Court Opinion

ID: 2968681
Source: CourtListenerOpinion
Date Created: 2015-09-22 07:47:01.384358+00
Date Added: 2024-06-11T11:43:19.832386
License: Public Domain

Certiorari granted, September 25, 2012
            Affirmed by Supreme Court, March 20, 2013

                        PUBLISHED

UNITED STATES COURT OF APPEALS
             FOR THE FOURTH CIRCUIT

E.M.A., a minor, by and through        
her Guardian ad Litem, William
W. Plyler; WILLIAM EARL
ARMSTRONG; SANDRA ARMSTRONG,
              Plaintiffs-Appellants,
                 v.                           No. 10-1865
LANIER M. CANSLER, in his official
capacity as Secretary of the North
Carolina Department of Health
and Human Services,
               Defendant-Appellee.
                                       
       Appeal from the United States District Court
 for the Western District of North Carolina, at Statesville.
          Richard L. Voorhees, District Judge.
               (5:07-cv-00037-RLV-DCK)

                 Argued: October 26, 2011

                  Decided: March 22, 2012

  Before AGEE, DAVIS, and KEENAN, Circuit Judges.

Vacated and remanded by published opinion. Judge Davis
wrote the opinion, in which Judge Keenan joined. Judge Agee
wrote an opinion concurring in part, dissenting in part, and
concurring in the judgment.
2                     E.M.A. v. CANSLER
                         COUNSEL

ARGUED: William Bernard Bystrynski, KIRBY & HOLT,
LLP, Raleigh, North Carolina, for Appellants. Belinda Anne
Smith, NORTH CAROLINA DEPARTMENT OF JUSTICE,
Raleigh, North Carolina, for Appellee. ON BRIEF: C. Mark
Holt, KIRBY & HOLT, LLP, Raleigh, North Carolina; Jef-
frey T. Mackie, SIGMON, CLARK, MACKIE, HUTTON,
HANVEY & FERRELL, PA, Hickory, North Carolina, for
Appellants. Roy Cooper, North Carolina Attorney General,
Raleigh, North Carolina, for Appellee.

                         OPINION

DAVIS, Circuit Judge:

   Under federal law, states participating in the Medicaid pro-
gram are obligated (with some exceptions) to seek reimburse-
ment from third-party tortfeasors for health care expenditures
made on behalf of Medicaid beneficiaries who are tort vic-
tims. At the same time, however, states are prohibited (with
some exceptions) from seeking reimbursement "from the per-
sonal property of" Medicaid beneficiaries themselves for
health care expenditures made on behalf of those beneficia-
ries. But what if the injured Medicaid beneficiary obtains a
judgment against (or enters into a settlement agreement with)
the tortfeasor? Under such circumstances, what constraints are
imposed as to how the state may satisfy its mandatory claim
for reimbursement? In Arkansas Department of Health &
Human Services v. Ahlborn, 547 U.S. 268 (2006), the
Supreme Court provided considerable guidance in resolving
this tension in the Medicaid law. The instant appeal requires
us to apply the teachings of Ahlborn to the Medicaid program
as it is administered in North Carolina.

   The minor appellant, E.M.A., sustained serious injuries at
birth due to the negligence of the medical professionals who
                       E.M.A. v. CANSLER                        3
attended to her delivery. As a result of E.M.A.’s injuries, the
North Carolina Department of Health and Human Services
("DHHS"), through the state Medicaid program, paid more
than $1.9 million in medical and health care expenses on her
behalf. Meanwhile, E.M.A., through her guardian ad litem,
and her parents, Sandra and William Earl Armstrong, individ-
ually (hereafter "Appellants"), instituted a medical malprac-
tice action in state court. In due course, they settled the action
for a lump sum of approximately $2.8 million (a sum in
excess of the total Medicaid expenditures of approximately
$1.9 million but well below the full value of all the tort
claims). The settlement agreement did not allocate separate
amounts for past medical expenses and other damages.

   DHHS subsequently asserted a statutory lien on the settle-
ment proceeds pursuant to N.C. Gen. Stat. §§ 108A-57 and -
59 (referred to herein as "the North Carolina third-party liabil-
ity statutes"), which provide that North Carolina has a subro-
gation right to, and may assert a lien upon, the lesser of its
actual medical expenditures or one-third of the Medicaid
recipient’s total recovery. Thus, under the circumstances
described, where DHHS’s actual medical expenditures are
greater than one-third of the settlement funds, the North Caro-
lina third-party liability statutes effect an unrebuttable pre-
sumption that the state is entitled to one-third of the total
settlement proceeds recovered by E.M.A. and her parents.
This amount, $933,333.33 (one-third of the $2.8 million
lump-sum settlement), has been paid into the registry of the
state court, where the funds have remained during the pen-
dency of this action. The parties before us do not dispute the
state’s entitlement to some reimbursement from the lump-sum
settlement, but they vigorously dispute the proper allocation
of the portion of the settlement proceeds held in trust by the
state court.

  Appellants brought this action in federal district court
against Lanier M. Cansler, in his official capacity as Secretary
of DHHS, seeking declaratory and injunctive relief pursuant
4                      E.M.A. v. CANSLER
to 42 U.S.C. § 1983. They sought to forestall payment of the
amount claimed by DHHS on the basis of the provision of the
federal Medicaid law known as the "anti-lien provision," 42
U.S.C. § 1396p. On cross-motions for summary judgment, the
district court, relying in significant part on the reasoning of a
majority opinion in a prior case by a divided Supreme Court
of North Carolina which distinguished Ahlborn while sustain-
ing the state statutory regime, granted summary judgment in
favor of Appellee, Secretary Cansler. Appellants filed this
timely appeal.

   For the reasons set forth within, we disagree, respectfully,
with the analysis of the Supreme Court of North Carolina, as
adopted by the district court. Rather, in agreement with one
of our sister circuit courts analyzing an analogous state law,
we are persuaded that the unrebuttable presumption inherent
in the one-third cap on the state’s recovery imposed by the
North Carolina third-party liability statutes is in fatal conflict
with federal law. Accordingly, we vacate the judgment in
favor of the Secretary and remand this action for further pro-
ceedings consistent with this opinion.

                                I

                                A

   E.M.A. was born on February 25, 2000 with injuries that
necessitated substantial medical treatment. As a result of the
injuries she suffered at birth, E.M.A. is legally deaf and blind,
and she is unable to sit, walk, crawl, or talk. Additionally,
E.M.A. suffers from mental retardation and a seizure disorder.
She requires between 12 and 18 hours of skilled nursing care
per day. Sandra Armstrong, E.M.A.’s mother, applied for
Medicaid benefits on behalf of E.M.A. on April 26, 2000. The
North Carolina Medicaid program is administered by the
Division of Medical Assistance ("DMA") of DHHS pursuant
to N.C. Gen. Stat. § 108A-54 and 42 U.S.C. §§ 1396-1396v.
                       E.M.A. v. CANSLER                       5
In the application for Medicaid coverage for E.M.A., Sandra
Armstrong agreed

    to give back to the State any and all money that is
    received by me or anyone listed on this application
    from any insurance company for payment of medical
    and/or hospital bills for which the Medical Assis-
    tance program has or will make payment. In addi-
    tion, I agree that all medical payments or medical
    support paid or owed due to a court order for me or
    anyone listed on this application must be sent to the
    State to repay past or current medical expenses paid
    by the State. This includes insurance settlements
    resulting from an accident. I further agree to notify
    the county department of social services if I or any-
    one listed on this application is involved in any acci-
    dent.

J.A. 82, ¶ 2.

   On February 21, 2003, E.M.A. and her parents filed a law-
suit in Catawba County Superior Court alleging claims for
medical malpractice. The malpractice suit sought damages on
behalf of E.M.A. for her physical and developmental injuries,
lost wages, pain and suffering, and future medical expenses
starting at her majority. Sandra and William Earl Armstrong
sought damages for past medical expenses for E.M.A.’s care
and treatment, medical expenses through E.M.A.’s eighteenth
birthday, and damages for their own emotional distress.

   After three years of litigation, the parties settled the medi-
cal malpractice case. Prior to consummating the settlement,
Appellants were aware that DHHS had paid more than $1.9
million for the costs of E.M.A.’s medical care. Appellants
contend that they gave notice of the settlement negotiations
and of the mediation process to DHHS pursuant to Rule 4B
of the North Carolina Rules for Mediated Settlement Confer-
6                         E.M.A. v. CANSLER
ence, but no representative of DHHS ever participated in or
attended the settlement discussions.1

   On November 13, 2006, Judge Timothy Kincaid held a
hearing in the Catawba County Superior Court to review the
fairness and appropriateness of the settlement. Appellants
allege they served DHHS with notice of the hearing, but no
representative of DHHS appeared. The court approved the
settlement, finding that it was fair and just, in the best interest
of E.M.A., and in all respects reasonable and proper. The
court likewise found the settlement to be fair in all respects
as to Sandra and William Earl Armstrong, and that their indi-
vidual claims had been resolved by the settlement, "including,
but not limited to, claims for severe emotional distress and
mental anguish and liability for past, present and future medi-
cal and life care expenses." J.A. 134. Judge Kincaid noted that
the plaintiffs had alleged that "[E.M.A.] suffered severe and
permanent injuries and that both parents . . . have incurred lia-
bility for past, present and future medical and life care
expenses for treatment of [E.M.A.]," J.A. 133, and concluded
that the sums set out in the Settlement Schedule were fair and
just compensation for their respective claims, J.A. 135.

   Notably, neither the parties to the settlement nor the court
allocated the settlement funds among the distinct claims or
categories of damages. To be sure, however, Judge Kincaid
recognized that DHHS had asserted a lien against the pro-
ceeds of the settlement, but for reasons not addressed by the
parties before us, he apparently was not asked and/or declined
to adjudicate the proper amount of the DHHS lien. Rather, he
found simply that "the amount of that lien needs to be deter-
mined in light of the U.S. Supreme Court decision in [Ahl-
born]," J.A. 136, which had been decided approximately six
months earlier during the pendency of the state medical mal-
practice litigation. Accordingly, the court ordered that the
    1
    It is undisputed that DHHS had a right to intervene in the malpractice
action but elected not to do so.
                         E.M.A. v. CANSLER                      7
maximum potential lien amount, as set out in the Settlement
Schedule and as provided in N.C. Gen. Stat. § 108A-57(a),
should be paid into an interest bearing account in the Catawba
County Clerk of Court’s Office until such time as the actual
amount of the DHHS lien was conclusively determined.
Although the Settlement Schedule was filed under seal and is
not part of the appellate record in this case, it is undisputed
that the amount held in the Catawba County Clerk of Court’s
Office is $933,333.33, which represents one-third of the total
lump-sum settlement paid to E.M.A. and her parents in reso-
lution of the medical malpractice action.

