for the Fourth Circuit for the Fourth Circuit for the Fourth Circuit Lois Strawser v. Nancy V. Atkins, in her capacity as Commissioner of the Bureau of Medical Services,…

Filed: June 25, 2002
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
Nos. 01-1175(L)
(S.D.W. Va. - CA-00-73-2)
(D.S.C. - CA-00-324-24-6)
(W.D.N.C. - CA-00-14-5-V)
Lois Strawser, et al.,
Plaintiffs - Appellants,
versus
Nancy V. Atkins, etc., et al.,
Defendants - Appellees.
O R D E R
The court amends its opinion filed May 22, 2002, and reported
at 290 F.3d 720 as follows:
On page 14, first paragraph, line 15 -- the citation is
corrected to read “42 U.S.C.A. § 1396k(b).”
On page 15, third full paragraph, line 3; and page 20, first
paragraph, line 4 -- the references to section “1369" are corrected
to read “1396.”
For the Court - By Direction
/s/ Patricia S. Connor
Clerk

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PUBLISHED PUBLISHED PUBLISHED PUBLISHED
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT FOR THE FOURTH CIRCUIT
LOIS STRAWSER; JOYCE PERRY; JAMES
H. SHEPPARD; MARY JEAN BOOTH;
JOYCE D. BARKER; BETTY JEAN
GILMAN; KATHY ROBERTSON,
individually and on behalf of all
others similarly situated,
Plaintiffs-Appellants,
v.
NANCY V. ATKINS, in her capacity as
Commissioner of the Bureau of
Medical Services, West Virginia
Department of Health and Human
Resources; DARRELL W. PETERS, in
his capacity as supervisor, Third No. 01-1175
Party Liability Office of
Administration, Accounts
Receivable Unit of the Bureau for
Medical Services, West Virginia
Department of Health and Medical
Services, West Virginia Department
of Health and Human Resources;
PAUL L. NUSBAUM, in his capacity as
Secretary of the West Virginia
Department of Health and Human
Resources; DARRELL V. MCGRAW, in
his capacity as Attorney General of
the State of West Virginia;
CITIBANK, N.A., Escrow Agent,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of West Virginia, at Charleston.
Charles H. Haden II, Chief District Judge.
(CA-00-73-2)

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STEPHEN ALBERT JOSEPH, JR.; SELMA
CHARLENE HATFIELD; HOWARD S.
MILLER; ANNIE SAMS MOSTELLER;
DAVID KAY MULLINS; MAMIE
BREWER; BRENDA CARSON, Personal
Representative of the Estate of
Bondale Carson Miller; MARGARET
RENEE FLEMING, Personal
Representative of the Estate of
Earnestine Fleming; LAURA KELLY,
Personal Representative of the
Estate of Elizabeth McAbee;
ALFORD WELBORN, Individually and
on behalf of others similarly
situated,
Plaintiffs-Appellants, No. 01-1557
v.
CHARLES M. CONDON, in his official
capacity as South Carolina Attorney
General; CITIBANK, N.A.; WILLIAM
A. PRINCE, in his official capacity as
Director of South Carolina
Department of Health and Human
Services,
Defendants-Appellees,
and
CHASE MANHATTAN BANK (USA),
N.A., in its official capacity as
Escrow Agent,
Defendant.
Appeal from the United States District Court
for the District of South Carolina, at Greenville.
Margaret B. Seymour, District Judge.
(CA-00-324-24-6)
2

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HILDA WHITE; THE ESTATE OF ROBERT
CORNELISON, by and through
Personal Representative, Helen
Forte; MAUDE C. STRICKLAND; THE
ESTATE OF ROBERT W. ELTZ, by and
through Personal Representative,
Nellie Eltz; THE ESTATE OF MARVIN
KING, by and through Personal
Representative, Donna King; THE
ESTATE OF MAGGIE IRVING, by and
through Personal Representative,
Wanda Jones; THE ESTATE OF ANNIS
E. MESSER, by and through Personal
Representative, Charles Messer;
DEBORAH MOREY; THE ESTATE OF
HESTER HEATHERLY, by and through
Personal Representative, Carroll No. 01-2245
Heatherly,
Plaintiffs-Appellants,
v.
MICHAEL F. EASLEY, Governor, in
his official capacity as Governor of
North Carolina; JOHN DOE, in his
official capacity as Tobacco Escrow
Agent for the State of North
Carolina; RICHARD H. MOORE, in his
official capacity as Treasurer of
North Carolina; CARMEN HOOKER
BUELL, in her official capacity as
Secretary of the North Carolina
Department of Health & Human
Services; NINA M. YEAGER, in her
official capacity as Director of the
Division of Medical Assistance;
3

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THE GOLDEN L.E.A.F. (LONG-TERM
ECONOMIC ADVANCEMENT
FOUNDATION), INC., a North Carolina
Nonprofit Corporation,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of North Carolina, at Statesville.
Richard L. Voorhees, District Judge.
(CA-00-14-5-V)
Argued: April 3, 2002
Decided: May 22, 2002
Before MOTZ and TRAXLER, Circuit Judges, and
W. Craig BROADWATER, United States District Judge
for the Northern District of West Virginia,
sitting by designation.
____________________________________________________________
Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Traxler and Judge Broadwater joined.
____________________________________________________________
COUNSEL COUNSEL COUNSEL COUNSEL
ARGUED: ARGUED: ARGUED: ARGUED: Antonio Ponvert, III, KOSKOFF, KOSKOFF &
BIEDER, P.C., Bridgeport, Connecticut; Larry Stephen McDevitt,
VAN WINKLE, BUCK, WALL, STARNES & DAVIS, P.A., Ashe-
ville, North Carolina, for Appellants. Charles R. Bailey, BAILEY &
WYANT, P.L.L.C., Charleston, West Virginia; John F. McCuskey,
SHUMAN, MCCUSKEY & SLICER, P.L.L.C., Charleston, West
Virginia; Randall Lee Trautwein, LAMP, O'DELL, BARTRAM,
LEVY & TRAUTWEIN, P.L.L.C., Huntington, West Virginia; James
Emory Smith, Jr., Assistant Deputy Attorney General, Columbia,
4

