 

 

7 While we intend to cast no aspersions on The Family 

Trust, its stewardship of funds has been questioned. For 
18

Gary Alexander is the Secretary of the Pennsylvania 

Department of Public Welfare. The DPW is charged with 

administration of the State‟s Medicaid program. It is also 

responsible for reviewing special needs trusts and for 

promulgating “regulations or statements of policy . . . to 

implement” Section 1414. 62 Pa. Stat. Ann. § 1414(b)(4). 

The DPW operates county assistance offices throughout the 

Commonwealth to serve the citizens of Pennsylvania. Eric 

Rollins is the Executive Director of the Erie County 

Assistance Office. Both Mr. Alexander and Mr. Rollins are 

defendants in this suit, having been sued in their official 

capacities.

Following the enactment of Section 1414, DPW 

sought to terminate the medical assistance of Mary Wagner 

by asserting that assets she had transferred to the trust could 

not be exempted because The Family Trust‟s trust agreements 

did not comply with Section 1414. In addition, DPW has 

objected to Kenny Atkinson and Bernice Tate‟s participation 

in The Family Trust based upon The Family Trust‟s failure to 

conform its agreements to Section 1414. DPW has not 

 

example, the Family Trust approved the use of trust 

funds for the purchase of a new home by the family of 

Zachery Lewis. Though the disbursement was in the 

amount calculated by the trust to provide for necessary 

safety features for the home, neither Zachery Lewis nor 

The Family Trust retained a security interest in the home. 

On the other hand, in a different case, The Family Trust 

refused to approve the use of funds to purchase a Jaguar 

automobile.
19

otherwise challenged the medical assistance eligibility of any 

individuals, terminated the medical assistance of any 

beneficiary, or attempted to block disbursements for failure to 

conform to Section 1414. But DPW stipulates that should it 

“prevail in this litigation, it will enforce all provisions of 

section 1414[.]” Also, DPW has “directed all pooled trusts in 

Pennsylvania to amend their master trust[] agreements and 

joinder agreements to conform to the requirements of section 

1414.”

DPW has not promulgated official regulations or 

issued formal guidance regarding its interpretation of Section 

1414. But it did create and circulate a document on Special 

Needs Trusts to DPW attorneys and County Assistance 

Offices.

IV

Plaintiffs brought a putative class action in the Eastern 

District of Pennsylvania before Judge Jan E. Dubois, 

challenging the validity of Section 1414 and seeking 

injunctive and declaratory relief barring its enforcement. The 

original defendants included a host of state officials 

(including the Governor of Pennsylvania, Attorney General of 

Pennsylvania, and others) purportedly charged with enforcing 

Section 1414. By opinion dated August 3, 2007, the District 

Court dismissed the claims against all individuals except the 

Secretary of the Pennsylvania Department of Public Welfare 

and the Executive Director of the Erie County Assistance 

Office. It concluded that the Complaint adequately alleged 

that these two individuals had actually attempted to enforce 

Section 1414. In the same opinion, the District Court 
20

dismissed substantive and procedural due process claims 

made by the plaintiffs.8 None of these decisions appears to be 

challenged, except insofar as Defendants continue to 

challenge the justiciability of Plaintiffs‟ claims.

After discovery and submission of stipulated facts, 

cross-motions for summary judgment were filed by the 

parties. In a thorough and carefully-considered opinion, the 

District Court granted Plaintiffs‟ motion for summary 

judgment almost in its entirety, holding that all but one of the 

challenged provisions of Section 1414 are preempted by 

federal law.9 However, the District Court concluded that the 

offending provisions could be severed from the remainder of 

the law, and thus did not strike down Section 1414 in its 

 

8

The District Court deferred consideration of one portion 

of the procedural due process claim until the summary 

judgment stage, at which point it concluded the claim 

was moot due to its determination that the challenged 

portions of Section 1414 were preempted. Given our 

reversal of the District Court‟s judgment with regard to 

the enforcement clause, the District Court is free to 

revisit this ruling on remand. We express no opinion on 

the merits of the claim.

9

The District Court concluded that the requirement of 

Section 1414(b)(3)(i) that “all distributions from the trust 

must be for the sole benefit of the beneficiary” mirrored 

federal law and was not preempted.
21

entirety. The District Court also certified a (b)(2) class action 

and appointed class counsel.

On appeal, Defendants challenge the justiciability of 

Plaintiffs‟ claims, their ability to bring a private right of 

action, and the District Court‟s judgment that Section 1414 is 

preempted by federal law. 

V.A.1

Constitutional standing “is an essential and 

unchanging part of the case-or-controversy requirement of 

Article III.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 

560 (1992). Reduced to its constitutional minimum, standing 

requires three elements: (1) an injury in fact consisting of an 

actual or imminent invasion of a legally protected interest; (2) 

a causal connection between the injury in fact and the 

Defendants‟ conduct; and (3) a likelihood that the injury will 

be redressed by a favorable decision. See id. at 560-61. “The 

party invoking federal jurisdiction bears the burden of 

establishing these elements.” Id. at 561.

Defendants‟ only challenge is to whether Plaintiffs 

have an injury in fact.10 Defendants note several provisions 

 

10 Because constitutional standing is a jurisdictional 

requirement, “[w]e are obliged to examine standing sua 

sponte where standing has erroneously been assumed 

below.” Adarand Constructors, Inc. v. Mineta, 534 U.S. 

103, 110 (2001). Thus, our examination is not confined 

to those arguments raised by the Defendants. But the 
22

of the law that they have allegedly never attempted to 

enforce. They particularly rely on arguments that: (1) they 

have never challenged trust disbursements under the 

expenditure provision of Section 1414(b)(3)(ii) (“any 

expenditure from the trust must have a reasonable 

relationship to the needs of the beneficiary”); and (2) they 

have never denied eligibility to form or maintain a trust based 

on the special needs provision of Section 1414(b)(2) (“The 

beneficiary shall have special needs that will not be met 

without the trust.”) (Appellants‟ Principal Br. at 14)

Because the provisions of Section 1414 are 

severable,11 we must analyze each provision independently 

for the purposes of determining whether the Plaintiffs have 

standing to challenge that particular provision. See 

Contractors Ass’n of E. Pa., Inc. v. City of Phila., 6 F.3d 990, 

 

District Court concluded – and we agree – that the causal 

connection and redressability prongs are satisfied 

because “[t]he injuries alleged by plaintiffs are a direct 

result of Section 1414 and its impending enforcement by 

defendants, and declaratory and injunctive relief would 

eliminate the risk of such injury.”

11 The District Court did a comprehensive severability 

analysis and concluded that the statute is severable. The 

parties have not contested severability before us. We 

adopt the analysis of the District Court and conclude that 

the statute is severable.
23

996 (3d Cir. 1993). But should we conclude that even one of 

the Plaintiffs has an injury regarding a specific provision of 

Section 1414, we need not examine the effect of that 

provision on the other Plaintiffs. See Montalvo-Huertas v. 

Rivera-Cruz, 885 F.2d 971, 976 (1st Cir. 1989) (“Where 

coplaintiffs have a shared stake in the litigation – close 

identity of interests and a joint objective – the finding that one 

has standing to sue renders it superfluous to adjudicate the 

other plaintiffs‟ standing.”).