                                  B

   On March 23, 2007, E.M.A. filed this suit in the United
States District Court for the Western District of North Caro-
lina under 42 U.S.C. § 1983 seeking declaratory and injunc-
tive relief. She alleged a deprivation of her rights as secured
by 42 U.S.C. § 1396p (the federal Medicaid anti-lien provi-
sion, discussed infra) and the Equal Protection Clause of the
Fourteenth Amendment to the United States Constitution.
U.S. Const. amend. XIV, § 1, cl. 2. In her complaint, E.M.A.
requested a declaratory judgment finding that: (1) DHHS does
not have a lien on the proceeds paid on her behalf in settle-
ment of the medical malpractice action or, in the alternative,
determining the amount of the lien; (2) the North Carolina
third-party liability statutes are unconstitutional under the fed-
eral Supremacy Clause, U.S. Const. art. VI, cl. 2, to the extent
the statutes allow DHHS to assert a lien on settlement funds
paid in lieu of damages for claims other than medical
expenses; and (3) DHHS be enjoined from enforcing the
North Carolina third-party liability statutes in a manner that
violates 42 U.S.C. §§ 1396-1396v, Ahlborn, and the Equal
Protection Clause.2
  2
   Appellants have abandoned their equal protection claim.
8                      E.M.A. v. CANSLER
   The Secretary filed certain preliminary motions, which the
district court granted in part and denied in part, without preju-
dice. E.M.A.’s parents were joined as plaintiffs by consent.
Thereafter, the district court stayed the action pending final
review in the North Carolina Supreme Court of Andrews v.
Haygood, 669 S.E.2d 310 (N.C. 2008), cert. denied sub nom.
Brown v. North Carolina Department of Health and Human
Services, 129 S. Ct. 2792 (2009), a state-court appeal chal-
lenging the enforceability of the North Carolina third-party
liability statutes under circumstances materially indistinguish-
able from the circumstances present in this case.

   After the North Carolina Supreme Court sustained the
North Carolina third-party liability statutes in Andrews, 669
S.E.2d 310, the parties filed cross-motions for summary judg-
ment. The district court concluded that, based upon the North
Carolina Supreme Court’s reasoning in Andrews and its own
independent analysis, the North Carolina third-party liability
statutes are consistent with federal Medicaid law as inter-
preted in Ahlborn. Having reached this conclusion of law and
finding no genuine dispute of material fact remaining, the dis-
trict court denied E.M.A.’s motion for summary judgment,
granted the Secretary’s motion for summary judgment, and
dismissed E.M.A.’s case with prejudice, thereby entitling the
Secretary to $933,333.33, the full amount held in trust by the
state court. E.M.A., through her guardian ad litem, together
with her parents, timely appealed. We have jurisdiction pursu-
ant to 28 U.S.C. § 1291.

                                II

   The outcome of the instant appeal turns upon our applica-
tion of federal Medicaid law, as interpreted by the Supreme
Court in Ahlborn, to North Carolina’s statutory scheme for
third-party liability, in light of the particular undisputed facts
of this case involving a lump-sum personal injury settlement
recovered by a minor child. We review de novo the district
court’s grant of summary judgment. Purdham v. Fairfax Cnty.
                       E.M.A. v. CANSLER                        9
Sch. Bd., 637 F.3d 421, 426 (4th Cir. 2011). Similarly, "[t]he
district court’s analysis of the statutes in the instant case pre-
sents questions of law which we review de novo," WLR
Foods, Inc. v. Tyson Foods, Inc., 65 F.3d 1172, 1178 (4th Cir.
1995), cert. denied, 516 U.S. 1117 (1996), including, of
course, its analysis of the Appellants’ Supremacy Clause chal-
lenge. See Sheehan v. Peveich (In re Peveich), 574 F.3d 248,
252 (4th Cir. 2009).

   E.M.A. and her parents argue on appeal that DHHS’s lien
against E.M.A.’s portion of the settlement proceeds violates
federal Medicaid law because the lien encumbers funds that
are not payment for medical expenses already incurred.
Although the medical malpractice settlement was not allo-
cated among categories of damages, E.M.A. asserts that her
portion of the proceeds necessarily does not include reim-
bursement for medical care because a minor has no cause of
action to recover past medical expenses under North Carolina
common law. In the alternative, Appellants argue that "the
proportional analysis undertaken in Ahlborn should be applied
to this case," and that this court should vacate and remand for
an evidentiary hearing to determine the proper amount of the
state’s lien. Br. of Appellants at 25.

   The Secretary responds, citing to the North Carolina
Supreme Court’s majority opinion in Andrews, that the dis-
trict court correctly held that the North Carolina third-party
liability statutes, N.C. Gen. Stat. §§ 108A-57 and -59, are
consistent with federal Medicaid law as construed in Ahlborn.
The Secretary further asserts that, having made this determi-
nation, the district court was not required to rule on the appli-
cability of North Carolina common law to the federal and
state statutes because the statutes abrogate the common law.
Finally, the Secretary argues that Ahlborn does not support
E.M.A.’s alternative theory of proportional analysis for reduc-
ing the state’s Medicaid lien.

  For the reasons set forth herein, although we agree that
common law principles play no role in the circumstances
10                     E.M.A. v. CANSLER
presented in this case, we are persuaded that Appellants have
the better of the argument with respect to federal law as expli-
cated in Ahlborn. E.M.A.’s argument that DHHS cannot
assert a lien against her portion of the settlement funds
because a minor cannot recover for past medical expenses
under North Carolina common law fails because the state stat-
utes at issue clearly abrogate the common law. Nevertheless,
we shall vacate the judgment because the North Carolina
third-party liability statutes, N.C. Gen. Stat. §§ 108A-57 and
-59, as applied in this case, fail to comply with federal Medic-
aid law as interpreted by the Supreme Court in Ahlborn. As
the unanimous Ahlborn Court’s decision makes clear, federal
Medicaid law limits North Carolina’s recovery to settlement
proceeds representing payment for medical expenses. In the
event of a lump-sum settlement, as in this case, the sum cer-
tain allocable to medical expenses must be determined, in the
absence of a stipulation by the affected parties, by judicial
determination or some similar adversarial process, before the
state may recoup its Medicaid outlays. Accord Tristani ex rel.
Karnes v. Richman, 652 F.3d 360, 377-78 (3d Cir. 2011)
(interpreting Pennsylvania law).

                               III

                               A

   We begin with a summary of the relevant provisions of fed-
eral law. The Medicaid program, launched in 1965 with the
enactment of Title XIX of the Social Security Act, as added,
79 Stat. 343, 42 U.S.C. §§ 1396-1396v, is a cooperative pro-
gram by which the federal government pays a percentage of
the costs a state incurs for medical care for individuals who
cannot afford to pay their own medical costs. Ahlborn, 547
U.S. at 275. Although states are not required to provide Med-
icaid assistance, all 50 states currently do. Id. In exchange for
receiving federal financial support for state-run Medicaid pro-
grams, states must comply with federal Medicaid laws,
including statutory third-party liability requirements, 42
                       E.M.A. v. CANSLER                       11
U.S.C. §§ 1396a(a)(25)(A), (B), (H); 1396k, and anti-lien pro-
visions, id. §§ 1396a(a)(18), 1396p. In order to comply with
requirements in federal Medicaid law, North Carolina has
enacted its own third-party liability statutes, comprised of an
assignment statute, N.C. Gen. Stat. § 108A-59, and a subroga-
tion statute, N.C. Gen. Stat. § 108A-57. See infra pp. 13-14.

   States providing Medicaid assistance must comply with
several provisions concerning third-party liability. For
instance, states are required to "take all reasonable measures
to ascertain the legal liability of third parties . . . to pay for
care and services available under the [State’s Medicaid] plan."
42 U.S.C. § 1396a(a)(25)(A). In addition to this identification
requirement, the state agency administering the Medicaid pro-
gram (here DHHS) must seek reimbursement for medical
assistance to the extent of such legal liability. Id.
§ 1396a(a)(25)(B). In order to secure its reimbursement from
liable third parties, the state must,

    to the extent that payment has been made under the
    State plan for medical assistance in any case where
    a third party has a legal liability to make payment for
    such assistance, [have] in effect laws under which, to
    the extent that payment has been made under the
    State plan for medical assistance for health care
    items or services furnished to an individual, the State
    is considered to have acquired the rights of such
    individual to payment by any other party for such
    health care items or services.

Id. § 1396a(a)(25)(H). Consistent with this provision, as a
condition to receiving state medical assistance, individuals are
required

    to assign the State any rights, of the individual or of
    any other person who is eligible for medical assis-
    tance under this title [42 USCS §§ 1396 et seq.] and
    on whose behalf the individual has the legal author-
12                      E.M.A. v. CANSLER
      ity to execute an assignment of such rights, to sup-
      port (specified as support for the purpose of medical
      care by a court or administrative order) and to pay-
      ment for medical care from any third party.

Id. § 1396k(a)(1)(A). Federal Medicaid law further provides
that "any amount collected by the State under an assignment
made under the provisions of this section shall be retained by
the State as is necessary to reimburse it for medical assistance
payments made on behalf of" the Medicaid recipient. Id.
§ 1396k(b). Any funds remaining after the state and federal
Medicaid programs are reimbursed are then paid to the recipi-
ent. Id.

   Although participating states are required under federal
Medicaid law to seek recovery from liable third parties, as set
forth above, "the federal statute places express limits on the
State’s powers to pursue recovery of funds it paid on the
recipient’s behalf." Ahlborn, 547 U.S. at 283. These limita-
tions are contained in 42 U.S.C. §§ 1396a(a)(18) and 1396p.
Section 1396a(a)(18) provides that a state plan for medical
assistance must comply with § 1396p, which in turn prohibits
states from imposing liens against, or seeking recovery of
benefits paid from, a Medicaid recipient. Subsection 1396p(a)
prohibits imposition of a lien "against the property of any
individual prior to his death on account of medical assistance
paid or to be paid on his behalf under the State plan." Subsec-
tion 1396p(b) further provides that "no adjustment or recov-
ery of any medical assistance correctly paid on behalf of an
individual under the State plan may be made."3

   The Supreme Court has characterized the third-party liabil-
ity provisions in federal Medicaid law as an exception to the
anti-lien provisions, stating that "[t]o the extent that the forced
assignment [of payments that constitute reimbursement for
  3
   While there are a few exceptions to the prohibitions in 42 U.S.C.
§§ 1396p(a) and (b), these exceptions are not relevant to this case.
                      E.M.A. v. CANSLER                       13
medical expenses] is expressly authorized in §§ 1396a(a)(25)
and 1396k(a), it is an exception to the anti-lien provision."
Ahlborn, 547 U.S. at 284 (citing Wash. State Dep’t of Soc. &
Health Servs. v. Guardianship Estate of Keffeler, 537 U.S.
371, 383-85, & n.7 (2003)). At the same time, the Supreme
Court has emphasized that this exception is strictly limited —
a state cannot force assignment of, or place a lien on, any
property that does not constitute reimbursement for medical
expenses. Id. at 284-85 ("[T]he exception carved out by
§§ 1396a(a)(25) and 1396k(a) is limited to payments for med-
ical care. Beyond that, the anti-lien provision applies.").