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South Carolina; Cory Hohnbaum, KENNEDY, COVINGTON, LOB-
DELL & HICKMAN, L.L.P., Charlotte, North Carolina; James Carey
Gulick, Senior Deputy Attorney General, NORTH CAROLINA
DEPARTMENT OF JUSTICE, Raleigh, North Carolina, for Appel-
lees. ON BRIEF: ON BRIEF: ON BRIEF: ON BRIEF: Richard A. Bieder, KOSKOFF, KOSKOFF &
BIEDER, P.C., Bridgeport, Connecticut; Troy N. Giatras, GIATRAS
& WEBB, Charleston, West Virginia; Robert James Gould, Charles-
ton, West Virginia; W. Carleton Metcalf, VAN WINKLE, BUCK,
WALL, STARNES & DAVIS, P.A., Asheville, North Carolina;
Charles E. Burgin, DAMERON, BURGIN & PARKER, P.A., Mar-
ion, North Carolina; John A. Hagins, Jr., Karen W. Creech, COV-
INGTON, PATRICK, HAGINS, STERN & LEWIS, P.A., Greenville,
South Carolina; Dick James, THE DICK JAMES LAW FIRM,
Greenville, South Carolina; William A. Jordan, WILLIAM A. JOR-
DAN, L.L.C., Greenville, South Carolina; J. David Flowers, J.
DAVID FLOWERS, P.A., Greenville, South Carolina, for Appellants.
John T. Molleur, BAILEY & WYANT, P.L.L.C., Charleston, West
Virginia; Roberta F. Green, SHUMAN, MCCUSKEY & SLICER,
P.L.L.C., Charleston, West Virginia; Frances A. Hughes, Managing
Deputy Attorney General, STATE OF WEST VIRGINIA, Charleston,
West Virginia; Charlie Condon, Attorney General, Treva G. Ash-
worth, Deputy Attorney General, Columbia, South Carolina; Marie
Ellen Gibbs, KENNEDY, COVINGTON, LOBDELL & HICKMAN,
L.L.P., Charlotte, North Carolina; Richard G. Hepfer, Deputy General
Counsel, DEPARTMENT OF HEALTH AND HUMAN SERVICES,
Columbia, South Carolina; Roy Cooper, North Carolina Attorney
General, Daniel F. McLawhorn, Special Deputy Attorney General,
NORTH CAROLINA DEPARTMENT OF JUSTICE, Raleigh, North
Carolina; Matthew W. Sawchak, ELLIS & WINTERS, L.L.P.,
Raleigh, North Carolina, for Appellees.
____________________________________________________________
OPINION OPINION OPINION OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
These appeals grow out of a 1998 settlement of litigation that many
states brought against a group of major tobacco companies. West Vir-
ginia, North Carolina, and South Carolina, like all other states partici-
5

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pating in the settlement, stand to receive substantial funds pursuant to
it. Residents of each of those states, who have received Medicaid
assistance for medical problems related to tobacco, filed suit to obtain
a share of the funds their respective states will receive under the set-
tlement. In each case, the district court dismissed the patients' com-
plaints on multiple grounds. Because federal law bars the claims,
see
42 U.S.C.A. § 1396b(d)(3)(B)(ii) (West Supp. 2001), we affirm the
judgment of the district court in each case.
I.
These cases concern the relationship between the Medicaid pro-
gram, which provides funds for health care for poor people, and the
1998 tobacco settlement. To facilitate understanding of the issues
involved, we briefly describe the relevant federal and state Medicaid
law, the litigation and 1998 settlement between the states and the
tobacco companies, and the claims raised in these appeals.
A.
In the United States, a person who cannot pay his or her medical
bills may be eligible for financial assistance under the Medicaid pro-
gram. If so, and if the state in which the person lives participates in
the federal Medicaid program, both the federal government and the
government of his or her state contribute through the program to pay
some of the medical bills.
See 42 U.S.C.A. §§ 1396, 1396a-1396u
(1992 & West Supp. 2001). West Virginia, North Carolina, and South
Carolina all participate in the Medicaid program and receive federal
funds under the program.
See N.C. Gen. Stat. § 108A-54 (1999); W.
Va. Code Ann. §§ 9-1-1 to 9-2-3 (Michie 1998 & Supp. 2001); S.C.
Code Ann. § 43-7-20, 43-7-410 to 43-7-460 (Law. Co-op. 1985 &
Supp. 2001).
In some instances, third parties are liable for the health-care
expenses of Medicaid patients, through, for example, insurance, tort
liability, or a court order based on familial obligation. To obtain fed-
eral assistance with Medicaid costs, a state must require Medicaid
recipients to assign any rights they possess against such third parties
to the state, and must make reasonable efforts to collect on all third-
party claims that are assigned.
See 42 U.S.C.A. §§ 1396a(a)(25),
6

