OPINION

ANDERSON, Paul H., Justice.

Joan E. Martin settled a personal injury cause of action against multiple defendants on behalf of her disabled son, Troy Hoff. The state asserted a medical assistance lien against the proceeds as reimbursement for Hoff's medical expenses paid by the state through medical assistance. The state also asserted a subrogation right to the proceeds. The district court dismissed the state's claim to the proceeds, finding that the state medical assistance lien and subrogation provisions were preempted by federal law. The state appealed to the Minnesota Court of Appeals, which reversed the district court, holding that federal law did not preempt the state's lien and subrogation rights. Martin appealed to this court. We reverse.

Troy Hoff and Donald Tlougan were involved in a single-car accident on July 10, 1991, near Rochester, Minnesota. Tlougan died as a result of the accident. Hoff suffered permanent and totally disabling injuries and was rendered mentally incompetent.

Hoff's mother, Joan E. Martin, sought medical assistance from the State of Minnesota on Hoff's behalf. The state began making medical assistance payments for Hoff's care on November 25, 1991. About a year and a half later, on May 23, 1993, Martin assigned to the state all of Hoff's rights to payment for medical care from any third party liable for Hoff's injuries. Martin made the assignment as Hoff's authorized representative.

The state filed a public assistance lien in the Olmsted County Recorder's Office on June 21, 1993. The lien was specifically placed upon Hoff's causes of action arising out of the accident. This lien was for $267,754.50 of past medical assistance benefits paid on Hoff's behalf, and also included any future medical assistance benefits to be paid as a consequence of the accident.

Martin, as guardian ad litem for Hoff, sued Tlougan's estate, the City of Rochester, Rochester Township, and the County of Olmsted. Martin sought recovery for past and future expenses for medical care and treatment, past and future pain and suffering, disability, disfigurement, past loss of earnings, loss of earning capacity, and other general and specific damages. Martin joined the state as an involuntary plaintiff on impleader, alleging that, as a result of the state's medical assistance lien, the state's presence was necessary for a "just adjudication of all rights." As a result of joining the state as a plaintiff on impleader, Martin was able to plead a claim on behalf of the state alleging that the defendants were liable to the state for past and future expenses for medical care, treatment, sheltered living, and other general and specific damages.

After being joined as a plaintiff on impleader, the state filed an answer and cross-claims against Martin. In its answer, the state specifically denied Martin's characterization of the state as an appropriately named plaintiff and alleged that "as a lienholder on the present cause of action," it did not need to be named as a plaintiff on the pleadings. Instead, the state, in its cross-claim against Martin, relied on its lien rights under Minn. Stat. § 256B.042, subd. 1 (2000), claiming the right to reimbursement for medical expenses it paid on Hoff's behalf from any judgment, award, or settlement of Hoff's causes of action. After filing its answer and cross-claims, the state was not significantly involved in the litigation and did not independently pursue its claim against defendants for medical expenses as pleaded by Martin on its behalf.

Nearly 6 years after commencing this action, Martin negotiated settlements with the defendants, first with the City of Rochester and then with Tlougan's estate and Rochester Township. The combined total of the settlements was $220,000. The settlement agreements encompassed all causes of action and claims.

The district court explicitly stated in its orders approving these settlement agreements that it was aware of the nature and extent of Hoff's injuries, the damages claimed, the respective positions of the parties regarding liability, and the consequences of further litigation between the parties. The court found that the settlements were fair, just, and in the best interests of Hoff. The court also stated that it was aware of a dispute between Martin and the state regarding the state's claim to part of the settlement proceeds. However, the court concluded that this dispute did not involve the settlements directly and only concerned the eventual disbursement of the balance of the settlement proceeds. The court concluded that the dispute between Martin and the state should not delay the settlement with the defendants and that the interests of Martin and the state in the settlement proceeds could be protected by depositing the balance of the proceeds in an interest-bearing account with the court administrator. In compliance with the order of the court approving each settlement, Martin and the state released all three defendants from further liability and stipulated to a dismissal with prejudice on their claims. It is unclear from the record what claims were part of the settlement and how, if at all, the settlement proceeds were allocated among the respective claims.

After the settlements with the three defendants had been agreed upon, Martin and the state pursued their separate dispute regarding the state's cross-claim. Specifically, the state asserted that its medical assistance lien entitled it to obtain out of the remaining settlement proceeds $58,561.82 as reimbursement for the over $600,000 it had paid by that time for Hoff's medical care.