Defendants deny Plaintiffs have an injury in fact as 

regards the expenditure and special needs provisions.

12

 So 

we must determine whether any of the Plaintiffs have been 

subject to actual enforcement of the expenditure or special 

needs provisions or are likely to have these provisions

 

12 Though injury in fact is not disputed as to the other 

provisions, we note that it appears from the record that 

there are Plaintiffs with standing to challenge those 

provisions. Michael Bidzilya and William Algar can 

challenge the under-65 provision because they are over 

65 years old. Mary Wagner can challenge the 50% 

repayment provision because the State sought repayment 

from her and has only suspended its collection attempt 

pending the outcome of this suit. All plaintiffs can 

challenge the termination provision, as that is an 

enforcement clause applicable to any potential violations 

of Section 1414. We therefore confirm our jurisdiction 

to consider challenges to those provisions.
24

enforced against them in the near future. We conclude that

Plaintiffs are indeed likely to have these provisions 

imminently enforced against them. First, all Plaintiffs fall 

within the scope of these statutory provisions, such that 

Plaintiffs would be burdened by these provisions if they were 

enforced. Second, DPW has stated that it intends to enforce 

all the requirements of the statute should it prevail. This 

establishes an imminent injury in fact.

Defendants believe that Plaintiffs lack an injury in fact 

as to the special needs provision because they “have not 

produced a single class member who can plausibly claim to 

be at risk of being denied access to a pooled trust under” that 

provision. (Appellants‟ Principal Br. at 14) Defendants point 

to cases where they have approved exceptionally large 

trusts,13 implicitly arguing that they will not enforce the 

“special needs” requirement except in egregious cases. They 

believe Plaintiffs lack an injury in fact unless one of the 

Plaintiffs presents such an egregious case. Similarly, because

Plaintiffs have failed to point to a specific expenditure that 

Defendants have disapproved or threatened to disapprove, 

Plaintiffs supposedly lack an injury in fact as to the 

expenditure provision.

But Defendants‟ position ignores the nature of these 

provisions. Instead of being imposed on particular classes of 

 

13 We note, though, that the Defendants do not commit 

themselves to continuing such a course. Faced with an 

identical situation in the future, they could disallow such 

trusts.
25

individuals, these requirements are burdens on the nature of 

the trust itself, affecting all beneficiaries and trustees of 

special needs trusts. With regard to the special needs 

provision, the Pennsylvania statute requires that the trust‟s 

existence be justified in relation to the “special needs” of the 

beneficiary. It defines “special needs” as “items, products or 

services . . . related to the treatment of the beneficiary‟s 

disability.” 62 Pa. Stat. Ann. § 1414(f). This requires that the 

trust be justified in relation to the treatment of the 

beneficiary‟s disability. Similarly, the expenditure provision

requires “any expenditure from the trust” to “have a 

reasonable relationship to the needs of the beneficiary.” 62 

Pa. Stat. Ann. § 1414(b)(3)(ii). All special needs trusts are 

subject to these requirements. Each of these provisions

requires careful scrutiny of the trust, the beneficiary, and the

beneficiary‟s ongoing needs, and therefore each provision

imposes an ongoing burden on beneficiaries and trustees.

Plaintiffs are within the scope of the statute and 

therefore potentially affected by it. By itself, this is not

sufficient to demonstrate constitutional standing. Normally, 

Plaintiffs would have the burden of demonstrating that there 

is an imminent threat of enforcement against them. But here

DPW has relieved Plaintiffs of that burden by stipulating that 

should it “prevail in this litigation, it will enforce all 

provisions of section 1414[.]” Therefore, the threat of 

enforcement is sufficiently imminent that Plaintiffs have an 

injury in fact.

Defendants also argue that should they prevail, they 

will not seek to terminate trusts, but rather seek to force their

compliance with Section 1414. (Appellants‟ Principal Br. at 
26

15) But it is unclear why this would deny Plaintiffs an injury 

in fact. While terminating non-compliant trusts would surely 

be more draconian, forcing such trusts to comply with an 

allegedly illegitimate statute is, from the perspective of 

constitutional standing, no less an injury in fact.

We hold that Plaintiffs have constitutional standing to 

challenge Section 1414.

V.A.2

Prudential standing requires: (1) that a litigant assert 

his or her own legal interests rather than those of a third 

party; (2) that the grievance not be so abstract as to amount to 

a generalized grievance; (3) and that the Plaintiffs‟ interests 

are arguably within the “zone of interests” protected by the 

statute, rule, or constitutional provision on which the claim is 

based. See Mariana v. Fisher, 338 F.3d 189, 205 (3d Cir. 

2003).14 These requirements are clearly met in this case. 

 

14 Defendants do not challenge Plaintiffs‟ prudential 

standing. Constitutional standing is clearly jurisdictional 

and must be considered even when the parties fail to raise 

the issue. It is unclear whether prudential standing is 

similar. There is significant disagreement among our 

sister circuits on whether objections to prudential 

standing can be waived. Compare Cmty. First Bank v. 

Nat’l Credit Union Admin., 41 F.3d 1050, 1053 (6th Cir. 

1994) (not waivable); Animal Legal Defense Fund, Inc. v. 

Espy, 29 F.3d 720, 723 n.2 (D.C. Cir. 1994) (not 
27

Plaintiffs are asserting their own interests as 

beneficiaries and trustees of trusts the Commonwealth of 

Pennsylvania is attempting to regulate. Their grievance is not 

so abstract as to amount to a generalized grievance. Rather, it 

is clear, distinct, and particular to their status as beneficiaries 

and trustees. Finally, the “zone of interests” analysis parallels 

our later consideration of whether Plaintiffs have a private 

right of action. Under Gonzaga University v. Doe, 536 U.S. 

273 (2002), to determine whether Congress intended to create 

a private right of action, we must look for “rights-creating 

language” clearly imparting an “individual entitlement,” with 

“an unmistakable focus on the benefitted class.” Id. at 287. 

This test is both narrower than the zone-of-interests test and 

fully encompassed within its boundaries. Thus, should we 

conclude that Plaintiffs have a private right of action, we must 

 

waivable); and Thompson v. Cnty. of Franklin, 15 F.3d 

245, 248 (2d Cir. 1994) (not waivable) with Bd. of Miss.

Levee Comm’rs v. EPA, 674 F.3d 409, 417-18 (5th Cir. 

2012) (waivable); The Wilderness Soc. v. Kane Cnty., 

Utah, 632 F.3d 1162, 1168 n.1 (10th Cir. 2011) 

(waivable); RK Co. v. See, 622 F.3d 846, 851-52 (7th Cir. 

2010) (waivable); City of L.A. v. Cnty. of Kern, 581 F.3d 

841, 845 (9th Cir. 2009) (waivable). We have previously 

acknowledged the divide in our sister circuits, see UPS 

Worldwide Forwarding, Inc. v. USPS, 66 F.3d 621, 626 

n.6 (3d Cir. 1995), but we have thus far not decided the 

issue. Because we hold that Plaintiffs have satisfied the 

requirements for prudential standing, we similarly 

decline to decide the issue now.
28

necessarily conclude that they satisfy the zone-of-interests 

test. Since our later analysis does conclude that Plaintiffs 

have a private right of action, Plaintiffs have satisfied the 

zone-of-interests test. We therefore hold that Plaintiffs have 

prudential standing to challenge Section 1414.