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1396k(a) (West 1992 & Supp. 2001). In keeping with these federal
requirements, West Virginia, North Carolina, and South Carolina
each mandate such an assignment.
See W. Va. Code Ann. § 9-5-11(a)
(Michie 1998); S.C. Code Ann. §§ 43-7-420 to 43-7-430 (Law. Co-
op. Supp. 2001); N.C. Gen. Stat. §§ 108A-57, 108A-59(a) (1999).
Federal law also governs a participating state's distribution of any
recovery on a third-party claim assigned by a Medicaid recipient. If
a state recovers "under an assignment," payments from third parties
go first to the state up to its relevant Medicaid expenses; then to the
federal government, up to its relevant Medicaid expenses (minus an
incentive payment to encourage the state to collect,
see 42 C.F.R.
§ 433.153 (2001)); and finally, if any funds remain, to the patient who
assigned the claim.
See 42 U.S.C.A. § 1396k(b);
see also 42 C.F.R.
§ 433.154 (2001). A state must distribute any remainder to the indi-
vidual Medicaid recipient.
See 42 U.S.C.A. § 1396k(b) (requiring that
after both governments cover all of their expenses, "the remainder of
such amount collected
shall be paid to such individual" (emphasis
added)).
B.
In the 1998 settlement of the tobacco litigation, each settling state
recovered a substantial amount of money from tobacco companies. In
many of the settling states, including West Virginia, North Carolina,
and South Carolina, Medicaid patients then brought suit against state
officials. 1111 The patients contend that at least part of the tobacco settle-
ment constituted a Medicaid recovery subject to the statutory frame-
____________________________________________________________
1111 Every federal appellate court to consider similar patients' claims has
rejected them.
See Greenless v. Almond, 277 F.3d 601 (1st Cir. 2002);
Tyler v. Douglas, 280 F.3d 116 (2d Cir. 2001);
Harris v. Owens, 264
F.3d 1282 (10th Cir. 2001);
McClendon v. Georgia, 261 F.3d 1252 (11th
Cir. 2001);
Floyd v. Thompson, 227 F.3d 1029 (7th Cir. 2000);
see also
Watson v. Texas, 261 F.3d 436 (5th Cir. 2001) (addressing similar claims
based on a separate settlement between Texas and the tobacco compa-
nies);
Table Bluff Reservation (Wiyot Tribe) v. Philip Morris, Inc., 256
F.3d 879 (9th Cir. 2000) (ruling that Indian tribes lacked standing to
challenge the tobacco settlement). The district courts have also uniformly
rejected such claims in cases too numerous to list.
7

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work outlined above. Therefore, they argue, state officials should
distribute excess funds recovered under the settlement to them. Before
analyzing these contentions, we describe the nature of the state law-
suits against tobacco companies and the settlement reached.
1.
In the 1990s, nearly all the states sued major tobacco companies for
harm arising from the deliberate concealment of the health risks posed
by tobacco. 2222 In their complaints, West Virginia, North Carolina, and
South Carolina all cited the medical costs of treating smoking-related
injuries as a major source of damages.
West Virginia filed suit on September 20, 1994. The state's third
amended complaint lists a number of tobacco harms to the state,
including its expenses in treating tobacco-related health problems, its
expenses in countering tobacco advertising aimed at young people,
products-liability claims, and antitrust violations. The complaint
includes fourteen counts; several discuss damage to the state other
than health-care costs, such as the cost of public campaigns about the
dangers of tobacco, and pursue relief other than the money the state
had spent on health-care costs.
South Carolina filed suit on May 12, 1997. Preliminary language
in its amended complaint describes only the medical expenses the
state had incurred. The complaint includes sixteen counts. The only
harm to the state discussed in any of the counts is the cost of medical
treatment for tobacco-related health problems. However, South Caro-
lina did seek an order requiring the tobacco companies to fund a cam-
paign of public education about smoking and health, as well as orders
barring them from marketing and sales practices aimed at minors and
requiring them to disclose information related to tobacco.
____________________________________________________________
2222 The states and tobacco companies participating in the tobacco settle-
ment have varied over time.
See, e.g.,
Star Scientific, Inc. v. Beales, 278
F.3d 339 (4th Cir. 2002) (considering the claims of a tobacco company
facing a choice as to whether to participate in the settlement);
infra (not-
ing North Carolina's decision to join the settlement after it had been exe-
cuted). Because nothing turns on these details in these appeals, we have
not attempted to specify which tobacco companies and states were
involved at any given point.
8

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North Carolina filed suit on December 21, 1998. (North Carolina's
lawsuit actually followed the execution of the settlement between the
tobacco companies and many other states by several weeks; on the
same day, the state both filed suit and immediately dismissed its suit
in order to join the settlement.) The complaint included two state-law
claims, for restraint of trade and unfair commercial practices. The
state cited the financial harm that the shrinking tobacco market
inflicted on its communities that depended on growing tobacco and
health-care costs incurred in treating smoking-related illnesses. It
sought damages "for the past and future medical costs paid by North
Carolina to medical assistance beneficiaries, state employees, and oth-
ers for treatment of tobacco-related illnesses." The state also sought
injunctions and "mandatory orders" to bar tobacco advertising and
tobacco-related conspiracy and to provide funds for public education
about the dangers of tobacco and for financial assistance to "tobacco-
dependent communities."
2.
Late in 1998, without admitting liability, the tobacco companies
settled the claims of West Virginia, North Carolina, South Carolina,
and most other states. In a document entitled "Master Settlement
Agreement" (MSA), the companies agreed to pay billions of dollars
to the states in future installments. Under the MSA, settlement funds
went into escrow, with Citibank as the escrow agent. The total
amounts involved cannot be fixed exactly, but the patients pursuing
these cases allege that West Virginia expects to receive $1.933 bil-
lion, South Carolina $2.3 billion, and North Carolina $4.6 billion, and
that these payments exceed what each state has paid and expects to
pay for Medicaid costs related to tobacco.
In return for these funds, the states released their rights to pursue
a wide range of claims against the tobacco companies. The states
released the companies from liability based on their past conduct and
from future monetary liability arising solely from use of or exposure
to tobacco. Some of the claims released by the states did not relate
to health-care costs; the MSA covered all claims "directly or indi-
rectly based on, arising out of or in any way related, in whole or in
part, to (A) the use, sale, distribution, manufacture, development,
9