Martin filed a motion to dismiss the state's claim, arguing that federal law prohibited the state from placing a lien on a medical assistance recipient's property. Martin argued that the settlement proceeds were solely Hoff's property because the assignment to the state of Hoff's rights to medical expenses left Martin with no power to collect or sue for medical expenses on Hoff's behalf. Therefore, Martin asserted that the settlement proceeds were solely Hoff's property because the settlement was made only on Hoff's remaining personal injury claims, i.e., damages for pain and suffering, disfigurement, disability, emotional distress, loss of earnings, and loss of earning capacity, but not medical expenses.

In response to Martin's motion, the state argued (1) that the federal anti-lien statute does not apply to third-party recoveries, (2) that the lien does not attach to the cause of action but instead to the proceeds, and (3) that proceeds are the property of the liable third parties. Additionally, the state contested Martin's argument on the effect of the assignment, arguing that the assignment did not deprive Martin of the ability to sue and collect for medical expenses. The state asserted that the assignment left both Martin and the state with the ability to pursue a recovery of medical expenses. Therefore, the state argues, the settlement included a recovery for medical expenses. Moreover, in its argument to the district court, the state did not assert that part of the settlement included the state's independent claim as pleaded by Martin. At this point in the proceedings, the state for the first time raised a subrogation claim under Minn. Stat. § 256B.37 (2000) for the medical assistance paid.

The district court granted Martin's motion to dismiss the state's claim to any of the settlement proceeds. The court found that, as a result of the assignment in the medical assistance application, neither Martin nor Hoff had any right to recover medical expenses from the defendants. The court then found that the settlement proceeds were Hoff's sole and exclusive property. The court further found that, because federal law bars imposition of a lien on any of Hoff's property during his lifetime and state lien laws permit a lien against Hoff's property, state lien laws conflicted with federal laws and thus were preempted. The court also rejected the state's subrogation claim on the grounds it was also prohibited by the federal anti-lien statute and because it was not timely asserted.

Although the foregoing proceedings were at times confusing, the final outcome in the district court can best be summarized as follows. The court found that Hoff's right to recover medical expenses was completely assigned to the state, leaving Martin, as Hoff's guardian, with no right to collect for medical expenses. Hoff's remaining rights to recover included all of his claims for personal injury damages except for medical expenses. Martin settled all of Hoff's remaining claims arising out of the accident against the three defendants for $220,000. The state released the three defendants from further liability for its claims, apparently relying only on its lien and subrogation rights to recover medical expenses paid on Hoff's behalf. The court then found that the state was not entitled to any of the settlement funds. The court concluded that the state's lien and subrogation rights were preempted by federal law.

The combined result of the settlement agreements, releases, and the district court's order left the state without the ability to recover its medical expenses paid on Hoff's behalf. That is to say, the state could not collect anything, either directly through a cause of action against the defendants or indirectly through the use of liens or subrogation against the settlement proceeds.

The state appealed, arguing that the federal anti-lien provision preempts neither the state's medical assistance lien statute nor the state's subrogation statute. The court of appeals agreed with the state and reversed the district court, concluding that Minnesota's medical assistance statute does not conflict with the federal Medicaid statutory scheme because compliance with both the state and federal provisions was possible. The court of appeals concluded that federal law therefore did not bar the state from placing a lien on the settlement proceeds. The court of appeals also concluded that the third-party settlement was subject to the state's subrogation claim. Martin then appealed to this court.

I.

This case presents three legal questions. The questions are whether Minnesota's medical assistance lien, assignment, and subrogation statutes are preempted by the federal anti-lien statute. Whether federal law preempts state law is generally an issue of statutory construction. Pikop v. Burlington N. R.R. Co., 390 N.W.2d 743, 748 (Minn. 1986). Statutory construction is reviewed de novo. Am. Family Ins. Group v. Schroedl, 616 N.W.2d 273, 277 (Minn. 2000).

A. Statutory Background

For an understanding of the legal issues in this case, it is first necessary to understand the relevant Medicaid statutes. Medicaid, enacted in 1965 as Title XIX of the Social Security Act, is a publicly funded program to ensure medical care to certain individuals who lack the resources to cover the costs of essential medical services. 42 C.F.R. § 430.0; see Norwest Bank of N.D., N.A. v. Doth, 159 F.3d 328, 331 (8th Cir. 1998). Medicaid was intended to be the payor of last resort. See H.R. Conf. Report No. 99-453, at 542 (1985). Medicaid is jointly funded by the federal and state governments. 42 C.F.R. § 430.0. Each state administers its own program within federally mandated requirements. Id. On the federal level, the Health Care Financing Administration (HCFA) is responsible for administering the Medicaid program.