V.A.3

Ripeness requires “a substantial controversy, between 

parties having adverse legal interests, of sufficient immediacy 

and reality to warrant the issuance of a declaratory 

judgment.” Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 

270, 273 (1941). 

In Step-Saver Data Systems, Inc. v. Wyse Technology, 

912 F.2d 643 (3d Cir. 1990), we concluded that the most 

important factors in determining whether a case is ripe are 

“the adversity of the interest of the parties, the conclusiveness 

of the judicial judgment and the practical help, or utility, of 

that judgment.” Id. at 647. Adversity requires opposing legal 

interests. See id. at 648 (citing and quoting 10A C. Wright, 

A. Miller & M. Kane, Federal Practice & Procedure § 2757, 

at 582-83 (2d ed. 1983)). Such opposing interests are clearly 

present here, as Defendants have an obligation to enforce 

Section 1414, and Plaintiffs seek to evade its strictures. 

Conclusivity depends on the ability of a decision to “define 

and clarify the legal rights or relations of the parties.” Id. at 

648. A decision here would establish whether the statute can 

be enforced against the Plaintiffs, so it would define and 

clarify Plaintiffs‟ legal rights. And declaratory judgments 

have utility because the clarity they bring enables “plaintiffs 

(and possibly defendants) [to] make responsible decisions 
29

about the future.” Id. at 649. Here, a declaratory judgment 

will enable the Plaintiffs to make informed decisions about 

the administration of their trusts with a full understanding of

Section 1414‟s effects.

Defendants argue that Plaintiffs‟ claims are not ripe, 

but do not clearly state which factors they believe are lacking. 

They argue that because Section 1414 requires compliance 

with authoritative interpretations of the statute, because DPW

is the agency charged with such interpretation, and because 

DPW has not released any such interpretations, the case is not 

ripe for decision. They are incorrect.

First, the statutory text has its own freestanding 

meaning and imposes requirements on trusts even without 

agency interpretation. Defendants point to no authority 

requiring us to wait for an authoritative interpretation from a 

state agency before determining whether a state statute 

conflicts with federal law. And to the extent the agency is 

pleading for a chance to interpret the statute more leniently 

than the statute‟s text might suggest, we question whether we 

can credit such an interpretation. As the Supreme Court said 

in United States v. Stevens, 130 S. Ct. 1577, 1591 (2010): 

“We would not uphold an unconstitutional statute merely 

because the Government promised to use it responsibly.”

Second, the stipulated facts cite multiple attempts to 

enforce provisions of the statute. In one enforcement attempt, 

DPW denied Mary Wagner medical assistance because the 

trust agreement for The Family Trust did not comply with 

Section 1414. Defendants claim this “ineligibility decision 

was withdrawn,” (Appellants‟ Reply Br. at 4) but that 
30

explanation is at best incomplete, and at worst misleading, 

particularly coming as it does in a reply brief. In fact, Mary 

Wagner, the trustee, and DPW entered into what is essentially 

a stay of the ineligibility determination pending resolution of 

this suit. Should Plaintiffs‟ challenge fail, Mary Wagner and 

the trustee have agreed that the Commonwealth will be paid 

“up to fifty (50%) percent of remaining funds in Mary 

Wagner‟s pooled account at her death[.]” Obviously, Mary 

Wagner‟s interests remain adverse to those of the 

Commonwealth.

Finally, the stipulated facts indicate that DPW has 

created and internally circulated a document addressing 

various provisions of the statute. Defendants argue that these 

guidelines have not been used to disapprove any accounts or 

expenditures, but that is beside the point. The document

undermines Defendants‟ argument that they have not reached 

any conclusions on the scope and meaning of the statute. For 

example, they have concluded that “luxury items” cannot be 

bought with trust funds and that “[n]o assets can be added 

after age 65.”

The issues raised by Defendants will often be present 

in declaratory judgment cases. Such actions are often brought 

specifically because legal rights and obligations are

ambiguous or undefined. Plaintiffs seek to clarify those legal 

rights and obligations. We understand that DPW has been 

entrusted by the Pennsylvania Legislature with the duty of 

interpreting Section 1414 and we appreciate DPW‟s stated 

intent to interpret the statute reasonably. But Plaintiffs have 

satisfied Step-Saver‟s requirements. They are entitled to have 

Section 1414 examined in light of federal law and to have 
31

their legal rights and obligations clarified. We hold that 

Plaintiffs‟ claims are ripe for adjudication.

V.B

Defendants‟ central argument, cutting across both the 

private-right-of-action and the merits sections of their brief, is 

that 42 U.S.C. § 1396p(d)(4) does not mandate that the States 

exempt special needs trusts meeting its criteria. Defendants‟ 

argument has been embraced by both the Second and Tenth 

Circuits. See Wong v. Doar, 571 F.3d 247 (2d Cir. 2009); 

Keith v. Rizzuto, 212 F.3d 1190 (10th Cir. 2000). 

Meanwhile, the Eighth Circuit suggests in a passing reference 

that § 1396p(d)(4) is mandatory. See Norwest Bank of N.D., 

N.A. v. Doth, 159 F.3d 328, 330 (8th Cir. 1998). Having

given careful consideration to Defendants‟ arguments and to 

the positions of our sister circuits, we conclude that 42 U.S.C. 

§ 1396p(d)(4) imposes mandatory obligations upon the 

States.

Defendants‟ key point is that the beginning of the 

special needs exemption states: “This subsection shall not 

apply to any of the following trusts[.]” 42 U.S.C. 

§ 1396p(d)(4) (emphasis added). This language refers to the 

portion of the Medicaid statute requiring States to count trusts 

against eligibility. It abrogates that section insofar as it 

applies to special needs trusts. Both parties agree that this 

lifts the obligation levied upon the States by the trustcounting provisions and says that the States do not have to 

apply the trust-counting provisions to qualifying special needs 

trusts. But the provision does not specifically say that “Any 
32

trusts meeting these requirements shall not be counted as 

available assets for determining Medicaid eligibility.”

Defendants argue that this creates a “gap” where the 

States can legislate. This was the Second Circuit‟s position

in Wong v. Doar, 571 F.3d at 256-57 (“Congress‟s negative 

command that (d)(3) „shall not apply‟ to the trusts referenced 

in (d)(4) does not, however, provide any guidance as to what 

rules shall apply to (d)(4) trusts.”). Similarly, in Keith v. 

Rizzuto, the Tenth Circuit concluded that “Section 

1396p(d)(4) . . . provides an exception to a requirement. 

States accordingly need not count income trusts for eligibility 

purposes, but nevertheless may . . . opt to do so.” 212 F.3d at 

1193; see also Hobbs ex rel. Hobbs v. Zenderman, 579 F.3d 

1171, 1179-80 (10th Cir. 2009) (applying Keith to conclude 

that 42 U.S.C. § 1396p(d)(4)(A) does not confer a private 

right of action).