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advertising, marketing, or health effects of, (B) the exposure to, or (C)
research, statements or warnings regarding, Tobacco Products."
West Virginia, North Carolina, and South Carolina have all
received payments under the MSA. A South Carolina statute assigns
all MSA receipts to a Tobacco Settlement Revenue Authority created
by the statute, which issues bonds (though not to the state) and pays
their proceeds to various trust funds. S.C. Code Ann. § 11-49-50, 11-
49-70 (Law. Co-op. Supp. 2001). Similarly, a North Carolina statute
assigns 50% of that state's MSA funds to a non-profit corporation cal-
led The Golden L.E.A.F. (Long-term Economic Advancement Foun-
dation) to provide financial assistance to tobacco-dependent areas of
North Carolina.
See 1999 N.C. Sess. Laws 2,
available at http://
www.ncga.state.nc.us/SessionLaws/1999_/sl19990002/default.htm
(last visited April 11, 2002).
In 1999, after the tobacco settlement had been reached, Congress
passed an amendment to federal Medicaid law that specifically
addresses the MSA, in a section of an emergency appropriations act,
entitled "Prohibition on Treating Any Funds Recovered From
Tobacco Companies as an Overpayment for Purposes of Medicaid."
See 1999 Emergency Supplemental Appropriations Act, Pub. L. No.
106-31, 113 Stat. 57, 103-04,
codified at 42 U.S.C.A. § 1396b(d)
(3)(B) (West Supp. 2001). Congress addressed the tobacco settlement
in two provisions that altered the usual manner for distribution of
recovery on third-party claims.
See 42 U.S.C.A. § 1396b(d)(3)(B)(i,
ii).
The first provision exempts the tobacco settlement from the usual
statutory payment scheme for state reimbursement of federal Medic-
aid costs. Ordinarily, a state reimburses the federal government by
designating the federal share of a recovery as part of an "overpay-
ment" on the federal obligations under Medicaid, to be repaid to the
federal government.
See 42 U.S.C.A. §§ 1396b(d)(2)(A), (2)(B),
(3)(A) (West Supp. 2001). Under the 1999 amendment, however,
Congress directed that this procedure
shall not apply to any amount recovered or paid to a State
as part of the comprehensive settlement of November 1998
between manufacturers of tobacco products . . . and State
10

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Attorneys General [the MSA], or as part of any individual
State settlement or judgment reached in litigation initiated or
pursued by a State against one or more such manufacturers.
42 U.S.C.A. § 1396b(d)(3)(B)(i). This provision, which for ease of
reference we designate "clause (i)," effectively eliminates any federal
right to a share of the proceeds of the MSA or certain other tobacco
settlements.
The second provision, which is crucial to our disposition of these
appeals, states that, except for litigation costs proscribed by 42
U.S.C.A. § 1396b(i)(19),
a State may use amounts recovered or paid to the State as
part of a comprehensive or individual settlement, or a judg-
ment, described in clause (i) for any expenditures deter-
mined appropriate by the State.
42 U.S.C.A. § 1396b(d)(3)(B)(ii). We refer to this provision herein as
"clause (ii)."
C.
By April 26, 2000, Medicaid patients suffering from tobacco-
related illnesses had filed the three similar amended complaints
against officials in West Virginia, North Carolina, and South Caro-
lina, which form the basis for these appeals. 3333 In these complaints, the
patients seek a share of the MSA funds received by their respective
____________________________________________________________
3333 For ease of reference, we often refer within to the individual state
defendants as "the states." The patients in all three cases also filed suit
against Citibank, the escrow agent for the MSA, and the North Carolina
patients sued the nonprofit organization that received a share of the
state's funds from the tobacco settlement, The Golden L.E.A.F. Both The
Golden L.E.A.F. and Citibank make a number of arguments on the mer-
its in their own behalf. Because we rule that the patients have no claim
at all to the MSA funds paid to the states, and because the patients'
claims against the non-state defendants are derivative of their other
claims, we need not address the specific arguments made by The Golden
L.E.A.F. or Citibank.
11