The focus of our analysis is on the relationship between federal and state laws addressing the government's right to recover funds it has expended for medical care under the Medicaid program. The most relevant federal statute is an anti-lien provision prohibiting states from imposing a lien on property of a Medicaid recipient because of medical assistance paid. 42 U.S.C. § 1396p(a)(1) (1994) ("[n]o lien may be imposed against the property of any individual prior to his death on account of medical assistance paid * * *."). Despite this federal prohibition, a Minnesota statute grants to the state lien rights for the cost of care arising from the injuries which lead to the need for medical assistance. Minn. Stat. § 256B.042, subd. 1 (2000). More specifically, the Minnesota statute provides in relevant part:

When the state agency provides, pays for, or becomes liable for medical care, it shall have a lien for the cost of the care upon any and all causes of action or recovery rights under any policy, plan, or contract providing benefits for health care or injury, which accrue to the person to whom the care was furnished, or to the person's legal representatives, as a result of the illness or injuries which necessitated the medical care.

Id. (emphasis added). The statute specifically directs that a lien be placed on a cause of action or recovery rights. A cause of action, often referred to as a claim, is "[a] group of operative facts giving rise to one or more bases for suing" or "[the] legal theory of a lawsuit." Black's Law Dictionary 214 (7th ed. 1999). Under Minnesota law, a cause of action is personal property. See State v. Royal Mineral Ass'n, 132 Minn. 232, 236, 156 N.W. 128, 130 (1916) ("[T]he term `credits,' as used in the taxing statutes, embraces only choses in action which are in their nature personal property."); Mattson v. Minnesota N. Wis. R.R., 95 Minn. 477, 488, 104 N.W. 443, 448 (1905) (holding that the right to pursue damages for personal injuries is a property right); see also Minn. Stat. § 550.37, subd. 22 (2000) (listing "[r]ights of action for injuries to the person" as exempt property).

In addition to the anti-lien provision, federal law also mandates that a state's medical assistance plan require that medical assistance recipients assign to the state the right to receive payments for medical expenses from third parties liable for payment of those expenses. 42 U.S.C. § 1396k(a) (1994). Minnesota's medical assistance plan includes such an assignment requirement, although it arguably requires assignment of more rights than the federal provision. Minn. Stat. § 256B.056, subd. 6 (2000).

It is apparent that there is a conflict between the state lien and assignment provisions and the federal requirements. Despite the federal anti-lien provision, state law gives the state a lien on a medical assistance recipient's causes of action and recovery rights. Also, despite the limited scope of the federal assignment of rights requirement, state law can be read to require that medical assistance recipients, as a condition of eligibility, assign to the state more rights than the federal provision requires. Compare 42 U.S.C. § 1396k with Minn. Stat. § 256B.056, subd. 6. In addition, the state is subrogated to any rights under a recipient's cause of action arising out of an occurrence necessitating medical assistance — although, at first glance, this subrogation provision does not run afoul of any federal restrictions. Minn. Stat. § 256B.37, subd. 1 (2000).

B. Preemption

Because of the conflict between the federal and state provisions, we must answer the question whether the federal provisions supersede the state statutes. To do so, we need to examine the law of federal preemption. There are three distinct situations in which federal law preempts and invalidates state law. Pikop, 390 N.W.2d at 748. First, state law is preempted when Congress explicitly states that the federal scheme preempts any for state action in the field. See Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977). The second arises when Congress implicitly preempts state involvement in a particular field of law because the scope of federal involvement or interest is so extensive that it fully "occupies the field." See, e.g., Cipollone v. Ligget Group, Inc., 505 U.S. 504, 516 (1992); Fidelity Fed. Sav. Loan Ass'n v. De la Cuesta, 458 U.S. 141, 153 (1982); Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). The final type of preemption, "conflict preemption," takes two forms and arises when state law conflicts with federal law, either because compliance with both federal and state law is impossible or because the state law is an obstacle to the accomplishment of the purposes of the federal scheme. See Fla. Lime Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-43 (1963); Hines v. Davidowitz, 312 U.S. 52, 67 (1941). Preemption of state laws is generally disfavored. See Cipollone, 505 U.S. at 516, 518; Forster v. R.J. Reynolds Tobacco Co., 437 N.W.2d 655, 658 (Minn. 1989). When federal laws do preempt conflicting state laws, the state laws are preempted only to the extent that they are in conflict with federal law. Dalton v. Little Rock Family Planning Servs., 516 U.S. 474, 476 (1996); De Canas v. Bica, 424 U.S. 351, 357-58 n. 5 (1976); Forster, 437 N.W.2d at 658.