                              B

   Next, we outline the state law provisions that are relevant
to this case. As noted above, North Carolina participates in
the federal Medicaid program, and DHHS is the North Caro-
lina regulatory body charged with establishing and adminis-
tering the Medicaid program throughout the state in
accordance with Title XIX of the federal Social Security Act,
42 U.S.C. §§ 1396-1396v. N.C. Gen. Stat. § 108A-54. In
order to comply with the federal third-party liability require-
ments discussed supra, North Carolina has enacted an assign-
ment statute, id. § 108A-59, and a subrogation statute, id.
§ 108A-57.       Section     108A-59(a)      provides     that,
"[n]othwithstanding any other provisions of the law, by
accepting medical assistance, the recipient shall be deemed to
have made an assignment to the State of the right to third
party benefits, contractual or otherwise to which [the recipi-
ent] may be entitled." Implementation of the recipient’s statu-
tory assignment is governed by § 108A-57(a), the subrogation
statute, which provides:

    Notwithstanding any other provisions of the law, to
    the extent of payments under this Part, the State, or
    the county providing medical assistance benefits,
    shall be subrogated to all rights of recovery, contrac-
    tual or otherwise, of the beneficiary of this assis-
14                         E.M.A. v. CANSLER
      tance, or of the beneficiary’s personal representative,
      heirs, or the administrator or executor of the estate,
      against any person . . . Any attorney retained by the
      beneficiary of the assistance shall, out of the pro-
      ceeds obtained on behalf of the beneficiary by settle-
      ment with, judgment against, or otherwise from a
      third party by reason of injury or death, distribute to
      the Department the amount of assistance paid by the
      Department on behalf of or to the beneficiary, as
      prorated with the claims of all others having medical
      subrogation rights or medical liens against the
      amount received or recovered, but the amount paid
      to the Department shall not exceed one-third of the
      gross amount to be retained or recovered.

Accordingly, under the state’s third-party liability statutes,
North Carolina has a subrogation right to, and may assert a
lien upon, the lesser of its actual medical expenditures or one-
third of the Medicaid recipient’s total recovery.4 See id.
  4
   As the Third Circuit has pointed out, see Tristani ex rel. Karnes v.
Richman, 652 F.3d 360, 368 n.10 (3d Cir. 2011), Ahlborn does not flatly
hold that statutory liens such as those created by North Carolina law are
permissible. Rather, Ahlborn assumed, without deciding, the propriety of
such laws. See id. ("To date, no federal appellate court has ruled on the
validity of Medicaid liens limited to medical costs. Numerous district
courts and state appellate courts, however, have assumed that such liens
are valid in the wake of Ahlborn . . . . Although these decisions have per-
mitted the use of Medicaid liens limited to medical costs, the majority of
them have not clearly articulated their rationale for doing so. Indeed, some
courts appear to be under the misapprehension that the Supreme Court
held such liens to be permissible in Ahlborn."); see also id. at 379 n.1
(Pollak, D.J., sitting by designation, dissenting) ("As the majority recog-
nizes, the Supreme Court’s decision in Arkansas Department of Health
and Human Services v. Ahlborn, 547 U.S. 268, 280 n.9 (2006), assumed
without deciding that ‘a State can . . . requir[e] an "assignment" of part of,
or plac[e] a lien on, the settlement that a Medicaid recipient procures on
her own.’"). Appellants have not asserted that the North Carolina lien stat-
ute is wholly unenforceable. They limit their challenge to the unrebuttable
presumption arising from the statutory one-third provision.
                       E.M.A. v. CANSLER                       15
   With commendable candor, the Secretary concedes that the
statutory presumption that the state’s recovery of one-third of
an unallocated lump-sum tort settlement is fair and appropri-
ate rests on nothing more than the state’s notion of "how
attorneys and insurance adjusters typically value tort cases."
See Br. of Appellee at 16 (citing and quoting Dorsey D. Ellis,
Jr., Fairness and Efficiency in the Law of Punitive Damages,
56 Cal. L. Rev. 1, 58 n.248 (1982) ("[T]hree times the special
damages is often used as a rule of thumb for settling personal
injury claims. See H. Ross, Settled Out of Court 108
(1970).")). The question posed by this appeal is whether the
state’s mere interest in "efficiency" is sufficient to satisfy the
federal anti-lien provision. We hold that it is not.

                                C

                               (1)

   The interplay among the above-described federal and state
legal principles creates a measure of tension. In Ahlborn, the
Supreme Court reconciled seemingly conflicting legal stan-
dards when it considered whether an Arkansas third-party lia-
bility statute permitting the state to claim a right to the
entirety of the costs it paid on a Medicaid recipient’s behalf,
regardless of whether that amount exceeded the portion of the
recipient’s judgment or settlement representing past medical
expenses, violated federal Medicaid law. 547 U.S. at 278. In
an opinion by Justice Stevens for a unanimous Court, Ahlborn
held that Arkansas’ assertion of a lien on a Medicaid recipi-
ent’s tort settlement in an amount exceeding the stipulated
medical-expenses portion was not authorized by federal Med-
icaid law; to the contrary, the state’s attempt to do so was
affirmatively prohibited by the general anti-lien provision in
42 U.S.C. § 1396p. Id. at 292.

   For the purposes of our analysis in the instant appeal, the
facts of Ahlborn are highly instructive. Following Heidi Ahl-
born’s car accident with allegedly negligent third parties, the
16                        E.M.A. v. CANSLER
Arkansas Department of Health and Human Services
("ADHHS")5 determined that she was eligible for Medicaid
and paid providers $215,645.30 on her behalf. Id. at 273. She
filed a state-court suit against the alleged tortfeasors seeking
damages for past medical costs and for other items, including
pain and suffering, loss of earnings and working time, and
permanent impairment of her future earning ability. Id.
ADHHS intervened in Ahlborn’s lawsuit to assert a lien on
the proceeds of any third-party recovery she might obtain. Id.
at 274. The case was settled for a lump sum of $550,000,
which was not allocated between her various claims. Id.
ADHHS did not participate or ask to participate in the settle-
ment negotiations, and did not seek to reopen the judgment
after the case was dismissed, but did assert a lien against the
settlement proceeds for the full amount it had paid for Ahl-
born’s care. Id.

   Ahlborn filed a declaratory judgment action in federal dis-
trict court seeking a declaration that the state’s lien violated
federal law insofar as its satisfaction would require depletion
of compensation for her injuries other than past medical
expenses. See Ahlborn v. Ark. Dep’t of Human Servs., 280 F.
Supp. 2d 881 (E.D. Ark. 2003). Notably, the parties stipulated
that the settlement amounted to approximately one-sixth of
the reasonable value of Ahlborn’s claim and that, if her con-
struction of federal law was correct, ADHHS would be enti-
tled to only the prorated portion of the settlement that
constituted reimbursement for medical payments made
($35,581.47, or one-sixth of $215,645.30, the full amount
paid by ADHHS for her medical expenses related to the car
accident). Id. at 883.

     Ruling on cross-motions for summary judgment, the district
  5
   While the State’s petition for certiorari in Ahlborn was pending in the
Supreme Court, the Arkansas Department of Human Services changed its
name to "Department of Health and Human Services." Since the Supreme
Court’s decision, the agency has reverted to its original name.
                      E.M.A. v. CANSLER                     17
court held that under Arkansas law, which it concluded did
not conflict with federal law, Ahlborn had assigned to
ADHHS her right to any recovery from the third-party tortfea-
sors to the full extent of Medicaid’s payments for her benefit.
Id. at 888. Accordingly, ADHHS was entitled to a lien in the
full amount of $215,645.30. The Eighth Circuit reversed,
holding that ADHHS was entitled only to that portion of the
settlement that represented payments for medical care. Ahl-
born v. Ark. Dep’t of Human Servs., 397 F.3d 620, 628 (8th
Cir. 2005). ADHHS sought further review in the Supreme
Court, which granted certiorari and affirmed the Eighth Cir-
cuit. Ahlborn, 547 U.S. at 292.

   The Supreme Court held that Arkansas’ third-party liability
lien attached only to the portion of Ahlborn’s settlement that
was designated by stipulation for past medical expenses paid
by Medicaid, or $35,581.47. Id. The Court found that the
remainder of ADHHS’s claim could not be asserted against
the balance of the settlement proceeds. Id. at 280-81. The
Court reasoned that the anti-lien provisions in the federal
Medicaid statutes, 42 U.S.C. §§ 1396a(18) and 1396p, must
be interpreted in view of 42 U.S.C. §§ 1396a(a)(25) and
1396k(a), which provide that states shall require individuals,
as a condition to receiving state medical assistance, to assign
the state any rights the individual may have "to payment for
medical care from any third party," 42 U.S.C.
§ 1396k(a)(1)(A). Id. at 283-84. The Court explained that

    there is no question that the State can require an
    assignment of the right, or a chose in action, to
    receive payments for medical care . . . The State can
    also demand . . . that the recipient "assign" in
    advance any payments that may constitute reim-
    bursement for medical costs . . . As long as the
    assignment rights are authorized under 42 U.S.C.
    §§ 1396a(a)(25) and 1396k(a), such assignments are
    considered exceptions to the anti-lien provision.
18                     E.M.A. v. CANSLER
Id. at 284. The Court concluded that the federal third-party
liability provisions require an assignment of no more than the
right to recover the portion of the settlement proceeds which
are designated for past medical bills paid by Medicaid, id. at
282, and that the federal anti-lien provision prohibits state
Medicaid programs from asserting a third-party liability claim
against a Medicaid beneficiary’s settlement or judgment for
personal injury damages other than medical expenses, id. at
286.

                               (2)

   In Andrews, 669 S.E.2d 310, upon which the district court
below heavily relied, the North Carolina Supreme Court
rejected, by a 4-3 vote, a Supremacy Clause challenge to N.C.
Gen. Stat. §§ 108A-57 and -59, concluding over a vigorous
dissent that the North Carolina third-party liability statutes did
not run afoul of the Supreme Court’s interpretation of federal
Medicaid law in Ahlborn. We believe it useful to review in
some detail the course of legal developments in the state
courts.

   In Ezell v. Grace Hospital, Inc., 623 S.E.2d 79 (N.C. Ct.
App. 2005), a pre-Ahlborn case, the North Carolina Court of
Appeals held that § 108A-57(a) requires reimbursement only
to the extent of the third party’s legal liability for injuries
resulting in medical care paid by Medicaid, effectively vitiat-
ing the impact of the one-third-of-settlement provision. 623
S.E.2d at 83. Judge Steelman concurred in part and dissented
in part, reasoning that "[DHHS’s] right of subrogation under
N.C. Gen. Stat. § 108A-57(a) is broad rather than narrow,"
and finding that the state was entitled to full satisfaction of its
lien under North Carolina law. Id. at 63-64 (Steelman, J., con-
curring in part and dissenting in part) (concluding that DHHS
was subrogated to the entire amount of the settlement, subject
only to the one-third limitation found in § 108A-57(a), irre-
spective of whether some of the settlement amount was
                       E.M.A. v. CANSLER                        19
intended to account for pain and suffering and not medical
damages).

   Judge Steelman’s dissent provided an automatic appeal to
the North Carolina Supreme Court under N.C. R. App. P.
14(b)(1), and eventually served as the basis for a summary
reversal when, on appeal, the North Carolina Supreme Court
reversed the Court of Appeals and adopted Judge Steelman’s
dissent by per curiam opinion. Ezell v. Grace Hosp., Inc., 631
S.E.2d 131 (N.C. 2006), rev’g per curiam for reasons stated
in the dissenting opinion, 623 S.E.2d 79 (N.C. Ct. App.
2005). Curiously, although the North Carolina Supreme Court
decided Ezell on June 30, 2006, it made no mention of Ahl-
born, which the United States Supreme Court had decided
two months earlier on May 1, 2006. Moreover, on December
14, 2006, the North Carolina Supreme Court summarily
denied a petition for rehearing in Ezell pursuant to N.C. R.
App. P. 31, which set out arguments based on Ahlborn. Ezell
v. Grace Hosp., Inc., 641 S.E.2d 4 (N.C. 2006).