“[T]he intent of Congress is the „ultimate touchstone‟ 

of preemption analysis.” Farina v. Nokia, Inc., 625 F.3d 97, 

115 (3d Cir. 2010) (quoting Medtronic, Inc. v. Lohr, 518 U.S. 

470, 485 (1996)). And because “the best evidence of 

Congress‟s intent is what it says in the texts of the statutes,” 

Fogleman v. Mercy Hosp., Inc., 283 F.3d 561, 569 (3d Cir. 

2002), we give controlling weight to the statutory text. But 

we believe that focusing solely on the words “[t]his 

subsection” has caused Defendants and several courts to miss 

the forest for the trees.

In enacting the trust provisions of OBRA 1993, 

Congress provided a comprehensive system for dealing with 

the relationship between trusts and Medicaid eligibility. After 
33

limited success with the Medicaid Qualifying Trusts 

provisions enacted in 1986, Congress made a deliberate 

choice to expand the federal role in defining trusts and their 

effect on Medicaid eligibility. Evidence of this can be found 

throughout the Medicaid statute. For example, the current 

text of 42 U.S.C. § 1396a(a)(18) requires States to comply 

with “section 1396p of this title with respect to . . . treatment 

of certain trusts[.]” Before OBRA 1993, the provision 

instructed States to “comply with the provisions of section 

1396p of this title with respect to liens, adjustments and 

recoveries of medical assistance correctly paid, and transfers 

of assets[.]” 42 U.S.C. § 1396a(a)(18) (1992). It did not 

mention compliance with 1396p.

Congress made a specific choice to expand the types of 

assets being treated as trusts and to unambiguously require 

States to count trusts against Medicaid eligibility. Its primary 

objective was unquestionably to prevent Medicaid recipients 

from receiving taxpayer-funded health care while they 

sheltered their own assets for their benefit and the benefit of 

their heirs. But its secondary objective was to shield special 

needs trusts from impacting Medicaid eligibility. And the 

Supreme Court has emphasized the importance of giving full 

effect to all of Congress‟ statutory objectives, as well as the

specific balance struck among them. See Rodriguez v. United 

States, 480 U.S. 522, 525-26 (1987) (“Deciding what 

competing values will or will not be sacrificed to the 

achievement of a particular objective is the very essence of 

legislative choice-and it frustrates rather than effectuates 

legislative intent simplistically to assume that whatever

furthers the statute‟s primary objective must be the law.”).
34

Congress‟ intent was not merely to shelter special 

needs trusts from the effect of 42 U.S.C. § 1396p(d)(3). It 

was to shelter special needs trusts from having any impact on 

Medicaid eligibility. This conclusion is rooted in the 

statutory text. If Congress had intended to do as the 

Defendants insist – provide an exception to the trust-counting 

rules through which the States were free to do as they wish –

it seems unlikely that Congress would use the word “shall” in 

its command that “[t]his subsection shall not apply.” Any 

number of constructions would have been more amenable to 

the Defendants‟ position. For example, Congress could have 

said: “States are not required to apply this subsection to any 

of the following trusts.” Congress is not required to use any 

particular magic words, but its choice of an imperative like 

“shall” does give evidence of its intent.

Even more important is the structure of the assetcounting rules. While Defendants focus on the specific 

mandate-and-exception structure of 42 U.S.C. §§ 1396p(d)(3) 

and (4), both of these sit within a complex and comprehensive 

system of asset-counting rules. Congress rigorously dictates 

what assets shall count and what assets shall not count toward

Medicaid eligibility. State law obviously plays a role in 

determining ownership, property rights, and similar matters. 

Here Congress has not only provided a comprehensive system 

of asset-counting rules, it has actually legislated on this 

precise class of asset. Defendants argue that Congress left a 

gap or an unprovided-for case with regard to these trusts. But 

with such a rigorous system, it seems clear that Congress 

intended to create a purely binary system of classification: 

either a trust affects Medicaid eligibility or it does not.
35

Finally, while this shades into our preemption analysis, 

it is important to note that 42 U.S.C. § 1396p(d)(4) basically 

provides a federal definition for what constitutes a special 

needs trust. Through this statutory provision, Congress has 

set the boundaries for what will be considered a special needs

trust under federal law. Pennsylvania‟s Section 1414 adds 

requirements to this definition. As our preemption analysis 

will demonstrate, States are not free to rewrite congressional 

statutes in this way.

For these reasons, rooted in the text and structure of 

the Medicaid statute, we respectfully disagree with the 

conclusion of the Second and Tenth Circuits. We hold that in 

determining Medicaid eligibility, States are required to 

exempt any trust meeting the provisions of 42 U.S.C. § 

1396p(d)(4).15

V.C.1

To find a private right of action under Section 1983: 

(1) the statutory provision must benefit the plaintiffs with a 

right unambiguously conferred by Congress; (2) the right 

cannot be so “vague and amorphous” that its enforcement 

would strain judicial competence; and (3) the statute must

impose a binding obligation on the States. See Blessing v. 

Freestone, 520 U.S. 329, 329 (1997); Gonzaga Univ. v. Doe, 

536 U.S. 273, 282 (2002). Defendants challenge the first and 

 

15 Trusts are, of course, required to abide by a State‟s 

general law of trusts, the effects of which will be 

discussed in greater detail in our preemption analysis.
36

third parts of this test. We conclude that Plaintiffs have a 

private right of action under Section 1983.

Medicaid provides eligible individuals with the 

statutory right to receive medical assistance and to receive it 

with reasonable promptness. See 42 U.S.C. §§ 1396a(a)(8),

1396a(a)(10) & 1396d(a). Our Court has already concluded 

that Medicaid provides a private right of action under Section 

1983 for interference with this right. See Sabree ex rel. 

Sabree v. Richman, 367 F.3d 180, 189 (3d Cir. 2004). 

Plaintiffs have a right to receive reasonably prompt medical 

assistance so long as they meet the eligibility requirements as

those requirements are defined by federal law. Plaintiffs 

allege that Section 1414 changes the eligibility requirements 

for medical assistance, contrary to federal law. Thus, it 

interferes with Plaintiffs‟ right to receive medical assistance. 

Plaintiffs therefore have a cause of action under Section 1983.

It is a closer question whether the Trust Plaintiffs have 

a private right of action here. To be sure, they do not have a 

right to receive medical assistance. We nonetheless conclude 

that the Medicaid statute confers a private right of action 

upon the Trust Plaintiffs.

Under Gonzaga University v. Doe, we must look for 

“rights-creating language” clearly imparting an “individual 

entitlement,” with “an unmistakable focus on the benefitted 

class.” 536 U.S. at 287. In Gonzaga, the Supreme Court 

contrasted the “individually focused terminology of Title VI 

(„No person . . . shall . . . be subjected to discrimination‟)” 

with FERPA‟s mandate that the Secretary of Education 
37

withhold funds from institutions violating its provisions. Id.

at 287.

Based on Gonzaga, at least two provisions of the 

Medicaid statute confer rights upon the trusts. First, 42 

U.S.C. § 1396p(d)(4) says that the trust-counting rules “shall 

not apply to” special needs trusts. This parallels the 

language from Title VI and Title IX (“No person . . . shall . . . 

be subjected to discrimination”) that the Court has held to 

create individual rights. See Gonzaga, 536 U.S. at 284, 287. 

