Court Opinion

ID: 2968399
Source: CourtListenerOpinion
Date Created: 2015-09-22 05:06:18.250938+00
Date Added: 2024-06-11T13:14:12.681848
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

STATE OF WEST VIRGINIA,                 
                          Petitioner,
                v.
TOMMY G. THOMPSON, Secretary of                 No. 03-1841
the United States Department of
Health and Human Services,
                        Respondent.
                                        
               On Petition for Review of an Order
         of the Secretary of Health and Human Services.
                             (2002-13)

                     Argued: December 1, 2006

                     Decided: January 19, 2007

   Before WILKINS, Chief Judge, WILKINSON, Circuit Judge,
        and Henry F. FLOYD, United States District Judge
     for the District of South Carolina, sitting by designation.

Affirmed by published opinion. Judge Wilkinson wrote the opinion,
in which Chief Judge Wilkins and Judge Floyd joined.

                            COUNSEL

ARGUED: Silas Bent Taylor, Senior Deputy Attorney General,
OFFICE OF THE ATTORNEY GENERAL OF WEST VIRGINIA,
Charleston, West Virginia, for Petitioner. Susan Maxson Lyons,
UNITED STATES DEPARTMENT OF HEALTH AND HUMAN
2               STATE OF WEST VIRGINIA v. THOMPSON
SERVICES, Office of General Counsel, Washington, D.C., for
Respondent. ON BRIEF: Rocco Fucillo, General Counsel, WEST
VIRGINIA DEPARTMENT OF HEALTH AND HUMAN SER-
VICES, Charleston, West Virginia, for Petitioner. Peter D. Keisler,
Assistant Attorney General, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C.; Paula M. Stannard, Acting General
Counsel, Kathleen H. McGuan, Associate General Counsel, Mark D.
Polston, Deputy Associate General Counsel for Litigation, UNITED
STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Washington, D.C., for Respondent.

                             OPINION

WILKINSON, Circuit Judge:

   The State of West Virginia appeals a final decision by the Secre-
tary of Health and Human Services denying approval of an amend-
ment to West Virginia’s Medicaid Plan. Federal law requires that
states participating in Medicaid recoup some costs by recovering
funds from the estates of recipients of Medicaid-funded long-term
care. It also requires that states establish procedures to waive recov-
eries that "would work an undue hardship as determined on the basis
of criteria established by the Secretary." 42 U.S.C. § 1396p(b)(3)
(2000). West Virginia sought to implement these provisions by
exempting more than $50,000 of every homestead from recovery,
through an exemption for home equity up to the statewide mean
appraised value of a home. The Secretary disapproved this exemption
as too broad to constitute an "undue hardship" exception. We affirm
his determination.

                                  I.

                                  A.

   Congress makes federal funds available to the states for medical
services for needy citizens through the Medicaid program. 42 U.S.C.
§ 1396; Wilder v. Va. Hosp. Ass’n, 496 U.S. 498, 502 (1990). "The
cornerstone of Medicaid is financial contribution by both the Federal
                 STATE OF WEST VIRGINIA v. THOMPSON                    3
Government and the participating State." Harris v. McRae, 448 U.S.
297, 308 (1980). States that choose to participate in Medicaid have
flexibility concerning the services they provide and the manner in
which they provide them, but do not possess a blank federal check.
In order to be reimbursed for a portion of the cost of care, they must
maintain "state plans for medical assistance" that conform to require-
ments designed in part to safeguard the federal fisc and ensure that
care meets federal standards. 42 U.S.C. § 1396a(a); see also Wilder,
496 U.S. at 502.

   While Medicaid seeks to assist those who could not readily afford
health care, individuals may sometimes receive benefits in spite of
substantial assets. Medicaid generally disregards an individual’s home
equity interest in assessing long-term care eligibility unless the inter-
est exceeds $500,000. See Pub. L. No. 109-171, § 6014, 120 Stat. 4,
64-65 (codified at 42 U.S.C. 1396p(f)(1)); West Virginia v. Dep’t of
Health & Human Servs. (West Virginia I), 289 F.3d 281, 284 (4th Cir.
2002). Until passage of the Deficit Reduction Act of 2005, even home
equity interests of more than $500,000 could be excluded from eligi-
bility calculations. West Virginia I, 289 F.3d at 284. "[T]he effect of
this exclusion is to allow someone with a potentially valuable asset
to receive benefits along with those who have greater financial need."
Id. (internal quotations omitted).