   Then, not long afterwards, in Andrews v. Haygood, 655
S.E.2d 440 (N.C. Ct. App. 2008), the North Carolina Court of
Appeals once again considered whether, in an action to deter-
mine the proper amount of a Medicaid lien on a medical mal-
practice settlement, the trial court erred in concluding that the
North Carolina Supreme Court’s decision in Ezell was con-
trolling, and the United States Supreme Court’s decision in
Ahlborn was not. Andrews, 655 S.E.2d at 441-42. The inter-
mediate appellate court concluded that Ezell was binding, id.
at 442, and that since the North Carolina Supreme Court
decided Ezell after Ahlborn was decided, and subsequently
denied the petition for rehearing, the North Carolina Supreme
Court had understood Ahlborn to have no effect on North Car-
olina’s third-party liability statutes, id. at 443. The North Car-
olina Court of Appeals reasoned that, "[although we recognize
that the Arkansas statute discussed in Ahlborn is similar to
[N.C. Gen. Stat. § 108A-57(a)], it is well settled that the con-
struction of the statutes of a state by its highest courts is to be
20                      E.M.A. v. CANSLER
regarded as determining their meaning." Id. (internal citations
and quotation marks omitted).

   Judge Wynn, then a member of the North Carolina Court
of Appeals, disagreed with the majority in Andrews, conclud-
ing that the North Carolina Supreme Court had not yet
squarely answered the question presented in the case, and
therefore "certif[ied] by dissent for a decision on the issue of
whether the amount of State Division of Medical Assistance’s
subrogation on a Medicaid recipient’s settlement is controlled
by the United States Supreme Court’s decision in [Ahlborn]."
Id. at 444 (Wynn, J., dissenting). Judge Wynn noted that the
state supreme court’s reversal of the North Carolina Court of
Appeals’ decision in Ezell was explained only as "for the rea-
sons stated in the dissenting opinion," that the dissenting
opinion adopted by the supreme court had neither considered
nor mentioned Ahlborn, and that the Supreme Court denied
the motion for rehearing in Ezell with one word: "Denied." Id.
(internal citations and quotation marks omitted).

  Judge Wynn’s dissent further emphasized that "the North
Carolina statute at issue in [Andrews] is materially indistin-
guishable from the Arkansas statutory provisions found by a
unanimous United States Supreme Court in Ahlborn to be pre-
empted by federal law." Id. Judge Wynn reasoned,

     The principal difference between the North Carolina
     and Arkansas statutes is that the latter provides no
     ceiling or limit on the amount of recovery allowed to
     the ADHS; rather, the statute explicitly stated that
     ADHS was entitled to recover the full amount of the
     benefits paid to the recipient . . . . North Carolina, by
     contrast, allows DMA to take at most one-third of
     the gross amount of the settlement, regardless of
     whether that fully satisfies the amount paid in medi-
     cal benefits . . . . Nevertheless, the basic thrust of the
     statutes is the same: under both, the State has an
     automatic lien on the full amount of any settlement
                       E.M.A. v. CANSLER                      21
    with a third party reached by a Medicaid settlement,
    regardless of what expenses or damages those funds
    are designated to compensate.

Id. at 445. Accordingly, Judge Wynn concluded that "the
Arkansas statute — and likewise, our North Carolina statute
— conflicts with federal Medicaid statutes by allowing the
State to recover from a recipient settlement funds that were
for purposes other than medical expenses." Id. He explained
that because the settlement at issue in Andrews, unlike the set-
tlement in Ahlborn, was not allocated as to particular claims,
"the holding of Ahlborn dictates that the trial court must hold
an evidentiary hearing as to what portion of the settlement is
designated for medical expenses prior to determination of the
amount of repayment to be made to DMA." Id. at 446.

   Upon further appellate review, the North Carolina Supreme
Court considered "whether the statutory framework governing
the State’s subrogation claim for medical expenses on a Med-
icaid recipient’s tort claim settlement complies with federal
Medicaid law as interpreted by the Supreme Court of the
United States in [Ahlborn]." Andrews, 669 S.E.2d at 311. The
appellant trustee of the settlement account argued that, absent
an agreement between the parties, federal law requires a judi-
cial determination of the portion of a tort claim settlement that
represents the recovery of medical expenses. Id. at 312. In
response, the state contended that the statutory one-third lim-
iting provision complies with Ahlborn’s interpretation of fed-
eral Medicaid law, and that judicial apportionment of medical
expenses from the settlement was therefore not required. Id.
The North Carolina Supreme Court agreed with the state and
affirmed the Court of Appeals, stating that "[b]ecause Ahlborn
does not mandate a specific method for determining the medi-
cal expense portion of a plaintiff’s settlement, we uphold
North Carolina’s reasonable statutory scheme." Id. at 311.

   Thus, when it finally confronted the issue of Ahlborn’s
effect on the North Carolina third-party liability statutes, the
22                    E.M.A. v. CANSLER
North Carolina Supreme Court read Ahlborn narrowly and
concluded that it "controls [only] when there has been a prior
determination or stipulation as to the medical expense portion
of a plaintiff’s settlement. In those cases, the State may not
receive reimbursement in excess of the portion so desig-
nated." Id. at 313. The court further emphasized that "the Ahl-
born holding, limited by the parties’ stipulations, did not
require a specific method for determining the portion of a set-
tlement that represents the recovery of medical expenses." Id.
Noting that Ahlborn recognized that some states have adopted
"special rules and procedures" for allocating tort settlements
under such circumstances, but ultimately expressed no view
on the matter, the Andrews court determined that "Ahlborn
thus does not mandate a judicial determination of the portion
of a settlement from which the State may be reimbursed for
past medical expenses. Instead, the Supreme Court left to the
States the decision on the measures to employ in the operation
of their Medicaid programs." Id. (citing Ahlborn, 575 U.S. at
288 n.18) (internal quotation marks omitted).

   Applying this interpretation of Ahlborn, the North Carolina
Supreme Court majority found that "the one-third limitation
of section 108A-57(a) thus comports with Ahlborn by provid-
ing a reasonable method for determining the State’s medical
reimbursements, which it is required to seek in accordance
with federal Medicaid law." Id. at 314 (citing 42 U.S.C.
§ 1396a(a)(25)(A)-(B)). The United States Supreme Court
subsequently denied the plaintiff’s petition for certiorari. See
Brown, 129 S. Ct. 2792.

   In her dissenting opinion in Andrews, Justice Hudson
agreed with the majority that Ahlborn does not mandate a spe-
cific method for determining the medical expense portion of
a plaintiff’s settlement, but emphasized that the Ahlborn
Court nevertheless did explicitly hold that a state may not vio-
late the anti-lien provisions of 42 U.S.C. §§ 1396a(a)(18) and
1396p by requiring a Medicaid recipient to reimburse it out of
settlement funds designated for (or otherwise properly alloca-
                      E.M.A. v. CANSLER                      23
ble to) purposes other than medical care. Id. at 314 (Hudson,
J., dissenting, joined by JJ. Brady and Timmons-Goodson)
(internal citations and quotation marks omitted). Justice Hud-
son ultimately concluded, however, that "the terms of the set-
tlement [in Andrews] provide[d] insufficient detail to allow
[the Andrews court] to determine whether the application of
N.C. Gen. Stat. § 108A-57(a) would violate the anti-lien pro-
visions of the federal Medicaid statutes, pursuant to the hold-
ing in Ahlborn." Id.; see also id. at 317 ("[A]pplication of the
bright-line rule articulated by the majority in a case like this
one, in which there has been no allocation, could allow pre-
cisely the result that is explicitly barred by Ahlborn.").

                              (3)

   In the instant case, the district court recognized that
Andrews was not binding upon it, but adopted the North Caro-
lina Supreme Court’s legal analysis and holding that the
state’s third-party liability statutes comport with federal Med-
icaid law and Ahlborn. Armstrong v. Cansler, 722 F. Supp. 2d
653, 655-58 (W.D.N.C. 2010). The district court agreed with
the Andrews court’s determination that the Supreme Court’s
holding in Ahlborn was "limited to a proscription against the
State receiving reimbursement in excess of the portion
expressly stipulated as recovery for medical expenses in a
Medicaid recipient’s settlement with a third party." Id. at 656
(emphasis added). The district court further agreed with the
Andrews court’s "infer[ence] that a State may adopt a statu-
tory method for [determining the portion of a settlement that
represents payment for medical expenses] in the absence of
prior judicial allocation," such as the one-third limitation in
N.C. Gen. Stat. § 108A-57(a). Id.

   The district court then undertook its own independent anal-
ysis of the North Carolina third-party liability statutes, and
thereby confirmed its conclusion that there is no conflict
between the state’s third-party liability scheme and federal
law. Id. at 656-58. The district court determined that North
24                     E.M.A. v. CANSLER
Carolina has complied with the federal requirements that it
"take all reasonable measures to ascertain the legal liability of
third parties . . . to pay for care and services available under
the [Medicaid] plan" and "seek reimbursement for assistance
to the extent of such legal liability" by enacting the State Plan
for Medical Assistance, which includes an assignment statute,
N.C. Gen. Stat. § 108A-59, and a subrogation statute, N.C.
Gen. Stat. § 108A-57. Id. at 657 (quoting 42 U.S.C.
§ 1396a(a)(25)(A)-(B)). The district court further reasoned
that, by preventing the state from recovering more than one-
third of a Medicaid recipient’s settlement in the absence of
judicial allocation, regardless of whether the state in fact pro-
vided more assistance, the North Carolina statutory scheme
avoids the conflict at issue in Ahlborn. Id. (finding that the
lesser of the state’s past medical expenditure or one-third of
the recipient’s total recovery "essentially defines" the portion
of the settlement that represents payment for medical
expenses in cases involving a lump-sum settlement) (internal
citation and quotation marks omitted). Unlike the Arkansas
statute at issue in Ahlborn, the district court noted, the North
Carolina statute provides a reasonable means of calculating
the portion of the settlement agreement representing medical
expenses, and then forbids the state from imposing a lien on
the remainder of the settlement. Id. Finally, the district court
noted that an intermediate appellate court in Florida had
recently upheld Florida’s nearly identical statutory scheme,
which imposes a fifty-percent cap on the portion of a Medic-
aid recipient’s award from a third-party tortfeasor that is
recoverable by the state where the parties have not allocated
medical costs, on the basis that the state’s stipulation concern-
ing the portion of the settlement proceeds attributable to med-
ical expenses was central to the Supreme Court’s reasoning in
Ahlborn. Id. at 658 (citing Russell v. Agency for Health Care
Admin., 23 So. 3d 1266 (Fla. 2d Dist. Ct. App. 2010)).
                           E.M.A. v. CANSLER                               25
                                     IV