Second, 42 U.S.C. § 1396a(a)(18) instructs that “[a] State 

plan for medical assistance must . . . comply with the 

provisions of section 1396p of this title with respect to . . . 

treatment of certain trusts[.]” This parallels the language 

from 42 U.S.C. § 1396a(a)(8)16 already held by Sabree to 

confer an individual right. In fact, they are both part of a list 

of requirements that Congress concluded “must” be met by a

“State plan for medical assistance[.]” While the instruction to 

comply is directed at the State, the right to have the State 

comply is directed at those affected by noncompliance. See 

Sabree, 367 F.3d at 190. In the case of Section 1396a(a)(8), 

individual rights were conferred upon those eligible for 

Medicaid. In the case of Section 1396a(a)(18), individual 

rights are conferred upon the trusts.

 

16 “A State plan for medical assistance must . . . provide 

that all individuals wishing to make application for 

medical assistance under the plan shall have opportunity 

to do so, and that such assistance shall be furnished with 

reasonable promptness to all eligible individuals[.]” 42 

U.S.C. § 1396a(a)(8).
38

Defendants‟ counterargument is that the special needs

exemptions to the trust-counting rules (42 U.S.C. 

§ 1396p(d)(4)) are not mandatory. In order to confer a 

private right of action, the statute “must be couched in 

mandatory, rather than precatory, terms.” Blessing, 520 U.S. 

at 341. Otherwise it does not “unambiguously impose a 

binding obligation on the States” such that plaintiffs can seek 

its enforcement through Section 1983. Because we have 

already concluded that the special needs exemptions are 

mandatory, we must reject this argument.

We hold, consistent with our opinion in Sabree, that 

the Individual Plaintiffs have a private right of action to 

enforce the application of the special needs exemptions. We 

further hold that 42 U.S.C. § 1396p(d)(4) and 42 U.S.C. 

§ 1396a(a)(18) unmistakably confer a similar right on the 

Trust Plaintiffs.

V.C.2

We also conclude that the Supremacy Clause provides 

Plaintiffs with an independent basis for a private right of 

action in this case.17 Supreme Court precedent establishes

 

17 The District Court concluded that this issue could not 

be bypassed – despite finding a private cause of action 

under Section 1983 – because Plaintiffs supposedly 

challenge a specific use of the 50% payback provision 

solely under the Supremacy Clause. While that may be 
39

that the Supremacy Clause creates an independent right of 

action where a party alleges preemption of state law by 

federal law. See Shaw v. Delta Air Lines, 463 U.S. 85, 96 

n.14 (1983) (“A plaintiff who seeks injunctive relief from 

state regulation, on the ground that such regulation is preempted by a federal statute which, by virtue of the Supremacy 

Clause of the Constitution, must prevail, thus presents a 

federal question which the federal courts have jurisdiction 

under 28 U.S.C. § 1331 to resolve.”). We acknowledged as 

much in St. Thomas-St. John Hotel & Tourism Ass’n v. Gov’t 

of the U.S. V.I., 218 F.3d 232, 240 (3d Cir. 2000) (“[A] state 

or territorial law can be unenforceable as preempted by 

federal law even when the federal law secures no individual 

substantive rights for the party arguing preemption. . . . The 

Supreme Court has recognized that such a challenge presents 

a federal question which the federal courts have jurisdiction 

under 28 U.S.C. § 1331 to resolve.”).18

Our opinion in Gonzalez v. Young, 560 F.2d 160, 166 

(3d Cir. 1977), is not to the contrary. There we concluded 

that 28 U.S.C. § 1343 did not confer jurisdiction over a claim 

 

an overly narrow construction of the Complaint, the 

Supremacy Clause does provide a cause of action.

18 It is worth noting, though, that our statement in St. 

Thomas-St. John is only dicta, because the Supremacy 

Clause has no direct role in a conflict between federal 

law and territorial law. Such a conflict presents no 

competition between state and federal sovereignty.
40

that the federal welfare program preempted New Jersey law. 

But here Section 1331 provides federal question jurisdiction 

so long as there is a “civil action[] arising under the 

Constitution, laws, or treaties of the United States.” 28 

U.S.C. § 1331.19 In any event, Shaw post-dates Gonzalez and 

commands that jurisdiction and a cause of action are present 

here.

 We are compelled to hold that the Supremacy Clause 

provides a private right of action here.20

 

19 Section 1331 could not be used in Gonzalez as the 

version in effect at the time had an amount-incontroversy requirement of $10,000. See Gonzalez, 560 

F.2d at 164. That requirement was removed in 1980. 

Federal Question Jurisdictional Amendments Act of 

1980, Pub. L. No. 96-486, 94 Stat. 2369 (Dec. 1, 1980).

20 When this case was briefed, the Supreme Court was 

poised to revisit this issue in Douglas v. Independent 

Living Center of Southern California, 565 U.S. __, No. 

09-958, 2012 WL 555204 (Feb. 22, 2012). But though 

the question on which the Court granted certiorari 

squarely presented the issue, the Court expressly declined 

to “address whether the Ninth Circuit properly 

recognized a Supremacy Clause action to enforce this 

federal statute[.]” Id. at *6. Instead, the Court remanded 

for consideration of agency determinations issued during 

the pendency of the appeal. See id. at *2. The Court 
41

V.D

Our preemption analysis must necessarily examine 

each individual component of the Pennsylvania statute to 

determine whether it conflicts with the Medicaid statute. But 

we begin by determining whether Congress had an

overarching intent in enacting the trust-counting provisions 

and the special needs exemptions.

The basic principles of a preemption analysis are 

familiar. First, “the intent of Congress is the „ultimate 

touchstone‟ of preemption analysis.” Farina, 625 F.3d at 115 

(quoting Medtronic, 518 U.S. at 485). Second, “we „start[] 

with the basic assumption that Congress did not intend to 

displace state law.‟” Id. at 116 (quoting Maryland v. 

Louisiana, 451 U.S. 725, 746 (1981)). Third, when we are 

dealing with Spending Clause legislation, we require 

Congress to speak “unambiguously,” because such legislation 

is in the nature of a contract between Congress and the States, 

 

reached this decision over the strong dissent of the Chief 

Justice, joined by Justices Scalia, Thomas, and Alito. 

The dissenting justices would have concluded that 

“[w]hen Congress did not intend to provide a private 

right of action to enforce a statute enacted under the 

Spending Clause, the Supremacy Clause does not supply 

one of its own force.” Id. at *11 (Roberts, C.J., 

dissenting). Although the Supreme Court is free to 

revisit Shaw if it so desires, we are not. Shaw is binding 

precedent unless and until it is abrogated by the Supreme 

Court.
42

and the States are entitled to know the conditions under which 

they are accepting. Pennhurst State Sch. & Hosp. v. 

Halderman, 451 U.S. 1, 17 (1981).

Bearing these principles in mind, we discern an 

overarching intent behind the trust exemptions. First, 

Congress intended to mandate the exemption of special needs

trusts from the trust-counting rules. We explained our 

reasoning for this conclusion in Section V.B. 