   Faced with rising health-care costs, Congress took steps to address
this "anomaly" in 1993 by requiring that states attempt to recover
costs of care after certain Medicaid recipients’ deaths. Id.; see also
Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66,
§ 13612, 107 Stat. 312, 627-28 (codified at 42 U.S.C.
§ 1396p(b)(1)(B)). Federal law now requires that after the death of a
person who began receiving Medicaid assistance at age 55 or older,
"the State shall seek adjustment or recovery from the individual’s
estate" for "nursing facility services, home and community-based ser-
vices, and related hospital and prescription drug services." 42 U.S.C.
§ 1396p(b)(1)(B)(i). Prior to 1993, states had been allowed to choose
whether or not to attempt to recover costs of care from Medicaid ben-
eficiaries’ estates, see West Virginia I, 289 F.3d at 284, and they are
still permitted to engage in or abstain from recoveries for other "items
or services under the State plan," 42 U.S.C. § 1396p(b)(1)(B)(ii).
Potential recipients of Medicaid-funded long-term care are notified of
4                STATE OF WEST VIRGINIA v. THOMPSON
the estate recovery requirement before they accept benefits. West Vir-
ginia I, 289 F.3d at 285.

   While federal law requires estate recoveries in some circumstances,
it prohibits them in others. Estate recovery is not permitted until the
death of a surviving spouse, or when the decedent has a surviving
child under the age of 21, or when the decedent has a surviving child
who is blind or disabled as defined under the statute. 42 U.S.C.
§ 1396p(b)(2). In addition, federal law requires "undue hardship"
waivers by providing, "The State agency shall establish procedures
(in accordance with standards specified by the Secretary) under which
the agency shall waive the application of this subsection [except in
limited circumstances not relevant here] if such application would
work an undue hardship as determined on the basis of criteria estab-
lished by the Secretary." Id. § 1396p(b)(3).

   "Undue hardship" is not defined in the Medicaid statute. A House
Budget Committee Report commented upon the term, however, stat-
ing that in establishing criteria for "undue hardship" the Secretary of
Health and Human Services "should provide for special consideration
of cases in which the estate subject to recovery is (1) the sole income-
producing asset of survivors (where such income is limited), such as
a family farm or other family business, or (2) a homestead of modest
value or (3) other compelling circumstances." H.R. Rep. No. 103-111,
at 209 (1993), as reprinted in 1993 U.S.C.C.A.N. 378, 536.

   The Secretary has the responsibility of determining whether pro-
posed state plans and plan amendments meet federal Medicaid
requirements. Congress has directed that the Secretary "shall approve"
any plan or amendment that complies with federal law. 42 U.S.C.
§ 1396a(b). The Secretary in turn has delegated approval authority to
the Administrator of the Centers for Medicare & Medicaid Services
("CMS"), a component of the Secretary’s department formerly known
as the Health Care Financing Administration ("HCFA"). 42 C.F.R.
§ 430.15(b) (2005). The Administrator consults with the Secretary
before making a final determination of disapproval. Id.
§ 430.15(c)(2).

   CMS promulgated guidance concerning undue hardship waivers in
the State Medicaid Manual. The manual directs states to "[e]stablish
                STATE OF WEST VIRGINIA v. THOMPSON                   5
procedures and standards for waiving estate recoveries" in cases of
undue hardship and to describe the resulting policies in their state
plan documents. The manual indicates that undue hardship provisions
need not be uniform, stating, "[y]ou have flexibility in implementing
an undue hardship provision." It points to the House Report for guid-
ance on the "undue hardship" term and reprints the report’s examples,
but adds that legislative history does not constitute a legally binding
definition. The agency "suggests that you consider the examples listed
above in developing your hardship waiver rules," the manual states,
"but does not require you to incorporate these examples once you
have considered whether they are appropriate for determining the
existence of an undue hardship."