                                     A

   E.M.A.’s primary argument on appeal is that DHHS’s lien
on her settlement proceeds violates the federal anti-lien stat-
ute, 42 U.S.C. § 1396p, because she did not recover for past
medical expenses.6 E.M.A. contends that although her lump-
sum settlement was not allocated between various claims
(either by stipulation or judicial determination), her recovery
necessarily does not include reimbursement for past medical
expenses because a minor has no cause of action for past
medical expenses under North Carolina common law. See
Vaughan v. Moore, 316 S.E.2d 518, 520 (1988). Notably,
although E.M.A. asserted this argument in her motion for
summary judgment, the district court made no mention of this
issue in its opinion. The Secretary contends that "[t]he rele-
vant federal and state statutes applicable to Medicaid recipi-
ents abrogate the common law and establish the basis for
DHHS to recover a portion of the funds paid for medical ser-
vices provided to the minor child." Br. of Appellee at 8.
  6
    In connection with their contention that under North Carolina law a
minor lacks a cause of action for the costs of medical care, Appellants
contend that the Superior Court allocated the settlement proceeds between
E.M.A. and her parents, with E.M.A. receiving 88 percent of the total and
her parents receiving the remaining 12 percent. Consequently, they con-
tend, the amount of North Carolina’s recoverable reimbursement is capped
at one-third of the 12 percent of the lump-sum settlement awarded to San-
dra and William Earl Armstrong.
   The alleged apportionment of 12 percent to Sandra and William Earl
Armstrong is not evident from the court’s order, however, and the Secre-
tary takes issue with Appellants’ characterization. See Br. of Appellee at
7 (stating that "[appellants’] assertion contradicts the plain language of the
order which provides that the funds be paid either to Medicaid or to the
minor plaintiff’s special needs trust. The record does not support [appel-
lant]s’ new apportionment theory."). In the view we take of the case, we
need not further explore this aspect of the parties’ contentions.
26                     E.M.A. v. CANSLER
   Neither the federal law nor the state law at issue in this case
mentions the Medicaid beneficiary’s age or minority status in
setting forth third-party liability and assignment requirements.
Indeed, the North Carolina assignment statute provides that
"[n]othwithstanding any other provisions of the law, by
accepting medical assistance, the recipient shall be deemed to
have made an assignment to the State of the right to third
party benefits, . . . to which he may be entitled." N.C. Gen.
Stat. § 108A-59(a) (emphases added). Similarly, the North
Carolina subrogation statute provides that "[n]otwithstanding
any other provisions of the law, to the extent of payments
under this Part, the State, or the county providing medical
assistance benefits, shall be subrogated to all rights of recov-
ery, contractual or otherwise, of the beneficiary of this assis-
tance . . ." N.C. Gen. Stat. § 108A-57(a) (emphases added).
Thus, with respect to E.M.A., who is both a "recipient" and
"beneficiary" of medical assistance, the North Carolina third
party liability statutes, N.C. Gen. Stat. §§ 108A-57(a), 59(a),
by their plain language abrogate the common law rule that a
minor cannot recover for medical expenses. See Campbell v.
N.C. Dep’t of Human Resources, 569 S.E.2d 670, 672 (N.C.
Ct. App. 2002) (finding that a minor is a "recipient" of medi-
cal assistance under N.C. Gen. Stat. § 108A-25(5), which
defines "recipient" as "a person to whom, or on whose behalf,
assistance is granted under this Article," and a "beneficiary"
of medical assistance under N.C. Gen. Stat. § 108A-57, pursu-
ant to the plain and definite meaning of the term as commonly
used); see also id. ("[P]laintiff cites no authority, and we find
none, to support his contention that a beneficiary in the mean-
ing of § 108A-57, or a recipient in the meaning of § 108A-59,
must be one who receives a direct cash payment or relief from
debt, or who has the legal right to bring suit for medical bene-
fits.").

   The North Carolina Court of Appeals considered a distinct
but analogous argument in Ezell, 623 S.E.2d 79, in which one
of the issues before the court on appeal was whether the trial
court committed reversible error in its application of common
                          E.M.A. v. CANSLER                             27
law principles of equity to the state’s right of subrogation
under N.C. Gen. Stat. § 108A-57(a). 623 S.E.2d at 81. The
court held that § 108A-57(a) abrogates the equitable princi-
ples of common law. Id. at 81-82. The court reasoned that

      [i]n matters of statutory construction, this Court must
      ascertain and effectuate the intent of the legislative
      body. It is well-established that legislative intent
      may be determined from the language of the statute,
      and if a statute is facially clear and unambiguous,
      leaving no room for interpretation, the courts will
      enforce the statute as written. We conclude that the
      plain language of the statute here precludes the
      application of equitable subrogation principles. We
      conclude that the legislature specifically abrogated
      the application of common law principles of equity
      when it stated that the State "shall be subrogated to
      all rights of recovery," "notwithstanding any other
      provisions of the law." . . . [W]e must enforce the
      statute as written and if the legislature wishes for
      common law equitable principles to apply to this
      statute, it may certainly amend it accordingly.

Id. (internal citations and quotation marks omitted). The Ezell
court’s reasoning applies with equal force here.7 Like the
Ezell court, we find that the plain language of the North Caro-
lina assignment and subrogation statutes quoted above dem-
onstrates the North Carolina legislature’s intent "to
specifically abrogate[ ] the application of [certain] common
  7
    The Secretary argues in the alternative that, even if § 108A-57(a) does
not abrogate the common law in this case, DHHS has a right to subroga-
tion of E.M.A.’s settlement proceeds because the common law doctrine of
necessaries provides that an infant may be liable for necessary medical
expenses even though she is living with a parent who has the duty to pro-
vide the same when the parent does not so provide. The Secretary argues
that this common law doctrine, and not the rule E.M.A. urges, applies in
this case. We need not address this argument, however, for as we con-
clude, the statute does abrogate the common law.
28                         E.M.A. v. CANSLER
law principles," see Ezell, 623 S.E.2d at 81-82, including, as
relevant here, the common law rule that a minor has no claim
for past medical expenses insofar as it conflicts with the
state’s rights of recovery against a third party tortfeasor.8 See,
e.g., Christenbury v. Hedrick, 234 S.E.2d 3, 5 (N.C. App.
1977) ("It is well settled that the common law of England is
in force in this State to the extent that it is not destructive of,
repugnant to, or inconsistent with our form of government,
and to the extent that it has not been abrogated or repealed by
statute or has not become obsolete; however, when the Gen-
eral Assembly legislates in respect to the subject matter of any
common law rule, the statute supplants the common law and
becomes the public policy of this State in respect to that par-
ticular matter.") (citation omitted). Accordingly, we hold that,
in light of the comprehensive statutory scheme before us,
E.M.A.’s share of the settlement proceeds at issue in this case
is not shielded from the state’s reimbursement claim by virtue
of her minority.9
   8
     We further note that in Ezell and Andrews, North Carolina’s appellate
courts allowed the state to recover its Medicaid outlays for medical care
costs of a tort victim minor suing for birth injuries in a medical malprac-
tice tort action. These post-Ahlborn cases cannot be rationally explained
unless the North Carolina courts have determined, implicitly if not explic-
itly, that the third-party liability statutes abrogate the common law.
   9
     In a post-Ahlborn case presenting an analogous issue, the Supreme
Court of Pennsylvania considered whether, under Pennsylvania’s Fraud
and Abuse Control Act (which addresses a variety of matters relating to
the Medicaid program, including third-party liability), the Pennsylvania
Department of Public Welfare could obtain reimbursement for Medicaid
expenditures on behalf of a disabled minor where a claim for medical
expenses rests with the minor’s parents under Pennsylvania common law
and the parents’ claim was barred by the statute of limitations. E.D.B. ex
rel. D.B. v. Clair, 987 A.2d 681, 682-83 (Pa. 2009); see id. at 691 (holding
that, "pursuant to the Fraud and Abuse Control Act, a Medicaid benefi-
ciary has a cause of action against his or her tortfeasor to recover and
reimburse DPW for Medicaid benefits received during the beneficiary’s
minority"). We agree with the E.D.B. court that
     Common law jurisprudence fails to speak to the central issue in
     this case. The policy questions that are implicated focus not on
                           E.M.A. v. CANSLER                                29
                                     B

                                    (1)

   Given that North Carolina common law does not bar
DHHS’s lien against E.M.A.’s settlement proceeds, we are
faced with the same question considered by the North Caro-
lina Supreme Court in Andrews: Whether North Carolina’s
third-party liability statutes comport with federal Medicaid
law and Ahlborn merely because the subrogation statute, N.C.
Gen. Stat. § 108A-57, "caps" the state’s recovery at the lesser
of the actual medical expenses paid or one-third of the total
settlement. The North Carolina Supreme Court in Andrews
and the district court in this case adopted a narrow interpreta-
tion of Ahlborn, limiting its holding to cases in which the par-
ties have stipulated to or otherwise allocated settlement
proceeds between different categories of damages, thereby
identifying a sum certain for medical expenses. Thus, these
decisions are based on the view that Ahlborn is inapplicable
in cases involving an unallocated lump-sum settlement, such
as the instant matter.

   On the contrary, however, nothing in Justice Stevens’s
opinion for a unanimous court in Ahlborn supports such a
crabbed application of that case. The Ahlborn Court addressed
the specific issue of "whether [ADHHS] can lay claim to
more than the portion of [the recipient’s] settlement that rep-
resents medical expenses." 547 U.S. at 280. The Court in no

    parental duty but on protection of the public fisc in the provision
    of medical assistance to minors whose parents do not have the
    financial means to do so. The common law is silent as to the pro-
    vision of medical care to needy minors and does not contemplate
    state involvement in administering such care. Accordingly, our
    resolution of the instant case is based on interpretation of the rel-
    evant statutory law, which incorporates social welfare develop-
    ments independent of common law jurisprudence.
Id. at 691 n.10.
30                           E.M.A. v. CANSLER
way rested its analysis of this issue on whether there has been
a prior determination or stipulation as to the medical expenses
portion of a Medicaid recipient’s settlement. Thus, Ahlborn is
properly understood to prohibit recovery by the state of more
than the amount of settlement proceeds representing payment
for medical care already received. The North Carolina stat-
ute’s one-third cap on the state’s recovery against a Medicaid
recipient’s settlement proceeds does not satisfy Ahlborn inso-
far as it permits DHHS to assert a lien against settlement pro-
ceeds intended (or otherwise properly allocable) to
compensate the Medicaid recipient for other claims, such as
pain and suffering or lost wages (i.e., in cases where one-third
of the recipient’s total settlement recovery is greater than the
amount DHHS expended on the recipient’s behalf).10 See
Andrews, 669 S.E.2d at 607-09 (Hudson, J., dissenting) (con-
cluding that the North Carolina statutes conflict with federal
Medicaid law by allowing the state to recover from a recipient
funds that were for purposes other than medical expenses);
Andrews, 655 S.E.2d at 445 (Wynn, J., dissenting) (same).