Second, Congress intended that special needs trusts be 

defined by a specific set of criteria that it set forth and no 

others. We base this upon Congress‟ choice to provide a list 

of requirements to be met by special needs trusts. The

venerable canon of statutory construction – expressio unius 

est exclusio alterius – essentially says that where a specific 

list is set forth, it is presumed that items not on the list have 

been excluded. See, e.g., U.S. Term Limits, Inc. v. Thornton, 

514 U.S. 779, 793 n.9 (1995) (noting that application of 

expressio unius leads to the conclusion that the qualifications 

for office expressed in the Constitution are the sole 

requirements and other requirements cannot be imposed); 

Waggoner v. Gonzales, 488 F.3d 632, 636 (5th Cir. 2007) 

(applying expressio unius to a list of requirements and 

concluding that expression of the “extreme hardship” 

requirement forecloses conclusion that additional 

requirements exist beyond “extreme hardship”). Absent an 

explicit statement or a clear implication that States are free to 

expand the list, expressio unius leads us to conclude they are 

not.
43

Third and finally, while Congress did not intend to 

allow additional burdens targeted specifically at special needs 

trusts, there is no reason to believe it abrogated States‟ 

general laws of trusts or their inherent powers under those 

laws. There is necessarily some tension between this 

conclusion and the bar on States adding requirements. For 

example, even application of the trustee‟s traditional duty of 

loyalty – to “administer the trust solely in the interests of the 

beneficiaries[,]” 20 Pa. Cons. Stat. Ann. § 7772(a) – could be 

considered an extra requirement. But we reject the 

conclusion that application of these traditional powers is 

contrary to the will of Congress. After all, Congress did not 

pass a federal body of trust law, estate law, or property law 

when enacting Medicaid. It relied and continues to rely on

state laws governing such issues.

These three conclusions – that the special needs

exemptions are mandatory, that Congress‟ stated 

requirements for special needs trusts are exclusive, and that 

States retain their traditional regulatory authority – guide our 

preemption analysis here.

21

 

21 We note briefly that we see no reason for application 

of the “no more restrictive” rule (NMR rule) in this case. 

The NMR rule bars States – in determining whether the 

medically needy are eligible for Medicaid – from using a 

methodology that is “more restrictive than the 

methodology which would be employed under the 

supplemental security income program.” 42 U.S.C. 

§ 1396a(a)(10)(C)(i)(III). While the NMR rule was 
44

V.D.1

Pennsylvania‟s 50% retention provision provides:

[U]pon the death of the beneficiary or upon the 

earlier termination of the trust, the department 

and any other state that provided medical 

assistance to the beneficiary must be reimbursed 

from the funds remaining in the trust up to an 

 

heavily relied upon by the District Court and its 

application has been extensively briefed, using the NMR 

rule without consideration of Congress‟ underlying intent 

is like using a yardstick without knowing where to start 

measuring. Regardless, the more direct approach is to 

apply Medicaid standards in resolving this case. As the 

Supreme Court has recognized, the Medicaid statute 

requires the States to base assessments of financial need 

(for both categorically needy and medically needy 

individuals) on resources “available” to the recipient. 

Schweiker v. Gray Panthers, 453 U.S. 34, 37 (1981). 

The trust provisions are deliberately worded to require 

that States consider money held in trust “available” 

unless the trust is protected by one of the exemptions. 42 

U.S.C. § 1396p(d)(3). (Use of Medicaid standards 

instead of SSI standards may be a distinction without a 

difference. The SSI standards incorporate by reference 

the Medicaid trust exemptions. See 42 U.S.C. 

§ 1382b(e)(5). But given the complexity of Medicaid, 

we seek to simplify the analysis in any way we can.)
45

amount equal to the total medical assistance 

paid on behalf of the beneficiary before any 

other claimant is paid: Provided, however, That 

in the case of an account in a pooled trust, the 

trust shall provide that no more than fifty 

percent of the amount remaining in the 

beneficiary‟s pooled trust account may be 

retained by the trust without any obligation to 

reimburse the department.

62 Pa. Stat. Ann. § 1414(b)(3)(iii). The Medicaid statute, 

meanwhile, includes the following language:

To the extent that amounts remaining in the 

beneficiary‟s account upon the death of the 

beneficiary are not retained by the trust, the 

trust pays to the State from such remaining 

amounts in the account an amount equal to the 

total amount of medical assistance paid on 

behalf of the beneficiary under the State plan 

under this subchapter.

42 U.S.C. § 1396p(d)(4)(C)(iv). These two provisions are 

irreconcilable. We conclude that Congress intended to permit 

special needs trusts – at the discretion of the trust – to retain 

up to 100% of the residual after the death of the disabled 

beneficiary. We therefore hold the repayment provision of 

Section 1414 preempted by federal law. 22

 

22 Defendants argue that there is a particular justiciability 

problem with the 50% repayment provision, as the 
46

Plaintiffs argue that the Medicaid provision leaves it to

the trust to decide how much – if any – money should be 

provided to the State to reimburse it for Medicaid expenses. 

We agree. This construction accords with the statutory text 

and Congress‟ evident solicitude for these pooled trusts 

(evident by the fact that there is a special category of 

exemption for them.) Retaining the residual enables the trust 

to cover administrative fees and other overhead without 

increasing charges on accounts of living beneficiaries At the 

same time, should the trust attempt to pass the money to the 

deceased‟s estate, this provision acts as a safeguard to ensure 

 

Individual Plaintiffs supposedly have no interest in where

the remainder goes after they die (as they have forfeited 

to the trust their right to the remainder) and Trust 

Plaintiffs do not have a “personal right” in the pooled 

trusts. (Appellants‟ Principal Br. at 26. n.7) We 

disagree. The injury to the Individual Plaintiffs does not 

arise from the disposition of property after their death. 

Rather, it arises from imposing additional requirements 

on their existing trust. If, for example, DPW reviews the 

trust agreement of an Individual Plaintiff and determines 

that the agreement is invalid for lack of a provision for 

repaying the State, DPW calls into question the validity 

of the Individual Plaintiff‟s trust and, by extension, their 

eligibility for medical assistance. This is an injury in fact 

sufficient to confer standing upon the Individual 

Plaintiffs. And for the reasons discussed above, we 

believe the relevant provisions of the Medicaid statute 

grant a private right of action to the Trust Plaintiffs.
47

that the State gets repaid. See Joseph A. Rosenberg, 

Supplemental Needs Trusts for People with Disabilities: The 

Development of a Private Trust in the Public Interest, 10 B.U. 

Pub. Int. L.J. 91, 132 (2000) (“To the extent the remaining 

balance in an individual trust account is retained by the 

pooled trust after the death of the beneficiary, the State is not 

entitled to be paid back. However, any amounts that are not 

retained by the pooled trust must be used to reimburse the 

State for the cost of medical assistance provided to the 

beneficiary during his or her lifetime.”).