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states, under the theory that the Medicaid recovery provisions
described above apply to the MSA settlement, and that they have a
right to payments in excess of the states' actual medical expenses.
Specifically, proceeding under 42 U.S.C.A. § 1983, the Medicaid
patients allege that state officials violated provisions of the Medicaid
statute that require states to disburse excess funds to individual recipi-
ents,
see 42 U.S.C.A. § 1396k(b), and make reasonable efforts to pur-
sue all third-party liability on behalf of individual patients.
See 42
U.S.C.A. § 1396a(a)(25). They further allege that these asserted
deprivations violate the Due Process Clause and the Takings Clause.
By suing state officials rather than the state itself, the patients seek
to invoke the
Ex parte Young, 209 U.S. 123 (1908), exception to the
Eleventh-Amendment immunity of the states. The patients ask for a
declaratory judgment of their rights and their state's obligations under
federal Medicaid law, and injunctive relief requiring state officials
inter alia to "disburse . . . or to cause the disbursement" of the MSA
settlement funds that assertedly belong to the patients. In each case,
the district court dismissed the patients' claims on multiple grounds.
See Strawser v. Lawton, 126 F. Supp. 2d 994 (S.D. W. Va. 2001);
Joseph v. Condon, No. 00-324 (D.S.C. Mar. 19, 2001) (opinion and
order dismissing the case with prejudice);
White v. Hunt, No. 00-14
(W.D.N.C. Sept. 25, 2001) (same);
White v. Hunt, No. 00-14, 2000
WL 33261006 (W.D.N.C. July 13, 2000) (magistrate judge's report
and recommendations).
These appeals followed. Our review is
de novo.
See TWFS, Inc. v.
Schaefer, 242 F.3d 198, 204 (4th Cir. 2001);
Lynn v. West, 134 F.3d
582, 585 (4th Cir. 1998). We heard oral argument in all three cases.
Because of the identical central issues presented in each, however, we
resolve all three appeals in this single opinion.
II.
The patients' central contention is that the usual provisions for dis-
tribution of Medicaid recoveries apply to the funds the states receive
from the MSA, so that under 42 U.S.C.A. § 1396k(b), they have a
federal right to a share of those funds. The state officials respond that
the district court in each case properly dismissed the complaints
because, for numerous reasons, the complaints fail to state a claim on
12

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which relief can be granted and, in any event, the state officials enjoy
Eleventh-Amendment immunity from these lawsuits. Each district
court made rulings on both grounds, and, in particular, each ruled that
the 1999 amendment to the Medicaid statute bars any claim by the
patients to part of their respective states' shares of the tobacco settle-
ment. 4444 We affirm on that basis.
A.
Even though generally "[q]uestions of jurisdiction . . . should be
given priority," and some courts have held that the Eleventh Amend-
ment constitutes such a jurisdictional bar,
see Vermont Agency of Nat-
ural Res. v. United States, 529 U.S. 765, 778 (2000) (discussing
circuit split), in this case, we can properly base our holding on the
plain language of the 1999 amendment to the Medicaid statute with-
out resolving the Eleventh-Amendment question. This is so for two
reasons.
First, the limited nature of our holding permits this. In
Vermont
Agency, the Supreme Court specifically held it "appropriate" to deter-
mine whether a statute permitted a cause of action against the states
without resolving an Eleventh-Amendment question.
Id. at 779-780.
The Court explained that the statutory question was both "logically
____________________________________________________________
4444 Although the United States District Court for the District of South
Carolina did not explicitly dismiss the suit before it for failure to state
a claim, two of the court's rulings addressed the merits. First, the court
ruled that the state had not violated federal law in any respect; although
the court handled that determination as an Eleventh-Amendment issue
under
Ex parte Young, it more properly constitutes a determination on
the merits.
See Harris, 264 F.3d at 1289;
TWFS, 242 F.3d at 204-06;
Booth v. Maryland, 112 F.3d 139, 142-43 (4th Cir. 1997). The court also
concluded that "Congress has relieved states participating in the MSA of
any obligation to disburse funds to Medicaid recipients pursuant to
§ 1396k(b) of the Act" and that therefore "Plaintiffs have been deprived
of no right or privilege secured by the Act" and"§ 1983 is not implicated
in the within action." In any case, of course, we may affirm on any
ground revealed in the record.
See, e.g.,
Adventure Communications, Inc.
v. Kentucky Registry of Election Fin., 191 F.3d 429, 439 n.9 (4th Cir.
1999) (quoting
PHP Healthcare Corp. v. EMSA Ltd. P'ship, 14 F.3d
941, 945 (4th Cir. 1993)).
13

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antecedent" to the Eleventh-Amendment question and so limited that
there was no "realistic possibility that addressing" it could "expand
the Court's power beyond the limits that the jurisdictional restriction
has imposed."
Id. at 779.
Cf. BellSouth Telecomms., Inc. v. North
Carolina Utils. Comm'n, 240 F.3d 270, 275-76 (4th Cir. 2001) (ruling
that a federal court may not avoid ruling on an assertion of Eleventh-
Amendment immunity while permitting a case to proceed). Even if
the statutory question here is not as plainly "logically antecedent" to
the Eleventh-Amendment question, 5555 it provides the basis for an even
more limited holding than that in
Vermont Agency. That case held that
individual plaintiffs could obtain
no relief of any type from the states
under a particular federal statute (31 U.S.C.A. § 3729(a) (West Supp.
2001)); we merely hold that individual plaintiffs cannot obtain
certain
relief (tobacco settlement funds) from the states under a particular
federal statute (42 U.S.C.A. § 1396k(b)). Thus, as in
Vermont Agency,
resolution of the statutory question here does not involve a court in
"pronounc[ing] upon any issue, or upon the rights of any person,
beyond the issues and persons that would be reached under the Elev-
enth Amendment inquiry."
Vermont Agency, 529 U.S. at 799.
Second, and independent of the limited nature of our holding, the
states' litigating position renders it appropriate to resolve these cases
on the basis of the Medicaid statute. Both in their briefs and at oral
argument the states have relied on the contention that the 1999
amendment bars the patients' claims, as well as their Eleventh-
Amendment defense. Although at oral argument counsel for the state
officials carefully refrained from in any way waiving that defense,
they did not insist on it. Thus, like the state officials in
McClendon,
the officials here argue the merits and rely "upon that defense only if
it is necessary to prevent judgment against them on the merits." 261
F.3d at 1238. The Eleventh Amendment can be waived by a party,
see, e.g.,
College Sav. Bank v. Florida Prepaid Postsecondary Educ.
Expense Bd., 527 U.S. 666, 675 (1999), and so does not automatically
____________________________________________________________
5555 The statutory question here well may be just as "logically antecedent"
to the constitutional question; the statutory question in this case is in the
nature of an affirmative defense. Courts often base their holdings on an
affirmative defense without even resolving the existence of a cause of
action.
See 5A Charles Alan Wright & Arthur R. Miller,
Federal Prac-
tice & Procedure § 1357 (1990), and the many cases cited therein.
14