   CMS amended the State Medicaid Manual to include additional
guidance in 2001 — the same year that the Secretary abandoned a
proposed rulemaking concerning the estate recovery and undue hard-
ship provisions that had been listed on his agenda in the Federal Reg-
ister since 1996. The new State Medicaid Manual provision stated,
"In defining a homestead of modest value, the methodology the State
uses to set a threshold level for the market value of a ‘homestead of
modest value’ cannot be set so high as to negate the intent of the
estate recovery program." It instructs participating states to
"[d]escribe your methodology for determining a home of modest
value in your State plan."

   The new manual provision includes an example of a permissible
waiver, taken from a New Mexico state plan amendment that CMS
approved. It states that "a homestead of ‘modest value’ can be defined
as fifty percent (50%) or less of the average price of homes in the
county where the homestead is located, as of the date of the benefi-
ciary’s death." The Secretary has indicated that CMS has since
approved other implementations of undue hardship waivers as well.

                                  B.

  West Virginia began efforts to exempt estates from recovery in 2001.1
  1
  West Virginia had previously challenged estate recovery in general.
The state did not engage in such recoveries when they were optional
6                 STATE OF WEST VIRGINIA v. THOMPSON
On March 8, it proposed exempting $50,000 of homestead property
from all estate recoveries on the grounds that it would not be cost
effective to pursue recoveries of such sums. (The State Medicaid
Manual provides that states need not engage in estate recovery when
doing so would not be cost effective.) After CMS requested additional
information such as the cost of recovery, the state’s methodology in
determining cost effectiveness, and the financial impact of the pro-
posed exemption, West Virginia changed its proposal and its justifica-
tion. On September 13, 2001, the state proposed exempting from each
homestead an amount equal to the statewide arithmetic mean
appraised value of a West Virginia home, calculated annually by the
West Virginia Department of Taxation and Revenue. This would have
been $50,735 at the time of CMS’ consideration. (This appraised
mean value was approximately half of the mean selling price in the
state, because West Virginia homes are appraised at well below mar-
ket value.)

   CMS Administrator Thomas A. Scully disapproved the proposed
amendment as overbroad. West Virginia sought administrative review
before a CMS hearing officer, who recommended that the disapproval
be affirmed. She found that "the State’s methodology, by not control-
ling for variation in home prices within the State, has the effect of
exempting a high percentage of homes in many of the states’ counties
and therefore, will negate the intent of the estate recovery program."
Administrator Scully adopted the hearing officer’s proposed decision
in May 2003. Because this constituted a final agency action, we have
jurisdiction to review West Virginia’s appeal under 42 U.S.C. § 1316.

under the Medicaid statute, and when they became mandatory, the state
continued to abstain until the Department of Health and Human Services
threatened "compliance proceedings" that "could result in West Virginia
losing all or part of its Federal financial participation in the State’s Med-
icaid Program." West Virginia I, 289 F.3d at 285. West Virginia
responded by authorizing estate recoveries but bringing suit challenging
the federal requirement as unduly coercive in violation of the Tenth
Amendment. Id. at 286-87. We held that the estate recovery provision
was not on its face so coercive as to raise a potential Tenth Amendment
problem. Id. at 297.
                 STATE OF WEST VIRGINIA v. THOMPSON                      7
                                    II.

   The Administrative Procedure Act provides the standard of review,
stating that a court shall "set aside agency action, findings, and con-
clusions" when they are found to be "arbitrary, capricious, an abuse
of discretion, or otherwise not in accordance with law." 5 U.S.C.
§ 706(2) (2000). A court shall also set aside agency actions "in excess
of statutory jurisdiction, authority, or limitations, or short of statutory
right" as well as actions "without observance of procedure required
by law." Id. § 706(2)(C)-(D).

                                   III.