Defendants have not offered any reasonable alternative 

construction of the Medicaid provision. Their principal 

argument is that the Medicaid statute makes no mention of 

who gets to decide the percentage retained by the trust. But 

Plaintiffs‟ construction of the statute – which we find 

persuasive, particularly in the absence of a contrary 

construction from the Defendants – is that this is a protective 

provision, intended to shield the trust from repayment 

obligations. Permitting the States to choose how much the 

trust can retain would eviscerate that protection. While 

Pennsylvania seeks “only” 50% of the trust residual, States 

would be free to demand any amount they wished, with the 

possible exception of 100%, and the courts would be 

powerless to mediate these disputes. Absent some statutory 

guidance, there is no reasonable way for us to say that 

demanding 75%, 85%, or even 99.9% of the residual is any 

less permissible than demanding 50%. We cannot believe 

Congress would intentionally cripple its statute in that 

manner.
48

It is particularly noteworthy that this provision differs 

from the other three types of special needs trusts. In enacting 

the trust-counting rules, Congress designated three types of 

exempted trusts in successive statutory paragraphs at 42 

U.S.C. §§ 1396p(d)(4)(A), (B), and (C). Both the first and 

second exemptions, 42 U.S.C. § 1396p(d)(4)(A) and (B), 

require repayment up to the total amount expended for 

medical assistance. The pooled-trust provision, 42 U.S.C. 

§ 1396p(d)(4)(C), is the only one of the three exemptions that 

qualifies this repayment obligation and permits the trust to 

retain some portion of the residual. This is strong evidence of 

congressional intent. See Russello v. United States, 464 U.S. 

16, 23 (1983) (“Where Congress includes particular language 

in one section of a statute but omits it in another section of the 

same Act, it is generally presumed that Congress acts 

intentionally and purposely in the disparate inclusion or 

exclusion.”).

There is no question that Congress could have chosen 

to strike the balance differently, determining that the trust 

could retain some portion of the residual while partially 

repaying the State. But Congress chose to strike the balance 

in favor of the trust. It is important to remember that the 

residual here is not being passed to the deceased beneficiary‟s 

estate. It is being retained by a charitable organization whose 

purpose is to operate special needs trusts for the benefit of the 

disabled. See 42 U.S.C. § 1396p(d)(4)(C)(I) (requiring that a 

pooled trust be “established and managed by a non-profit 

association”). To the extent any part of the residual is passed

to the estate, States are free to seek repayment from those

funds. But Congress has given the trust discretion to 
49

determine whether to retain the residual. We hold the 

repayment provision of Section 1414 preempted by federal 

law.

V.D.2

The expenditure provision of Section 1414(b)(3)(ii) 

provides that “any expenditure from the trust must have a 

reasonable relationship to the needs of the beneficiary.” 62 

Pa. Stat. Ann. § 1414(b)(3)(ii). The Medicaid statute sets no 

restrictions on the purposes for which trust funds can be 

expended. Thus, the reasonable relationship requirement of

Section 1414(b)(3)(ii) transgresses congressional intent. We 

hold it preempted by federal law.

The Commonwealth is justifiably concerned with the 

potential for fraud and abuse. While there is little if any 

evidence to demonstrate that the Trust Plaintiffs here have 

spent trust funds recklessly, it is always possible that trustees 

could do so. But States are not without tools to prevent 

abuse. The trust-counting rules are built atop the States‟ legal

framework for trusts. Special needs trusts are therefore

subject to supervision by the courts and legal actions to 

enforce trustees‟ fiduciary duties. And because pooled 

special needs trusts must be managed by non-profit 

organizations, they are similarly subject to the States‟ legal 

rules for non-profits. We trust that these statutory tools are

robust enough to curtail abuses. But should States find these 

tools inadequate, they are free to petition Congress to change 

the Medicaid statute. Should Congress be unresponsive, 

States retain the option of withdrawing from Medicaid.
50

V.D.3

The special needs requirement of Section 1414(b)(2) 

attempts to restrict pooled special needs trusts to beneficiaries 

with “special needs that will not be met without the trust.” 62 

Pa. Stat. Ann. § 1414(b)(2). The Pennsylvania statute defines 

“special needs” as “those items, products or services not 

covered by the medical assistance program, insurance or other 

third-party liability source for which a beneficiary of a special 

needs trust or his parents are personally liable and that can be 

provided to the beneficiary to increase the beneficiary‟s 

quality of life and to assist in and are related to the treatment 

of the beneficiary‟s disability.”23 These limitations do not 

appear in the Medicaid statute, which only requires that 

individuals be “disabled.”24

 

23 The statute also provides examples: “The term may 

include medical expenses, dental expenses, nursing and 

custodial care, psychiatric / psychological services, 

recreational therapy, occupational therapy, physical 

therapy, vocational therapy, durable medical needs, 

prosthetic devices, special rehabilitative services or 

equipment, disability-related training, education, 

transportation and travel expenses, dietary needs and 

supplements, related insurance and other goods and 

services specified by the department.” 62 Pa. Stat. Ann. 

§ 1414(f).

24 The definition of “disabled” for this purpose is given at 

42 U.S.C. § 1382c(a)(3)(A): “[A]n individual shall be 
51

Defendants point to the flexibility of the term “quality

of life” as support for their contention that this provision is 

not inconsistent with Medicaid‟s requirements. Plaintiffs 

rightly note that the Pennsylvania statute requires both that 

the items will enhance the beneficiary‟s quality of life and

that they be “related to the treatment of the beneficiary‟s 

disability.” Congress did not include any requirement that 

proceeds from a special needs trust be used solely for 

treatment of the beneficiary‟s disability. Starting from the 

assumption that Congress intended to exempt all legally 

constituted trusts meeting the requirements of 42 U.S.C. 

§ 1396p(d)(4) from counting against Medicaid eligibility, and 

did not intend to permit additional restrictions beyond those it 

specified, the special needs requirement of Section 1414(b)(2) 

transgresses congressional intent. We hold it preempted by 

federal law.

Defendants claim that this requirement, much like the 

“reasonable relationship” requirement, is needed to prevent 

abuse of the trusts and the purchase of luxury items. But 

 

considered to be disabled for purposes of this subchapter 

if he is unable to engage in any substantial gainful 

activity by reason of any medically determinable physical 

or mental impairment which can be expected to result in 

death or which has lasted or can be expected to last for a 

continuous period of not less than twelve months.” 

Additional provisions provide that disability requires 

consideration of all jobs for which an individual might be 

eligible and relax the definition of “disabled” for minors. 

42 U.S.C. § 1382c(a)(3)(B) & (C).
52

while preventing abuse is a laudable goal and one with which 

Congress may agree, that requirement is not reflected in the 

Medicaid statute. And of course States retain their full 

complement of general trust and non-profit laws to combat 

waste, fraud, and abuse. Should a State find these tools 

inadequate, it may petition Congress for statutory changes, or 

it may withdraw from Medicaid entirely.

V.D.4

The age provision of Section 1414(b)(1) attempts to 

restrict pooled special needs trusts to beneficiaries “under the 

age of sixty-five.” 62 Pa. Stat. Ann. § 1414(b)(1). Congress 

did not include an age restriction for pooled special needs 

trusts. On that basis alone, the age restriction in Section 

1414(b)(1) transgresses congressional intent.

Our conclusion is bolstered by a close examination of 

the other trust exemptions (for non-pooled trusts). In 

enacting the trust-counting rules, Congress designated three 

types of exempted trusts in successive statutory paragraphs at 

42 U.S.C. §§ 1396p(d)(4)(A), (B), and (C). Only the first 

exemption, 42 U.S.C. § 1396p(d)(4)(A), is restricted to “an 

individual under age 65[.]” The other two exemptions –

including pooled special needs trusts at 42 U.S.C. 