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divest a court of jurisdiction.
See Wisconsin Dept. of Corr. v. Schact,
524 U.S. 381, 389 (1998). The states' restricted use of the Eleventh-
Amendment defense here provides another reason permitting us "to
decide in their favor on the merits."
McClendon, 261 F.3d at 1258.
Additionally, we note that avoiding the constitutional question and
resolving this case on the merits — on the basis of the 1999 amend-
ment to the Medicaid statute — well accords with the venerable prin-
ciple that a court will not decide a constitutional question, particularly
a complicated constitutional question, if another ground adequately
disposes of the controversy.
See INS v. St. Cyr, 533 U.S. 289, 299-301
& n.13 (2001);
Ashwander v. TVA, 297 U.S. 288, 347 (1936) (Bran-
deis, J., concurring). 6666 While the statutory question here is easy, sev-
eral courts have concluded that the Eleventh-Amendment question
presents real difficulty.
See Greenless, 277 F.3d at 607;
Tyler, 280
F.3d at 121;
Floyd, 227 F.3d at 1034-35. In fact, no circuit has upheld
the states' contention that the
Ex parte Young exception does not
apply.
See Harris, 264 F.3d at 1288-94 (expressly holding that an
Ex
parte Young exception is available);
Greenless, 277 F.3d at 606-08
(holding on the merits);
Tyler, 280 F.3d at 121 (same);
McClendon,
261 F.3d at 1256-59 (same);
Floyd, 227 F.3d at 1034-35 (same).
For these reasons, we can and do resolve this case on the merits,
without reaching the Eleventh-Amendment question.
B.
Resolution of the patients' claims on the merits is straightforward.
But for an exception that is irrelevant here for litigation costs pro-
scribed by 42 U.S.C.A. § 1396b(i)(19), the 1999 Medicaid amend-
ment expressly provides that "a State may use amounts recovered or
paid to the State" under the MSA "for any expenditures determined
appropriate by the State."
See 42 U.S.C.A. § 1396b(d)(3)(B)(ii). The
states argue that the permission to use the funds freely applies to
all
____________________________________________________________
6666 We recognize that this principle does not permit a court to refrain
from resolving a disputed question as to Article III jurisdiction,
see Steel
Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-100 & n.3 (1998), but
no party contends that this case involves any lack of Article III jurisdic-
tion.
15

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"amounts recovered or paid to" them under the tobacco settlement,
and that it therefore extinguishes the rights of individual Medicaid
recipients under 42 U.S.C.A. § 1396k(b), with respect to tobacco-
settlement funds alone. The patients respond that the permission to
undertake "any expenditures determined appropriate by the State"
applies only to the funds that the federal government itself relin-
quished. The statutory text supplies a clear answer.
The relevant statutory language in clause (ii) provides that:
a State may use amounts recovered or paid to the State as
part of a comprehensive or individual settlement, or a judg-
ment, described in clause (i) for any expenditures deter-
mined appropriate by the State.
42 U.S.C.A. § 1396b(d)(3)(B)(ii). Clause (i), meanwhile, provides
that certain provisions under which the federal government ordinarily
recoups its share of a Medicaid recovery
shall not apply to any amount recovered or paid to a State
as part of the comprehensive settlement of November 1998
between manufacturers of tobacco products . . . and State
Attorneys General [the MSA], or as part of any individual
State settlement or judgment reached in litigation initiated or
pursued by a State against one or more such manufacturers.
42 U.S.C.A. § 1396b(d)(3)(B)(i). Clause (i) thus discusses an
"amount," the MSA itself, and "individual state settlement[s] or judg-
ment[s]."
The patients' theory rests on two propositions. First, they assert
that in clause (ii), the phrase "described in clause (i)" modifies
"amounts," not "settlement, or . . . judgment." According to the
patients, clause (ii) only provides the states federal permission to do
what they like with "amounts . . . described in clause (i)," whatever
those might be. Second, the patients contend that the "amounts . . .
described in clause (i)" constitute only "the federal share of the
tobacco settlement," not all the money recovered. Thus, the permis-
sion granted in clause (ii) applies only to the federal share of the
MSA, leaving the individual claims under § 1396k(b) intact.
16