   West Virginia first argues that the Secretary exceeded his authority
or failed to follow required procedures when he rejected the state’s
proposed hardship waiver without first establishing regulations to
define undue hardship. See id. § 706(2); Citizens to Preserve Overton
Park, Inc. v. Volpe, 401 U.S. 402, 415, 417 (1971). West Virginia
concedes that the Secretary has been given authority to establish
criteria defining the scope of undue hardship waivers and to disap-
prove state plans that do not comply with these criteria under 42
U.S.C. § 1396p(b)(3), but it argues that such criteria may be estab-
lished only through notice-and-comment rulemaking. Since neither
the Secretary nor his delegate, the CMS Administrator, has promul-
gated hardship criteria through rulemaking, West Virginia argues that
the disapproval of the hardship waiver in its estate recovery program
exceeded the Secretary’s authority and did not comport with proce-
dures prescribed by federal law. See 42 U.S.C. § 1396a(b) (providing
that Secretary "shall approve any plan" that fulfills conditions pre-
scribed by law).

   We reject this argument. West Virginia is of course correct that the
Secretary cannot disapprove state plan amendments for failing to
comply with a requirement that is without any statutory basis. But the
disapproval here was not without warrant: 42 U.S.C. § 1396p(b)(3)
grants the Secretary authority to establish criteria governing hardship
waivers, and West Virginia’s claim that these criteria can be estab-
lished only through notice-and-comment regulation is unfounded.

  Agencies are ordinarily permitted to choose in adjudication among
permissible meanings of statutes they are charged with administering,
8                STATE OF WEST VIRGINIA v. THOMPSON
without spelling out their interpretations beforehand through notice-
and-comment rulemaking. Sec. & Exch. Comm’n v. Chenery Corp.
(Chenery II), 332 U.S. 194, 202-03 (1947); Nat’l Labor Relations Bd.
v. Bell Aerospace Co., 416 U.S. 267, 292-94 (1974); Onslow County
v. U.S. Dep’t of Labor, 774 F.2d 607, 610 (4th Cir. 1985); see also
Alaska Dep’t of Health & Soc. Servs. v. Ctrs. for Medicare & Medic-
aid Servs., 424 F.3d 931, 939 (9th Cir. 2005) (recognizing this author-
ity in context of CMS Administrator’s disapproval of Medicaid state
plan amendment). A contrary rule would "stultify the administrative
process," ignoring the benefits of adjudicatory development that have
led courts to recognize "a very definite place for the case-by-case evo-
lution of statutory standards":

    [P]roblems may arise in a case which the administrative
    agency could not reasonably foresee, problems which must
    be solved despite the absence of a relevant general rule. Or
    the agency may not have had sufficient experience with a
    particular problem to warrant rigidifying its tentative judg-
    ment into a hard and fast rule. Or the problem may be so
    specialized and varying in nature as to be impossible of cap-
    ture within the boundaries of a general rule. In those situa-
    tions, the agency must retain power to deal with the
    problems on a case-to-case basis if the administrative pro-
    cess is to be effective.

Chenery II, 332 U.S. at 202-03. The choice between rulemaking and
adjudication "lies primarily in the informed discretion of the adminis-
trative agency." Id. at 203; see also Bell Aerospace, 416 U.S. at 294.
The ability to proceed through adjudication may ultimately serve
states’ interests in the context of cooperative federalism programs like
Medicaid by enabling federal authorities to take into account the cir-
cumstances of each state, rather than adopting a uniform rule better
suited to some regions than to others.

   West Virginia argues, however, that the undue hardship provision
was intended to impose special procedural requirements upon the
Secretary. We agree that Congress may require the Secretary to go
through notice-and-comment proceedings, but West Virginia’s argu-
ment that this statute imposes such an obligation inverts the provi-
sion’s plain meaning. An agency’s authority to adopt one of several
                 STATE OF WEST VIRGINIA v. THOMPSON                     9
meanings of a statutory provision is often merely an implication of
Congress’ use of an ambiguous term, but here the authority is con-
veyed explicitly, by statutory language that provides, "The State
agency shall establish procedures (in accordance with standards speci-
fied by the Secretary) under which the agency shall waive the applica-
tion of this subsection . . . if such application would work an undue
hardship as determined on the basis of criteria established by the Sec-
retary." 42 U.S.C. § 1396p(b)(3). This explicit delegation of interpre-
tive authority militates in favor of allowing the Secretary more than
the usual interpretive leeway, not less. And the implied directive to
the Secretary to establish criteria for hardship waivers conveys no hint
of a command to act through particular mechanisms.