§ 1396p(d)(4)(C) – contain no similar language. This is 

strong evidence of congressional intent not to impose an age 

restriction on pooled special needs trusts. See Russello v. 

United States, 464 U.S. 16, 23 (1983) (“Where Congress 

includes particular language in one section of a statute but 

omits it in another section of the same Act, it is generally 

presumed that Congress acts intentionally and purposely in 
53

the disparate inclusion or exclusion.”). And, indeed, 

Defendants conceded at oral argument that if we held 42 

U.S.C. § 1396p(d)(4) to be mandatory and binding, the age 

restriction must fall. We agree, and hold the provision 

preempted.

We note here that Defendants were attempting to 

protect elderly beneficiaries of special needs trusts from 

potentially invalidating (at least temporarily) their Medicaid 

eligibility. Through a quirk of the Medicaid statute, elderly 

individuals (65 and over) transferring assets into a pooled 

trust are made ineligible for Medicaid for a period of time. 

See Rosenberg, supra, 10 B.U. Pub. Int. L.J. at 134-35 & 

n.234 (discussing operation of the penalty). Before the 

District Court, Defendants argued that this was a “drafting 

error” by Congress. They may well be correct.25 But this is 

not a mere “scrivener‟s error” that we can correct judicially. 

Congress could have rationally concluded that the benefits of 

making special needs trusts available to elderly individuals 

outweighed the burden of the penalty. As it stands, 

congressional intent – as exemplified by the text of the statute 

– is clear. The Commonwealth‟s goal may be laudable, but if 

Congress perceives a problem, Congress will have to fix it.

 

25 Professor Rosenberg‟s article notes that advocates who

lobbied Congress for the trust exceptions have expressed 

their belief that the lack of an age restriction was a 

“technical drafting error, created when the provision was 

divided into separate sections to accommodate the 

retention of the remainder by the pooled trust.” 

Rosenberg, supra, 10 B.U. Pub. Int. L.J. at 129.
54

V.D.5

The enforcement provision of Section 1414(c) states: 

“If at any time it appears that any of the requirements of 

subsection (b) are not satisfied or the trustee refuses without

good cause to make payments from the trust for the special 

needs of the beneficiary and, provided that the department or 

any other public agency in this Commonwealth has a claim 

against trust property, the department or other public agency 

may petition the court for an order terminating the trust.” 62 

Pa. Stat. Ann. § 1414(c). The District Court held this 

provision preempted, but we believe it is a reasonable 

exercise of the Commonwealth‟s retained authority to 

regulate trusts. We therefore hold that the enforcement 

provision is not preempted by federal law.

The pooled special needs trust is a unique type of trust. 

It is one legal entity, but with many separate beneficiaries, 

each having a claim over a specific “account” within the trust. 

It is entirely reasonable for the Commonwealth to seek a 

method of enforcement tailored to this legal entity. Assume, 

for example, that the non-profit trustee has a dozen accounts 

within the trust. Eleven of those twelve accounts it manages 

well. But for one of those accounts, it breaches the sole 

benefit requirement and makes distributions of account funds 

to relatives and friends of the disabled beneficiary, or – even 

worse – to its own employees. It is the nonprofit that is at 

fault, and the nonprofit that can no longer be trusted to 

manage any of the accounts. It is entirely reasonable for the 

Commonwealth to seek cancellation of the entire trust.
55

Pennsylvania‟s general trust law contains numerous 

provisions for protecting the trust and the interests of its 

beneficiaries. For example, Pennsylvania law imposes duties 

of loyalty, impartiality, prudent administration, and prudent 

investment. See 20 Pa. Cons. Stat. Ann. §§ 7772, 7773, 7774, 

7203. These duties may be enforced by a court when the 

court‟s jurisdiction is “invoked by an interested person or as 

provided by law” and the proceeding may “relate to any 

matter involving the trust‟s administration.” 20 Pa. Cons. 

Stat. Ann. § 7711. The court‟s authority includes the power 

to remedy breaches of trust, remove the trustee, or terminate 

the trust. See 20 Pa. Cons. Stat. Ann. §§ 7781, 7766, 7740.2. 

Should the beneficiary be incapable of protecting his or her 

own interests, the Commonwealth may ask a court to appoint 

a guardian capable of bringing actions on the beneficiary‟s 

behalf. See 20 Pa. Cons. Stat. Ann. § 5511.

Because pooled trusts are required to be managed by 

non-profit organizations, see 42 U.S.C. § 1396p(d)(4)(C)(i), 

Pennsylvania is also free to employ its general laws regarding 

nonprofits. Among other things, these laws regulate the 

formation of non-profit corporations, see 15 Pa. Cons. Stat. 

Ann. §§ 5301-5311; they set forth the powers and duties of 

non-profit corporations, see 15 Pa. Cons. Stat. Ann. §§ 5501-

5589; and they hold directors to a duty of care, see 15 Pa. 

Cons. Stat. Ann. § 5712.

Obviously, Pennsylvania cannot use the enforcement 

provision of Section 1414 to terminate trusts for violating 

other provisions we hold to be preempted. But we see no 

reason why it cannot use this section to enforce its general 

trust laws or provisions like the sole benefit requirement.
56

In briefing and at oral argument, Defendants have 

expressed an intent not to cancel entire trusts because of a 

single account‟s transgressions. We agree that innocent 

beneficiaries should not be punished for the transgressions of 

their trustee or their fellow account holders. We appreciate 

Defendants‟ intent to apply this provision reasonably, and we 

trust that they will do so. Should any individual enforcement 

action infringe on the rights of a trust or a disabled 

beneficiary, those individuals remain free to bring an asapplied challenge to the statute. But we cannot hold the 

enforcement provision categorically preempted, and we 

therefore vacate that portion of the District Court‟s opinion.

V.D.6

The District Court addressed a number of other issues 

in its opinion. It concluded that the surviving portions of 

Section 1414 were severable and could stand on their own. It 

granted Plaintiffs‟ request for class certification, but narrowed 

the class on the basis of its conclusion that no Plaintiff 

adequately represented individuals with trusts created prior to 

2000, when the SSI and Medicaid standards for trust 

treatment were different. It concluded that The Family Trust 

could not adequately represent the class. Finally, it appointed 

class counsel. None of these decisions are challenged by the 

parties. We affirm them in all respects.

VI

We conclude that Plaintiffs‟ case is justiciable and 

they have a private right of action under both Section 1983 

and the Supremacy Clause of the Constitution. On the merits 
57

of Plaintiffs‟ challenge, we conclude that the District Court 

was correct in its determination that Section 1414‟s 50% 

repayment provision, “special needs” provision, expenditure 

provision, and age restriction are all preempted by federal 

law. However, we conclude that the enforcement provision 

of Section 1414 – when used to enforce provisions not 

otherwise preempted by federal law – is a reasonable exercise 

of the Commonwealth‟s retained authority to regulate trusts. 

We will affirm in part, reverse in part, and remand for 

proceedings consistent with this opinion.