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Neither proposition is tenable. First, clause (ii)'s term "described
in clause (i)" is better read to modify "settlement, or . . . judgment."
Clause (ii) provides that "a State may use amounts recovered or paid
to a state as part of a comprehensive or individual settlement, or a
judgment, described in clause (i)" as it likes. It is the phrase "settle-
ment, or . . . judgment" that would be vague without the modifier
directing the reader to clause (i), not the phrase "amounts recovered
or paid to the State." An amount recovered or paid to a state under
a settlement or judgment is the incoming money, plainly. Meanwhile,
without more, "a comprehensive or individual settlement, or a judg-
ment," is much broader than the scope of the 1999 amendment. The
modifier is only necessary for the latter.
Morever, even if the phrase "described in clause (i)" did modify
"amounts," the "amount" that clause (i) itself discusses is "
any
amount recovered or paid to a State" as a result of the MSA or other
tobacco settlements — not just the federal share.
See Tyler, 280 F.3d
at 122-23;
Harris, 264 F.3d at 1295-96;
Strawser, 126 F. Supp. 2d at
1000. This is true even though clause (i) itself functions to exempt
such amounts from the ordinary processes by which the states repay
the federal government for its share of Medicaid expenses. We thus
reject both propositions supporting the patients' reading of clause (ii).
Turning to the impact of clause (ii) on the patients' claims in these
cases, we consider its statement that "a State may use amounts recov-
ered or paid to the State" under the MSA "for any expenditures deter-
mined appropriate by the State." This provision permits a state to use
"amounts recovered or paid . . . for
any expenditure," and does not
qualify the term "amounts." There is no ambiguity in this sentence:
Congress declares that the states may spend any money they receive
under the MSA on any expenditure.
See Greenless, 277 F.3d at 609
("Congress made its intent clear in the amendment.");
Tyler, 280 F.3d
at 124 ("[T]here is no ambiguity in the language of
§ 1396b(d)(3)(B)(ii).");
Harris, 264 F.3d at 1295. 7777
____________________________________________________________
7777 The West Virginia patients argued unsuccessfully below that the 1999
amendment raised problems of retroactivity.
See Strawser, 126 F. Supp.
2d at 1002 n.5. Neither they nor the South Carolina patients press this
argument in their briefs on appeal. The North Carolina patients do press
17

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C.
Notwithstanding the clarity of this language, the patients offer sev-
eral reasons why we should ignore it.
1.
First, they maintain that the legislative history, the title, and the
context of the 1999 amendment require rejection of its clear language.
Even if it were appropriate to consider legislative history when the
statutory text is plain, and it is not, the legislative history here does
not contradict the statutory text; indeed, the legislative history does
not even mention individual Medicaid recipients.
See Tyler, 280 F.3d
at 124;
Harris, 264 F.3d at 1297. Rather, the legislative history of the
1999 amendment describes, without reference to individual patients,
the existence and nature of a federal right to a share of the MSA. The
patients actually emphasize this silence, suggesting that it supports
them, because the legislative history does not expressly discuss the
states' entitlement to all funds from the tobacco litigation here. How-
ever, total silence on a point is far from the "substantial, unambiguous
evidence" necessary for a court to consider reaching "a contrary inter-
pretation" of clear statutory language.
Matala v. Consolidation Coal
Co., 647 F.2d 427, 430 (4th Cir. 1981).
The title of the amendment similarly contains no mention of the
rights of individual Medicaid patients. That title — "Prohibition on
Treating Any Funds Recovered From Tobacco Companies as an
Overpayment for Purposes of Medicaid" — instead simply refers to
____________________________________________________________
such an argument on appeal, but they failed to preserve it in objecting
to the magistrate judge's recommendation of dismissal.
See 28 U.S.C.A.
§ 636(b)(1) (West 1993);
Praylow v. Martin, 761 F.2d 179, 180 n.1 (4th
Cir. 1985) (ruling that an issue is waived where no specific objection is
filed). Accordingly, we need not and do not reach it; we note, however,
that two of our sister circuits have expressly rejected such an argument.
See Greenless, 277 F.3d at 609 (rejecting a retroactivity argument against
application of the 1999 amendment);
Harris, 264 F.3d at 1296-97
(same).
18

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"an overpayment," the term of art used for refunding state money to
the federal government in this context.
See 42 U.S.C.A.
§§ 1396b(d)(2)(A), (2)(B), (3)(A). Nor, contrary to the patients' sug-
gestion, does the 1999 amendment's context — the amendment's
"distance" of 113 pages in the U.S.C.A. from § 1396k(b), under
which the patients seek to recover — affect the amendment's legal
import.
In short, we agree with the states (and with the First, Second, and
Tenth Circuits) that the plain language of the Medicaid statute, specif-
ically the 1999 amendment, permits the states to do whatever they
like with all "amounts recovered" under the MSA, that is, with all the
money they derive from it.
See Greenless, 277 F.3d at 605-09;
Tyler,
280 F.3d at 121-24;
Harris, 264 F.3d at 1294-97;
see also McClen-
don, 261 F.3d at 1262 (Noonan, J., concurring in the judgment). 8888
2.
The patients next contend that to find the 1999 amendment disposi-
tive, we must conclude that it repealed § 1396k(b) by implication, a
conclusion that they say we should be extremely reluctant to draw.
The plain language of the 1999 amendment does necessarily signal a
marked departure from § 1396k(b)'s general requirement for the final
distribution of monies to individual Medicaid recipients.
See Green-
less, 277 F.3d at 609 n.8;
Strawser, 126 F. Supp. 2d at 1000 n.4. And
____________________________________________________________
8888 At oral argument the patients contended that the district courts had
improperly overlooked their claims under the Takings Clause.
See U.S.
Const. amend. V. Their briefs in this court make no Takings Clause argu-
ment; nor have they asserted that the 1999 amendment itself constitutes
or unconstitutionally authorizes a taking.
Cf. Joseph Reply at 12
("American citizens cannot be stripped of their statutory rights
sub silen-
tio."); White Reply at 19 (addressing whether Congress wished "to take
private property" in an argument about how "courts may properly inter-
pret acts of Congress"). The states contend that, regardless of the effect
of the 1999 amendment on their use of MSA funds, the tobacco settle-
ment did not resolve and had no effect on individual claims against the
tobacco companies, which remain viable in separate actions.
See also
McClendon, 261 F.3d at 1261-62;
Floyd, 227 F.3d at 1033-34, 1037. In
light of our disposition of these appeals, we need take no position on that
issue.
19