                                      (2)

     In determining that N.C. Gen. Stat. § 108A-57(a) complies
  10
     We observe that the consent language included in the application for
benefits executed by Sandra Armstrong would appear to reflect exactly
this understanding. Sandra Armstrong agreed
       to give back to the State any and all money that is received by
       me or anyone listed on this application from my insurance com-
       pany for payment of medical and/or hospital bills for which the
       Medical Assistance program has or will make payment. In addi-
       tion, I agree that all medical payments or medical support paid
       or owed due to a court order for me or anyone listed on this
       application must be sent to the State to repay past or current
       medical expenses paid by the State. This includes insurance set-
       tlements resulting from an accident. I further agree to notify the
       county department of social services if I or anyone listed on this
       application is involved in any accident.
J.A. 82 (emphases added).
                       E.M.A. v. CANSLER                      31
with Ahlborn by imposing what it regarded as a "reasonable
cap" on the state’s lien where recovery for past medical
expenses is not expressly allocated, the North Carolina
Supreme Court in Andrews relied primarily on a footnote in
Ahlborn. See Andrews, 669 S.E.2d at 313 (citing Ahlborn, 547
U.S. at 288 n.18). In the opinion of the Court, Justice Stevens
was addressing a danger suggested by proponents of full
reimbursement that parties would manipulate settlement
agreements reducing the allocation to the medical expense
component and thereby diminishing the proportional reim-
bursement to the state. Ahlborn, 547 U.S. at 288. Justice Ste-
vens pointed out that this risk could be avoided either by
obtaining a state’s advance consent to the allocation or by
requiring that the allocation be submitted to the court. Id. In
footnote 18, Justice Stevens noted that "[a]s one amicus
observes, some States have adopted special rules and proce-
dures for allocating tort settlements . . . . Although we express
no view on the matter, we leave open the possibility that such
rules and procedures might be employed to meet concerns
about settlement manipulation." Id. at n.18 (citing Brief of the
Association of Trial Lawyers of America as Amicus Curiae in
Support of Respondents at 20-21) (hereafter "ATLA Brief").

   We are not persuaded that a mere "reasonable cap" on a
state’s recovery from an unallocated lump-sum settlement sat-
isfies the federal anti-lien law as required by Ahlborn. Indeed,
contrary to the Andrews court’s reliance on Justice Stevens’s
footnote, the ATLA Brief, rather than advocating full recov-
ery subject only to a statutory cap, discussed procedures in
several states to have "mini-hearings" to set allocations of
proceeds from tort settlements where there is no agreement
among the interested parties. Nevertheless, the Supreme Court
of North Carolina found that footnote 18 in Ahlborn autho-
rizes the states to mandate full recovery up to a legislatively-
determined, across-the-board limit or cap. This reliance is
misplaced.

 It is also illuminating that the Centers for Medicaid and
Medicare Services ("CMS") issued a memorandum to all
32                         E.M.A. v. CANSLER
Associate Regional Administrators for Medicaid and State
Operations in the wake of the Ahlborn decision to aid the
states in understanding the effect the decision would have on
state third-party liability recovery. See Memorandum from
Gale Arden, Director of CMS’s Center for Medicaid and State
Operations Disable and Elderly Health Programs Group
(DEHPG) to all Associate Regional Administrators for Med-
icaid and State Operations, "State Options for Recovery
Against Liability Settlements in Light of U.S. Supreme Court
Decision in Arkansas Department of Human Services v. Ahl-
born" (July 3, 2006) (hereafter "CMS Memorandum"). The
CMS Memorandum stated that, post-Ahlborn, "if a State
attempted to recover from more than the portion of a settle-
ment that the parties allocated to medical items and services,
it was in violation of the federal anti-lien statute." Id. Addi-
tionally, the CMS Memorandum clarified that, "to the extent
State laws permit recovery over and above what the parties
have appropriately designated as payment for medical items
and services, the State was in violation of federal Medicaid
laws." Id.

   To aid states in ensuring compliance with Ahlborn, the
CMS Memorandum listed various actions states may and may
not take: (1) states may only require assignment of the right
to payment from a third party for healthcare (or medical)
items and services; and (2) states may not pass or enforce
laws which broaden the recovery rights, vis-à-vis Medicaid
beneficiaries, of the state Medicaid agency, allowing such
agencies to recover from damages other than medical
expenses provided for in the award amount, even if this
means that Medicaid must forego full recovery of its claim.11
On the other hand, a state may wish to, inter alia: (1) "enact
laws which provide for a specific allocation amongst dam-
  11
     The unrebuttable presumption created by N.C. Gen. Stat. § 108A-57,
in the form of a statutory one-third cap on the state’s third-party liability
recovery against a Medicaid recipient’s tort settlement, clearly falls into
this category.
                       E.M.A. v. CANSLER                      33
age[s], i.e., pain and suffering, lost wages, and medical
claims"; (2) "require that cases can only be compromised with
the consent of the state"; (3) "pass laws which require a man-
datory joinder of a State when a Medicaid lien is at issue"; (4)
"strengthen their laws regarding the duty of attorneys to notify
and cooperate to include provisions which could render void-
able any settlement of which the State was not notified and
given an opportunity to present its recovery claim for medical
assistance paid." Id. In addition, the CMS Memorandum
emphasized the Ahlborn Court’s admonition that states should
become involved in the underlying tort litigation in order to
influence the amount that is allocated in a settlement to medi-
cal items and services. Id. (stating that "absent such involve-
ment, the Court found little sympathy in the State’s argument
that they should be able to recover the total settlement").

   Indeed, in reaction to the Supreme Court’s ruling in Ahl-
born, many states that previously imposed statutory caps on
Medicaid third-party recovery amended their laws in various
ways. Most notably, California changed its laws from impos-
ing a statutory cap of one-half of the recovery to limiting
recovery to the portion of the award specifically representing
payment for medical expenses or care. Petition for Writ of
Certiorari at 20-23, Brown, 129 S. Ct. 2792 (No. 08–1146)
(discussing Cal. Welf. & Inst. Code § 14124.76). Prior to Ahl-
born, Pennsylvania’s third-party liability statute imposed a
fifty percent cap on the state’s recovery. Id. at 23-24 (discuss-
ing 62 Pa. Cons. Stat. Ann. § 1409); see infra pp. 35-36 (dis-
cussing Tristani, 652 F.3d 360). In the wake of Ahlborn,
however, the Pennsylvania legislature enacted Pa. Cons. Stat.
Ann. § 1409.1, which provides inter alia that "the court or
agency shall allocate the judgment or award between the med-
ical portion and other damages . . ." Similarly, Oklahoma
amended its statute to provide that the state’s lien extends to
the entire settlement, after attorneys fees and costs, unless a
more limited allocation of damages to medical expenses is
shown by clear and convincing evidence. Brown, 129 S. Ct.
at 24 (discussing Okla. Stat. Ann. tit. 63, § 5051.1(D)(1)(d))
34                    E.M.A. v. CANSLER
(internal quotation marks omitted). Idaho continues to use its
pre-Ahlborn statute, which allows for full payment to Medic-
aid prior to payment of other expenses. Id. at 26-27 (discuss-
ing Idaho Code Ann. § 56-209b(6)). Post-Ahlborn, however,
this statute has been interpreted to include a rebuttable pre-
sumption of such full payment when an allocation is agreed
upon by the parties (including the state agency) or is deter-
mined through a hearing. Id. at 27 (citing State Dep’t of
Health & Human Welfare v. Hudelson, 196 P.3d 905, 912
(Idaho 2008)). States that continue to impose a statutory cap
or allow full recovery for Medicaid reimbursements post-
Ahlborn include Florida, Georgia, Hawaii, Iowa, and North
Carolina. Id. at 17; see Fla. Stat. Ann. §§ 409.910(1), (4),
(6)(a); Ga. Code Ann. § 49-4-149(d); Haw. Rev. Stat. Ann.
§ 346-37(d); Iowa Code Ann. § 249A.6; N.C. Gen. Stat.
§ 108-57(a).

                              (3)

   On the basis of Ahlborn’s clear holding that the general
anti-lien provision in federal Medicaid law prohibits a state
from recovering any portion of a settlement or judgment not
attributable to medical expenses, DHHS’s lien on E.M.A.’s
settlement proceeds in this case violates federal law. In order
to comply with 42 U.S.C. §§ 1396a(a)(18), 1396p, and Ahl-
born, North Carolina is free to implement a process by which
settlement proceeds are explicitly allocated or otherwise
determined. In this case, we must remand for an evidentiary
hearing consistent with this opinion to determine the proper
amount of the DHHS lien on E.M.A.’s settlement proceeds.

   Just as there is insufficient information before this court
regarding allocation of the settlement proceeds among various
categories of damages, we cannot apply the "proportional
analysis" that E.M.A. argues is proper under Ahlborn. As dis-
cussed above, the parties in Ahlborn stipulated that the settle-
ment of $550,000 represented only one-sixth of the true value
of Ahlborn’s claim, because the settlement was limited due to
                              E.M.A. v. CANSLER                                35
the amount of insurance available, and determined that the
state was thereby entitled to only one-sixth of the stipulated
medical expenses. E.M.A.’s settlement is distinguishable in
that there was no issue (so far as the record before us shows)
of limited insurance and no stipulation. On remand, the dis-
trict court must determine the true value of the case in allocat-
ing medical expenses, but Ahlborn does not mandate such a
"proportional analysis," to use the term that Appellants have
coined in their briefing.12

   In reaching the conclusion we do, we find the Third Cir-
cuit’s analysis of the analogous provisions of Pennsylvania
law particularly persuasive in our disposition of this appeal.
See Tristani, 652 F.3d 360. Although the Third Circuit found
that the Pennsylvania statutory presumption that fifty percent
  12
    In an analogous case arising under post-Ahlborn Oklahoma law, the
Tenth Circuit has helpfully indicated the kind of considerations that might
be salient in assessing the propriety of a particular lien determination:
          [A] reduction in a Medicaid lien can be justified only by show-
       ing a reason why the plaintiff would agree to allow the defendant
       to pay less than the full amount of the Medicaid lien. The usual
       reasons would be that the liability of the settling defendant is
       uncertain or that the defendant lacks the money to pay for his full
       liability (or both); so the plaintiff would be willing to take a pro-
       portionate reduction in each component of the damages that she
       would expect the jury to award if the defendant were found lia-
       ble. For example, if the settlement is for 50% of what the jury is
       likely to award because there is only a 50% chance that the jury
       will find liability, the Medicaid lien could properly be cut in half.
       Or if liability is clear and the expected verdict would be $2 mil-
       lion, but the defendant can pay only $1 million, a 50% reduction
       would also be in order. A further reduction might also be appro-
       priate if there are doubts about whether the jury would award as
       damages all the medical expenses paid by Medicaid-because, for
       example, one could question whether the expenses were caused
       by the negligent acts of the defendant-although generally one can
       be more confident of recovering those expenses in full than in
       recovering, say, the full claim for pain and suffering.
Price v. Wolford, 608 F.3d 698, 707-08 (10th Cir. 2010).
36                         E.M.A. v. CANSLER
of a settlement amount was properly allocable to medical
expenditures may be deemed to fall within the acceptable
"special rules and procedures" contemplated by Ahlborn in
footnote 18, it cautioned the state that it must afford a mecha-
nism permitting beneficiaries to rebut such a presumption,13
reasoning as follows:

          Although the Ahlborn Court acknowledged the
       existence in state law of "special rules and proce-
       dures" for allocating settlements, and left open the
       possibility that such rules may be employed to
       address concerns about settlement manipulation, 547
       U.S. at 288 n. 18, it did not give states unfettered
       discretion to allocate settlements without regard to
       the actual portion attributable to medical expenses.
       Indeed, Ahlborn expressed a preference for resolving
       allocation disputes "either by obtaining the State’s
       advance agreement to an allocation or, if necessary,
       by submitting the matter to a court for decision." Id.
       at 288.