   Indeed, when Congress has wanted the Secretary to go through
notice-and-comment proceedings, it has said so. For example, the
Social Security Act requires the Secretary to "establish a mechanism
to recognize the costs of new medical services and technologies" and
states that "[s]uch mechanism shall be established after notice and
opportunity for public comment." Id. § 1395ww(d)(5)(K)(I). It also
states that "[t]he Secretary shall establish by regulation a process for
the enrollment of providers of services and suppliers under this sub-
chapter," and that "[t]he Secretary shall establish by regulation proce-
dures under which there are deadlines for actions on applications for
enrollment . . ." Id. § 1395cc(j)(1)(A)-(B) (Supp. 2003) (emphasis
added). It further provides that the Secretary "shall establish by regu-
lation procedures" governing the basis and amount of payment for
certain clinical diagnostic laboratory tests. Id. § 1395l(h)(8)(A) (Supp.
2003) (emphasis added). Congress has even explicitly directed notice-
and-comment in conjunction with the phrase "criteria established by
the Secretary," stating that "a medical service or technology will be
considered a ‘new medical service or technology’ if the service or
technology meets criteria established by the Secretary after notice
and an opportunity for public comment." Id. § 1395ww(d)(5)(K)(vi)
(emphasis added); see also id. § 12147(b)(1) (2000) (defining as dis-
crimination in Americans with Disabilities Act a public entity’s fail-
ure in public transportation "to make key stations (as determined
under criteria established by the Secretary by regulation)" accessible
to individuals with disabilities) (emphasis added). In contrast, the stat-
utory provision concerning undue hardship waivers contains no com-
parable regulatory directive.
10               STATE OF WEST VIRGINIA v. THOMPSON
   An analysis of the Medicaid statute as a whole only bolsters our
conclusion that the Secretary and his delegates have been granted at
least the usual leeway to develop criteria through adjudication. The
Medicaid statute provides in mandatory terms that states "shall estab-
lish procedures" under which they will waive application of the estate
recovery rules "if such application would work an undue hardship as
determined on the basis of criteria established by the Secretary." Id.
§ 1396p(b)(3). Under West Virginia’s reading, this provision would
command states to do the impossible before the Secretary issued regu-
lations, requiring them to establish hardship waivers while permitting
them to do so only in accordance with yet-to-be-issued criteria. We
think, however, the most logical inference from the difficulties cre-
ated by West Virginia’s reading is to reinforce the meaning to which
all other indicators point: the "criteria" required by the statute need
not be established through a time-consuming notice-and-comment
process that the statute nowhere mentions.2

                                   IV.

                                   A.

   We turn now to whether the Secretary’s rejection of West Virgin-
ia’s proposed amendment was "arbitrary, capricious, an abuse of dis-
cretion, or otherwise not in accordance with law." 5 U.S.C.
§ 706(2)(A); Overton Park, 401 U.S. at 416. "To make this finding
the court must consider whether the decision was based on a consider-
  2
    Our conclusion that the statute does not require notice-and-comment
rulemaking is fatal to West Virginia’s claim that the State Medicaid
Manual provision concerning hardship waivers was a substantive rule in
interpretative clothing. West Virginia’s attack on the manual provision
collapses into its argument that the Secretary was required to act through
notice-and-comment rulemaking, relying upon the premise that "in the
absence of the rule there would not be an adequate legislative basis for
enforcement action or other agency action." Am. Mining Congress v.
Mine Safety & Health Admin., 995 F.2d 1106, 1112 (D.C. Cir. 1993). In
all events, the manual provision goes out of its way to emphasize that it
does not bind the states to any mandatory requirements beyond those in
the Medicaid statute but merely provides guidance as to the agency’s
construction of the law.
                STATE OF WEST VIRGINIA v. THOMPSON                  11
ation of the relevant factors and whether there has been a clear error
of judgment." Overton Park, 401 U.S. at 416. The scope of this
review is "narrow," and we must not substitute our judgment for that
of the agency. Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983). We ask, however, whether "the
agency has relied on factors which Congress has not intended it to
consider, entirely failed to consider an important aspect of the prob-
lem, offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could not be
ascribed to a difference in view or the product of agency expertise."
Id.