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courts do indeed disfavor repeals by implication.
See, e.g.,
Rodriguez
v. United States, 480 U.S. 522, 524 (1987);
Rodgers v. United States,
185 U.S. 83, 87-88 (1902). But we do not believe that the 1999
amendment repeals § 1396k(b) by implication.
In support of their contrary view, the patients cite only cases
involving repeals of entire statutes or rules.
See, e.g.,
United States v.
United Cont'l Tuna Corp., 425 U.S. 164, 169 (1976) ("[T]he expecta-
tion that there would be some expression of an intent to `repeal' is
particularly strong in a case . . . in which the`repeal' would extend
to virtually every case to which the statute had application.");
FDIC
v. Hirsch (
In re Colonial Realty Co.), 980 F.2d 125, 133 (2d Cir.
1992) (noting that finding a repeal would be "a quite significant modi-
fication" of a general rule). By contrast, the effect of the 1999 amend-
ment is highly specific. The amendment does not repeal the general
operation of § 1396k(b).
See Greenless, 277 F.3d at 608. Every Med-
icaid recipient — except those seeking tobacco money from the states
— has the same rights under § 1396k(b) after the 1999 amendment
as he or she had before it.
Rather than repeal by implication a general statute (§ 1396k(b)),
the 1999 amendment simply created a specific, discrete exception to
that statute.
See Harris, 264 F.3d at 1296 (ruling that the 1999 amend-
ment "simply addresses one particular application and carves out an
exception"). "It is a well-settled principle of construction that specific
terms covering the given subject matter will prevail over general lan-
guage of the same or another statute which might otherwise prove
controlling."
Kepner v. United States, 195 U.S. 100, 125 (1904) (cita-
tions omitted);
see also Stewart v. Smith, 673 F.2d 485, 492 (D.C. Cir.
1982) ("When one statute speaks in general terms while the other is
specific, conflicting provisions may be reconciled by carving out an
exception from the more general enactment for the more specific stat-
ute."); 1A Norman J. Singer,
Sutherland Statutory Construction
§ 23:16 (6th ed. 2002);
cf. Brown v. Gen. Servs. Admin., 425 U.S.
820, 834 (1976) ("In a variety of contexts the Court has held that a
precisely drawn, detailed statute pre-empts more general remedies.").
Although the 1999 amendment conflicts with § 1396k(b) with respect
to individual recovery under the tobacco settlement,"[b]oth will be
given effect if the general language of [§ 1396k(b)] be construed as
applying generally, and [the 1999 amendment] be construed as creat-
20

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ing an exception to its general application."
Niagara Fire Ins. Co. of
New York v. Raleigh Hardware Co., 62 F.2d 705, 709 (4th Cir. 1933);
see also Greenless, 277 F.3d at 608-09 (rejecting a repeal-by-
implication argument);
Harris, 264 F.3d at 1296 (same).
Finally, the patients contend that because the 1999 amendment was
part of an emergency appropriations rider, we should be even more
reluctant to hold that it affects an earlier substantive statute. Again,
we agree as a general matter: "According to its own rules, Congress
is not supposed to use appropriations measures as vehicles for the
amendment of general laws . . . . [T]he doctrine disfavoring repeals
by implications is said to apply `with full vigor' when the subsequent
law is an appropriations measure."
City of Los Angeles v. Adams, 556
F.2d 40, 48 (D.C. Cir. 1977) (citations omitted);
see also TVA v. Hill,
437 U.S. 153, 189-90 (1978). The Supreme Court has ruled, however,
that despite legislative rules to the contrary, Congress may "accom-
plish its purpose by an amendment to an appropriation bill, or other-
wise."
United States v. Dickerson, 310 U.S. 554, 555 (1940) (citations
omitted),
cited approvingly in United States v. Will, 449 U.S. 200,
221-24 (1980);
see also 1A Singer,
Sutherland Statutory Construc-
tion, § 23:17 ("A purpose to repeal substantive provisions in earlier
statutes may be manifested by provisions in subsequent appropriation
acts directing what use may be made of funds in relation to the sub-
ject dealt with in the earlier act.").
If two statutes can otherwise be reconciled, a court should not read
a later amendment as an exception to an established general statute.
See TVA, 437 U.S. at 189-93. But as any child with an allowance
knows, permission to use money "for any expenditure" clearly con-
flicts with a mandate to give some of the money to someone else.
"Where Congress chooses" to amend substantive law in an appropria-
tions rider, "we are bound to follow Congress's last word on the mat-
ter even in an appropriations law."
City of Los Angeles, 556 F.2d at
49. With respect to the tobacco settlement, Congress has spoken, and
spoken clearly.
III.
In sum, we hold that 42 U.S.C.A. § 1396b(d)(3)(B)(ii) bars any
recovery by individual Medicaid recipients to a share of the money
21

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the states receive under the Master Settlement Agreement. 9999 The judg-
ments of the district courts are therefore
AFFIRMED.
____________________________________________________________
9999 In addition to the ground on which we rule, the states argue that indi-
vidual Medicaid recipients only assigned their third-party claims to the
states up to the amount the states had spent on their care; that the states
did not sue the tobacco companies on behalf of individual Medicaid
recipients; that the MSA did not resolve claims that individual Medicaid
recipients might have against the tobacco companies; that the tobacco
settlement did not constitute a Medicaid recovery at all, so neither the
federal government nor individual recipients had any right to any of its
funds; that the state officials have no authority under South Carolina law
to disburse MSA funds; and that even if the MSA constituted a Medicaid
recovery in part, any money the states received in the tobacco settlement
was for non-Medicaid claims that were settled in the MSA, so no excess
exists to be refunded under 42 U.S.C.A. § 1396k(b). We need not
address these arguments given our disposition of these appeals.
22

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