North Carolina's argument, if accepted, would frustrate the Medicaid anti-lien provision in the context of tort recoveries. The argument lacks any limiting principle: If a State arbitrarily may designate one-third of any recovery as payment for medical expenses, there is no logical reason why it could not designate half, three-quarters, or all of a tort recovery in the same way. In Ahlborn, the State of Arkansas, under this rationale, would have succeeded in claiming the full amount it sought from the beneficiary had it been more creative and less candid in describing the effect of its full reimbursement law.

E.M.A. sustained injuries at birth that left her deaf, blind, and unable to sit, walk, crawl, or talk. The injuries also caused her mental retardation and a seizure disorder. She requires between 12 and 18 hours of skilled nursing care per day. To care for her the rest of her life, her family sought $42 million in damages. The state of North Carolina anticipated getting one-third of this amount under its statutory scheme. When E.M.A.'s parents settlement was reduced to $2.8 million, North Carolina still sought a $1.9 million fee to reimburse its Medicaid expenditures.