   Insofar as West Virginia disputes the Secretary’s construction of
the Medicaid statute that he administers, we also view the challenge
through the lens of Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984). The Medicaid statute is a proto-
typical "complex and highly technical regulatory program" benefitting
from expert administration, which makes deference particularly war-
ranted. Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 512 (1994).

   The administrative process through which state plan amendments
are considered also counsels deference. CMS regional staff review
state plans and proposed amendments, discuss concerns with the
Medicaid agency, and consult with central office staff on questions of
federal policy. 42 C.F.R. § 430.14 (2005). The administrative process
for plan amendments gives a state "opportunities to petition for recon-
sideration, brief its arguments, be heard at a formal hearing, receive
reasoned decisions at multiple levels of review, and submit exceptions
to those decisions." Alaska Dep’t of Health & Soc. Servs., 424 F.3d
at 939; see also 42 C.F.R. § 430.18 (2005). Recognizing the mecha-
nisms for evaluation of amendments at the agency level, "[w]e take
care not lightly to disrupt the informed judgments of those who must
labor daily in the minefield of often arcane policy, especially given
the substantive complexities of the Medicaid statute." Cmty. Health
Ctr. v. Wilson-Coker, 311 F.3d 132, 138 (2d Cir. 2002).

  Courts, therefore, have rightly granted Chevron deference to
agency interpretations of statutes in the context of state plan amend-
ment disapprovals. Alaska Dep’t of Health & Soc. Servs., 424 F.3d at
939 (affording Chevron deference in context of agency disapproval of
12               STATE OF WEST VIRGINIA v. THOMPSON
Medicaid state plan amendment); Texas v. U.S. Dep’t of Health &
Human Servs., 61 F.3d 438, 440 (5th Cir. 1995) (same); Georgia v.
Shalala, 8 F.3d 1565, 1566-68 (11th Cir. 1993) (same); New York v.
Sullivan, 894 F.2d 20, 24 (2d Cir. 1990) (same). We find ample rea-
son to defer in the context of this particular provision of the Medicaid
statute, because the undue hardship language does not merely dele-
gate implicitly through the use of ambiguous terms, but rather explic-
itly calls for administrative action to narrow its meaning.

                                   B.

   The Secretary did not act arbitrarily or capriciously, or interpret the
Medicaid statute in an unreasonable fashion, when he disapproved
West Virginia’s proposed "undue hardship" waiver. The agency con-
sidered a variety of evidence concerning West Virginia’s plan to
exempt from estate recovery any homestead property up to the state-
wide mean appraised value of a home — which was more than
$50,000 at the time of the disapproval. The agency requested data on
the cost that West Virginia incurred for estate recoveries, the market
value of homes in West Virginia, and the average value of estates to
which exemptions would apply.