          We express no view as to whether allocation dis-
       putes of this type must be adjudicated by a court, or
       may instead be resolved through other "special rules
       and procedures." Id. at 288 n. 18. We hold merely
       that in determining what portion of a Medicaid bene-
       ficiary’s third-party recovery it may claim in reim-
       bursement for Medicaid expenses, the state must
       have in place procedures that allow a dissatisfied
       beneficiary to challenge the default allocation. As
       the Beneficiaries point out, without such a rule noth-
  13
    Indeed, the Pennsylvania legislature had amended that state’s law after
Ahlborn precisely to provide such a mechanism, there, an administrative
hearing. See Tristani, 652 F.3d at 377-78. Nevertheless, the Tristani court
was required to address an earlier version of the state law because one of
the state claims to reimbursement at issue pre-dated the legislative change.
Id.
                            E.M.A. v. CANSLER                               37
       ing would prevent states from allocating 75%, 90%
       or even 100% of a settlement to medical expenses,
       thereby eviscerating the rule promulgated by Ahl-
       born. Because the District Court concluded other-
       wise, we will reverse its order in this respect and
       remand for further proceedings consistent with this
       opinion.

Id. at 378.

   We agree with the reasoning of the Third Circuit and hold
that to comport with federal law as interpreted in Ahlborn,
under the circumstances in this case, North Carolina’s statu-
tory presumption must be subject to adversarial testing.14
Under the circumstances of the case before us, absent any
state-created mechanism for such testing, it will fall to the dis-
trict court to conduct the appropriate proceedings.

                                      V

   In sum, E.M.A.’s argument that DHHS cannot assert a lien
against her portion of the settlement proceeds because a minor
has no cause of action for past medical expenses under North
Carolina common law fails because the state Medicaid stat-
utes at issue fully abrogate the common law. Nevertheless, we
hold that the North Carolina third-party liability statutes, N.C.
Gen. Stat. §§ 108A-57 and -59, as applied in this case, fail to
comply with federal Medicaid law as interpreted by the
Supreme Court in Ahlborn. As the unanimous Ahlborn
Court’s decision makes clear, federal Medicaid law limits a
  14
     Notably, in its opinion in this case, the district court cited, in support
of its narrow reading of the Ahlborn holding, the lower court’s decision
in Tristani. See Armstrong, 722 F. Supp. 2d at 658 (citing Tristani v. Rich-
man, 609 F. Supp. 2d 423, 464-65 (W.D. Pa. 2009)). But, as just dis-
cussed, on appeal, the Third Circuit specifically reversed that portion of
the lower court’s judgment in Tristani that had rejected the need for adver-
sary testing of the fifty percent presumption under Pennsylvania law. See
652 F.3d at 378.
38                    E.M.A. v. CANSLER
state’s recovery to settlement proceeds that are shown to be
properly allocable to past medical expenses. In the event of an
unallocated lump-sum settlement exceeding the amount of the
state’s Medicaid expenditures, as in this case, the sum certain
allocable to medical expenses must be determined by way of
a fair and impartial adversarial procedure that affords the
Medicaid beneficiary an opportunity to rebut the statutory
presumption in favor of the state that allocation of one-third
of a lump sum settlement is consistent with the anti-lien pro-
vision in federal law.

  Accordingly, for the reasons set forth, we vacate the judg-
ment of the district court and remand for an evidentiary hear-
ing at which the district court shall determine the proper
amount of DHHS’s Medicaid lien in this case in accordance
with Ahlborn and the views expressed in this opinion.

                               VACATED AND REMANDED

AGEE, Circuit Judge, concurring in part, dissenting in part,
and concurring in the judgment:

   I join the majority opinion except for Section IV(A) (and
related references), which concludes that the relevant North
Carolina Medicaid statutes, N.C. Gen. Stat. § 108A-59(a)
("the assignment statute") and N.C. Gen. Stat. § 108A-57(a)
("the subrogation statute") abrogate the common law of North
Carolina under which a minor has no cause of action for
recovery of medical expenses incurred during minority.
Accordingly, I respectfully dissent from that portion of the
majority opinion and write separately because nothing in
either the assignment statute or the abrogation statute suggest
that the General Assembly of North Carolina intended to
extend or create such a cause of action. Furthermore, I find no
support in the decided cases of the North Carolina appellate
courts holding that state’s legislature abrogated the otherwise
applicable common law rule. Consequently, I would hold the
common law rule survives the enactment of North Carolina’s
                           E.M.A. v. CANSLER                               39
Medicaid statutes.1 Nonetheless, for the reasons discussed
below, I would vacate and remand the judgment of the district
court.

   Unless modified by statute, the common law is the law of
North Carolina, as in many states. See State v. Vance, 403
S.E.2d 495, 498 (N.C. 1991); N.C. Gen. Stat. § 4-1("All such
parts of the common law . . . [as are] not abrogated, repealed,
or . . . obsolete, are hereby declared to be in full force within
this State."). "When the [North Carolina] General Assembly
legislates in respect to the subject matter of a common law
rule, the statute supplants the common law rule in regard to
that matter." State v. Green, 477 S.E.2d 182, 187 (N.C. Ct.
App. 1996) (citing McMichael v. Proctor, 91 S.E.2d 231, 234
(N.C. 1956)). However, the common law controls unless the
legislature expressly abrogates it. See In re Thompson, 327
S.E.2d 908, 909 (N.C. Ct. App. 1985); see also Lowe v. Har-
ris, 17 S.E. 539, 544 (N.C. 1893) (Shepherd, C.J., concurring)
("[I]f the legislature intended to abrogate these [common law]
rules, in whole or in part, it should have expressed such inten-
tion in the clearest and most unmistakable manner."); Price v.
Edwards, 101 S.E. 33, 36 (N.C. 1919) ("[S]tatutes in deroga-
tion of common law . . . are construed strictly.").2

   Under the common law of North Carolina, a minor has no
cause of action against a tortfeasor for medical expenses
incurred during minority. See Vaughan v. Moore, 366 S.E.2d
  1
     In resolving this difficult question of the interplay between North Caro-
lina’s common law and its Medicaid statutes, it would be helpful to seek
guidance from that state’s highest court. Unfortunately, unlike the other
states in this circuit, North Carolina alone provides no mechanism for us
to certify questions of state law to its Supreme Court. See MLC Automo-
tive, LLC v. Town of Southern Pines, 532 F.3d 269, 284 (4th Cir. 2008).
   2
     The common law is incorporated into the North Carolina statutory
scheme by N.C. Gen. Stat. § 4-1. North Carolina courts abide by the
maxim that "repeal by implication is not a favored rule of statutory con-
struction." State v. Greer, 302 S.E.2d 774, 777 (N.C. 1983) (internal quo-
tation marks omitted).
40                    E.M.A. v. CANSLER
518, 520 (N.C. Ct. App. 1988). Rather, the right to recover for
medical expenses lies with the parents, but the minor (through
his or her proper representative) may recover for other dam-
ages, such as pain and suffering or loss of future income. Id.
(citing Ellington v. Bradford, 86 S.E.2d 925, 926 (N.C.
1955)). Applying that principle to this case, it would appear
that E.M.A. could not recover against her tortfeasor for the
incurred medical expenses. As a consequence, the principles
enunciated in Arkansas Department of Health and Human
Services v. Ahlborn, 547 U.S. 268 (2006), would insulate
E.M.A.’s allotted portion of the settlement proceeds from the
State’s lien unless that portion did in fact include medical
expense reimbursements.

   Notwithstanding North Carolina common law, however,
the majority opinion, relying upon the "plain language" of the
subrogation statute and the assignment statute, as well as pre-
Ahlborn authority, allows the State to encumber E.M.A.’s
portion of settlement proceeds. I do not agree the statutes at
issue here lead to that result.

   The assignment statute states that "[n]otwithstanding any
other provisions of the law, by accepting medical assistance,
the recipient shall be deemed to have made an assignment to
the State of the right to third party benefits . . . to which he
may be entitled." N.C. Gen. Stat. § 108A-59(a). The subroga-
tion statute uses similar terms to express that:
"[n]otwithstanding any other provisions of the law, to the
extent of payments under this Part, the State, or the county
providing medical assistance benefits, shall be subrogated to
all rights of recovery, contractual or otherwise, of the benefi-
ciary of this assistance . . . ." Id.

   With particular emphasis on the "[n]otwithstanding any
other provisions of the law," language, the majority opinion
concludes that these statutes "by their plain language abrogate
the common law rule that a minor cannot recover for medical
expenses." Maj. Op. at 26. Neither statute, however, conflicts
                           E.M.A. v. CANSLER                               41
with the common law rule at issue here by its plain terms or
otherwise.

   The assignment statute specifically limits the "rights"
assigned: "the recipient [of Medicaid benefits] shall be
deemed to have made an assignment to the state of the right
to third party benefits . . . to which he may be entitled."
(Emphasis added.) By its express language, this statute does
not purport to enlarge the preexisting rights of a beneficiary
of Medicaid benefits, including those possessed by minors. A
plain reading of the statute instead leads to the conclusion
that, to the extent a beneficiary of Medicaid benefits has a
claim to third party benefits, that beneficiary by operation of
law assigns those rights to the state. The statute could have
easily been written to create a new cause of action in the Med-
icaid beneficiary, but it was not. Rather, the statute speaks of
the assignment only of the rights, if any, that already exist in
the beneficiary.

   In this regard, E.D.B. ex rel. D.B. v. Clair, 987 A.2d 681
(Pa. 2009), cited ante at 28 n.9, is instructive. In that case, the
Supreme Court of Pennsylvania found, pursuant to its state’s
Fraud and Abuse Control Act (which operates, like the North
Carolina Medicaid statutes at issue here, to regulate the state’s
right of assignment of benefits) "a Medicaid beneficiary has
a cause of action against his or her tortfeasor to recover and
reimburse [the state] for Medicaid benefits received during
the beneficiary’s minority." Id. at 691.3 The Pennsylvania stat-
utes at issue did not expressly provide for a cause of action
for a minor tort-victim for medical expenses, but rather, Penn-
sylvania’s highest court found that the legislature intended to
create such a cause of action in order to effectuate its goal that
  3
    The court in E.D.B. found such a cause of action in Pennsylvania’s
statutes. Its analysis demonstrates, however, that the relevant inquiry is not
whether a state had mandated that the minor assign his or her rights to the
state, but rather, whether the minor had a recognized right to recover (i.e.,
a cause of action) and therefore something to assign.
42                      E.M.A. v. CANSLER
"the entirety of a beneficiary’s settlement would be subject to
[the state’s] claim." Id. at 690. Although that goal was unat-
tainable after Ahlborn, the court noted that "nothing in Ahl-
born affects, negates, weakens, or calls into question the rea-
soning . . . as to the General Assembly’s intent with regard to
the filing of claims by beneficiaries for Medicaid expenditures
incurred during their minority." Id. at 691 (emphasis in origi-
nal). The key here, in contradistinction from the statutes or
court decisions in North Carolina, is that the Pennsylvania
Supreme Court specifically concluded a cause of action
existed in a minor, therefore giving the minor a chose to
assign.

   In stark contrast, North Carolina’s Court of Appeals has
rejected the notion that the statutes at issue create a cause of
action in a minor for medical expenses, even where that minor
is a beneficiary of Medicaid benefits. See Campbell v. N.C.
Dep’t of Human Res., 569 S.E.2d 670, 672 (N.C. Ct. App.
2002) (stating that because, under North Carolina common
law, a minor has no cause of action for medical expenses, "the
settlement money which [the minor] plaintiff received was not
recompense for medical expenses"). Campbell thus acknowl-
edged that, even after the enactment of the North Carolina
Medicaid statutes, a minor lacked a cause of action for medi-
cal expenses, ruling instead that the State was nonetheless
entitled to the plaintiff’s settlement proceeds on other grounds
(although this rationale has since been nullified by Ahlborn).

    The same is true of North Carolina’s subrogation statute
which requires that "to the extent of [Medicaid] payments
. . . , the State, . . . shall be subrogated to all rights of recovery
. . . of the beneficiary of this assistance[.]" N.C. Gen. Stat
§ 108A-57(a) (emphasis added). Again, the statute speaks
only of the existing rights of the beneficiary, and simply does
not create any new rights to a cause of action in a minor.
E.M.A. cannot assign, nor can the State be subrogated to,
rights that she does not possess.
                       E.M.A. v. CANSLER                       43
   I am also not persuaded that Ezell v. Grace Hospital, Inc.,
623 S.E.2d 79 (N.C. Ct. App. 2005), rev’d per curiam for the
reasons stated in the dissenting opinion, 631 S.E.2d 131
(N.C. 2006), is applicable to E.M.A’s argument. That case
dealt with the issue of whether common law equitable limita-
tions on recovery could be applied to reduce the State’s recov-
ery of third-party benefits paid to a Medicaid beneficiary. See
Ezell, 623 S.E.2d at 81. Ezell’s holding that the subrogation
statute abrogates common law equitable recovery principles is
simply a recognition that application of the common law
yields a different result than application of the statutory lan-
guage. As explained above, that is not the case with the com-
mon law rule limiting the minor’s right to recovery for
medical expenses. Ezell says nothing about changing the
North Carolina common law rule regarding the cause of
action for recovery of a minor’s medical expenses.

   The majority opinion, however, relies on Campbell as addi-
tional support for its holding that the common law rule is
abrogated. In that case, the North Carolina Court of Appeals
considered and rejected a claim similar to that raised by
E.M.A. Ahlborn, however, which was decided four years
after Campbell, has clearly eviscerated the rationale of Camp-
bell such that its holding should not be entitled precedential
weight.

   In Campbell, the plaintiff, who was a minor at the time he
was injured by a third-party tortfeasor and received Medicaid
benefits, claimed that the State had no right of subrogation
because he lacked a cause of action under North Carolina law
for medical expenses. While agreeing with the premise that,
at common law, a minor may not recover for medical
expenses incurred during minority, the North Carolina Court
of Appeals reasoned that "[N.C. Gen. Stat.] § 108A-57(a)
does not restrict [the State’s] right of subrogation to a benefi-
ciary’s right of recovery only for medical expenses." 569
S.E.2d at 672. Because North Carolina’s Medicaid statutes
allowed the state to place a lien upon any of the plaintiff’s set-
44                        E.M.A. v. CANSLER
tlement proceeds, regardless of whether they were for medical
expenses, the plaintiff’s right (or lack thereof) to receive med-
ical expenses in tort was no barrier to the State’s lien. The
Campbell court relied on prior North Carolina cases for the
proposition that "to the extent of Medicaid payments under
[the] Medical Assistance Program" the State is "subrogated to
all rights of recovery of the beneficiary of medical assis-
tance." Id. (citing and quoting N.C. Dept of H.R. v. Weaver,
466 S.E.2d 717, 719 (N.C. Ct. App. 1996), (emphasis and
internal alterations omitted).

   Campbell also relied heavily on Payne v. North Carolina
Department of Human Resources, 486 S.E.2d 469 (N.C. Ct.
App. 1997), a case in which the North Carolina Court of
Appeals considered and rejected a challenge to North Caroli-
na’s Medicaid subrogation scheme based on the federal anti-
lien statute found at 42 U.S.C. § 1396p(a)(1). Campbell
described the Payne holding as follows:

      Plaintiff [in Payne] argued that [the State’s] subroga-
      tion rights extended only to the amount allocated to
      his mother for medical expenses. This Court dis-
      agreed, and held that "by accepting Medicaid bene-
      fits, [minor plaintiff] assigned his right to third-party
      benefits to [the State], and [the State’s] lien vested
      at that time."

Campbell, 569 S.E.2d at 672-73.

   This reasoning is plainly at odds with Ahlborn’s command
that a state Medicaid agency may not seek assignment of
"rights to payment for anything other than medical expenses-
not lost wages, not pain and suffering, not an inheritance."
Ahlborn, 547 U.S. at 281.4
  4
   The fact that, pre-Ahlborn, the Campbell and Payne courts permitted
a Medicaid lien regardless of the medical expense portion of tort recovery,
combined with the statutory percentage limit, may explain why the partic-
ular issue now raised by E.M.A. had not previously been raised or
addressed by the North Carolina courts post-Ahlborn.
                       E.M.A. v. CANSLER                       45
   Accordingly, when the Campbell court opined that "[the
State] is entitled to recover the costs of medical treatment pro-
vided for a minor, even when the funds received by the minor
are not reimbursement for medical expenses[,]" 569 S.E.2d at
672, its rationale conflicts directly with Ahlborn. See 547 U.S.
at 282 ("[T]he State’s assigned rights extend only to recovery
of payments for medical care."). While it is true that most
creditors can usually satisfy debts owing to them from any
assets of the debtor that the creditor can find, this is not the
case in the Medicaid context. Ahlborn and the federal anti-lien
statute at 42 U.S.C. § 1396p make clear that a state Medicaid
lien can only be levied against those assets received for medi-
cal expenses.

    There is no question that the State can require an
    assignment of the right, or chose in action, to receive
    payments for medical care. So much is expressly
    provided for by §§ 1396a(a)(25) and 1396k(a). . . .
    To the extent that the forced assignment is expressly
    authorized by the terms of §§ 1396a(a)(25) and
    1396k(a), it is an exception to the anti-lien provision.
    But that does not mean that the State can force an
    assignment of, or place a lien on, any other portion
    of Ahlborn’s property.

Ahlborn, 547 U.S. at 284-85 (internal citations omitted)
(emphasis added). Campbell, which stands in obvious conflict
with that holding, must give way and cannot be a basis upon
which to find abrogation of the North Carolina common law
rule.

   Indeed, the one aspect of Campbell that seems to survive
Ahlborn is the acknowledgement of the North Carolina com-
mon law that because "a minor, even after reaching majority,
may not recover for medical expenses incurred during minor-
ity . . . the settlement money which plaintiff received was not
recompense for medical expenses." 569 S.E.2d at 672 (inter-
nal citation and quotation marks omitted) (emphasis added).
46                    E.M.A. v. CANSLER
That statement of North Carolina law does not rest on a prem-
ise that has been rejected by the Supreme Court, and should
guide our analysis of E.M.A.’s claim on appeal. It is a recog-
nition that, even in light of North Carolina’s Medicaid stat-
utes, a minor still lacks a cause of action for medical
expenses. Accordingly, the argument that the North Carolina
Medicaid subrogation and assignment statutes somehow abro-
gate this right is not an accurate statement of North Carolina
law in my view.

   I therefore must disagree with the conclusion in the major-
ity opinion that the North Carolina Medicaid statutes "by their
plain language" abrogate the common law. Maj. Op. at 26.
And, as noted above, no North Carolina appellate court deci-
sion, in conformity with Ahlborn, so construes those statutes.
To the contrary, the statutes at issue plainly do not conflict
with, and nor do they abrogate, the common law rule that
minors may not recover for medical expenses in North Caro-
lina.

   Nevertheless, while the minor does not have a cause of
action for medical expenses, that does not necessarily mean,
in an otherwise unallocated settlement, that none of the funds
comprising the minor’s share were not in fact representative
of medical expenses already incurred or allocated to a Special
Needs Trust ("SNT") in anticipation of medical expenses to
be incurred in the future. A competent advocate for a minor
in structuring such a settlement would, knowing the North
Carolina common law, attempt to have allocated as much as
possible of a fixed settlement to the minor’s share, irrespec-
tive of what categories of damages comprise the settlement
amount. That allocation would be of little moment to the tort-
feasor, whose only interest is in release from liability. The
record before the court in the case at bar simply does not
allow us to determine whether E.M.A.’s settlement share did
include an amount actually represented by the medical
expense damages.
                       E.M.A. v. CANSLER                      47
   The state trial court order approving the settlement does not
make the findings necessary to resolve to what extent the
Medicaid lien, under Ahlborn, is applicable here. I do not
fault the state trial judge as there was (like now) no clear rule
by appellate decision or legislative enactment on point. If the
matter of medical expense reimbursement was part of the cal-
culation put before the state trial court, and the settlement
order stated how an allocation between the parties was deter-
mined with the damage elements comprising each share, then
the determination as to what could be attached by the Medic-
aid lien should be straightforward. Such an explicit allocation
is not in the record before us, however. It is simply not possi-
ble, on this record, to ascertain what elements of damages
comprise the respective settlement shares of E.M.A. or her
parents. For that reason I agree with the majority that the dis-
trict court judgment must be vacated and remanded. Should
it be determined, on remand, that any portion of E.M.A.’s set-
tlement share was in fact represented by her past medical
expenses, then the State’s Medicaid lien could properly attach
to that portion under Ahlborn. However, should it be deter-
mined that no part of E.M.A.’s share was represented by her
past medical expenses, no lien could attach.

  On remand, the district court should consider two salient
questions:

   1. What amount of the settlement was allocated to each
party: (a) E.M.A. (acting through her guardian ad litem); and
(b) Earl and Sandra Armstrong (E.M.A.’s parents)?

   2. What elements of damage comprise the award each party
received? Put another way, were the respective amounts
awarded on an ad hoc or arbitrary determination or was there
an actual basis for the division between the parties based on
the merits of the various elements of damage, such as medical
expenses?

  Although cases that have approved the default statutory
percentage method for allocating settlement proceeds did so
48                     E.M.A. v. CANSLER
partly on the basis to avoid a case-by-case determination of
the medical expense portion of settlements, e.g., Andrews v.
Haygood, 669 S.E.2d 310, 314 (N.C. 2008), I agree with the
majority opinion that Ahlborn requires such fact-specific
inquiries in a case such as is now before us. Until states
develop a specific mechanism for determining the medical
expense portion of unallocated settlements, a judicial resolu-
tion is the only means by which the Ahlborn principles for
application of a Medicaid lien can be established. The
Supreme Court seemed to recognize this point in Ahlborn that
determining Medicaid lien status on an allocated or unallo-
cated settlement could be "either by obtaining the State’s
advance agreement to an allocation or, if necessary, by sub-
mitting the matter to a court for decision." Ahlborn, 547 U.S.
at 288.

   I am in agreement with the majority opinion’s conclusion
that "[t]he North Carolina statute’s one-third cap on the state’s
recovery against a Medicaid recipient’s settlement proceeds
does not satisfy Ahlborn insofar as it permits DHHS to assert
a lien against settlement proceeds intended (or otherwise
properly allocable) to compensate the Medicaid recipient for
other claims[.]" Maj. Op. at 30. While I disagree that North
Carolina has abrogated its common law rule that minors have
no cause of action for medical expenses, I do agree a remand
is necessary in order for the district court to determine
whether E.M.A. actually received any settlement funds for
medical expenses, and if so, how much.

   For the foregoing reasons, I respectfully dissent from Sec-
tion IV(A) (and related references) of the majority opinion,
but concur otherwise and concur in the judgment.