   The data before CMS established that the impact of West Virgin-
ia’s proposed exemption would vary significantly from county to
county. About 3.9 percent of homes in Jefferson County were valued
below $50,000, on one end of the spectrum, while more than 83 per-
cent of homes in McDowell County were valued below $50,000 on
the other end of the spectrum. West Virginia argued this disparity
reflected the relative wealth of its counties, and the Secretary does not
dispute that, for example, McDowell County is significantly poorer
than Jefferson County. But the disparate impact may also indicate, as
the Secretary emphasizes, that a single figure cannot capture the
meaning of a homestead of "modest value" throughout West Virginia.
Real-estate markets may vary dramatically within any given state. In
some markets a great deal less may buy a great deal more home than
in others. The Secretary was not statutorily precluded from taking
such variations into account, or from requesting that West Virginia set
a threshold for modest value using more refined data, as other states
have done.
                 STATE OF WEST VIRGINIA v. THOMPSON                   13
   Most critically, the Secretary’s disapproval emphasized the amend-
ment’s significant overbreadth. We find nothing arbitrary or capri-
cious about the Secretary’s conclusion that West Virginia’s waiver
was so broad that it would serve not as an exception to estate recovery
for hardship cases but as a means of unraveling the estate recovery
mandate itself. What has been represented as a hardship exemption
for "homesteads of modest value" would apply to every homestead,
regardless of value, and without any means-testing of the recipients.
It was not a clear error of judgment for the Secretary to conclude that
a provision this broad sweeps beyond cases of "undue hardship" and
"sets threshold levels for the market value of a ‘homestead of modest
value’ so as to negate the intent of the estate recovery program" that
Congress enacted.

   Indeed, West Virginia does not direct us to data that the Secretary
ought to have considered, data upon which the Secretary impermiss-
ibly relied, or considerations that the Secretary erroneously neglected.
The state’s argument instead amounts to a claim that the "undue hard-
ship" provision itself required the Secretary to approve its proposed
amendment. The House Budget Committee Report stating that Con-
gress intended the Secretary to establish criteria allowing waivers for
homesteads of "modest value" is the strongest basis for such a claim,
but the report cannot bear the weight that the state’s argument places
upon it. Given that homesteads of modest value are not mentioned in
the statute, we are hard-pressed to conclude that Congress intended
that the Secretary must approve a hardship waiver applicable to all
homesteads, even those of enormous value. See Chevron, 467 U.S. at
842-43. The unambiguous command of the "undue hardship" provi-
sion is in fact one of deference to those charged with administering
the statute: It authorizes states to establish procedures to waive estate
recovery only "if such application would work an undue hardship as
determined on the basis of criteria established by the Secretary." 42
U.S.C. § 1396p(b)(3) (emphasis added).

   Further, the Secretary’s construction of undue hardship "represents
a reasonable accommodation of conflicting policies that were com-
mitted to the agency’s care by statute." Chevron, 467 U.S. at 845
(internal quotations omitted). Simply put, while the statute and its
accompanying history provide support for exempting homesteads of
modest value, they do not require that the Secretary approve hardship
14               STATE OF WEST VIRGINIA v. THOMPSON
exceptions for homesteads of any value. Federal administrators may
be empowered to approve a broad waiver as an exercise of the stat-
ute’s delegated authority, but the interpretation of undue hardship as
excluding West Virginia’s proposal was certainly a reasonable con-
struction of statutory terms over which Congress had delegated inter-
pretive authority.

                                   V.

   West Virginia has long argued against estate recovery and contin-
ues to do so here. It argues that estate recoveries can lead needy citi-
zens to turn down necessary medical care out of fear that they will
lose homes in which they take enormous pride. We do not for a
moment discount these concerns, nor do we discount the federal gov-
ernment’s desire to recoup some small portion of the Medicaid pro-
gram’s staggering costs. Congress has created a place to balance such
interests in its statutory scheme, however, and that place is not pri-
marily in the federal courts. The hardship waiver provision entrusts
the Secretary with developing criteria that still allow some latitude
and flexibility in estate recovery plans from state to state. The latitude
is limited, however, by Congress’ intention to have an estate recovery
program in more than name only. We find no basis to conclude that
the Secretary or his delegates exceeded their authority, failed to fol-
low procedures required by law, or acted arbitrarily and capriciously
in disapproving West Virginia’s hardship waiver amendment. Since
"the Administrator’s interpretation represents a reasonable accommo-
dation of manifestly competing interests and is entitled to deference,"
id. at 865, we will not usurp the power that Congress provided the
Secretary to make the difficult choices involved in this case.

                                                             AFFIRMED