Congress specifically permits state action regarding Medicaid; in fact, it requires that a participating state's Medicaid plan conform to federal requirements. Schweiker v. Gray Panthers, 453 U.S. 34, 37 (1981); see also 42 U.S.C. § 1396a(a) (1994 Supp. V 1999). Thus, there is no explicit or implicit federal preemption of the field. Instead, the conflict between the federal and state provisions requires a determination that preemption will apply here only if state law conflicts with specific federal Medicaid law or is an obstacle to federal Medicaid purposes. To make this determination, we first must compare the federal anti-lien provision with the state lien provision, then compare the federal and state assignment provisions with each other, and, finally, compare the federal anti-lien and state assignment provisions. Before making such comparisons, it is important to have a more complete description of the federal Medicaid scheme.

1. The Federal Law

The federal anti-lien provision ensures that property of a Medicaid recipient not be depleted during his life by a state seeking reimbursement for medical assistance paid. At the same time, the federal assignment and third-party recovery provisions enable a state to recover, to the extent of third-party liability, amounts the state has paid on behalf of Medicaid recipients. These provisions may be in conflict; therefore, our first step is to examine and seek to harmonize the federal law.

Fundamental principles of statutory construction require that courts give effect to the plain meaning of a statute when the language is clear. See, e.g., Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997); s ee also Minn. Stat. § 645.16 (2000); Correll v. Distinctive Dental Servs., P.A., 607 N.W.2d 440, 445 (Minn. 2000). The state argues that the federal anti-lien provision clearly does not apply to third-party recoveries. Alternatively, the state argues that if we conclude the anti-lien provision is ambiguous, we should defer to clarifying agency interpretations under the doctrine articulated in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984). But we conclude the federal anti-lien provision is unambiguous. It unequivocally provides that "[n]o lien may be imposed against the property of any individual prior to his death on account of medical assistance paid * * *." 42 U.S.C. § 1396p(a)(1). Further, there is no indication in the statute's language that this anti-lien provision does not apply to third-party recoveries. The provision means exactly what it says — prior to his death, no lien may be placed on the property of a medical assistance recipient for recovery of medical assistance paid. Therefore, we will give effect to the plain meaning of the federal anti-lien provision.

We read and construe a statute as a whole and "interpret each section in light of the surrounding sections to avoid conflicting interpretations." Schroedl, 616 N.W.2d at 277; see also United States v. Morton, 467 U.S. 822, 828 (1984). Further, we are required, when possible, to give effect to all of a law's provisions. See Duncan v. Walker, 533 U.S. 167, 121 S.Ct. 2120, 2125 (2001); see also Minn. Stat. § 645.16. We are mindful of these requirements as we next seek to harmonize the plain meaning of the anti-lien provision with other federal provisions.

There are two other significant federal Medicaid requirements regarding a state's ability to recover medical assistance paid that must be construed in concert with our interpretation of the anti-lien provision. The first of these is the federal law that requires states to obtain from recipients, as a condition of eligibility for medical assistance, an assignment of rights to payment for medical care. 42 U.S.C. § 1396k. The specific provision requires a medical assistance recipient to "assign the State any rights, of the individual * * * to payment for medical care from any third party." 42 U.S.C. § 1396k (emphasis added). The second requirement directs states to recover the cost of care from potentially liable third parties. See 42 U.S.C. § 1396a(a)(25)(H) (Supp. V 1999). The third-party recovery provision provides

that 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, the State has 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.

42 U.S.C. § 1396a(a)(25)(H) (emphasis added).

Both of these provisions specifically refer to payments for medical or health care. The required assignment of rights under federal law is for payment from any third party for medical care only. Similarly, a state's right to recover from third parties is specifically limited under federal law to payment for health care items or services only. Thus, federal law requires a state to obtain an assignment of rights from the medical assistance recipient, but only for payments for medical or health care expenses.

The right assigned to the state is the medical assistance recipient's right to recover medical expenses from third parties liable for payment of those expenses. An assignment generally operates to transfer all rights possessed by the assignor and the assignor retains no interest in the right transferred. Marquette Appliances, Inc. v. Econ. Food Plan, Inc., 256 Minn. 169, 173, 97 N.W.2d 652, 655 (1959). By assigning the right to recover medical expenses, the Medicaid recipient no longer owns that right of recovery, i.e., the right is no longer the property of the recipient. Therefore, state enforcement of the assignment for medical expenses does not violate the anti-lien provision because recovery under the assignment does not operate on the property of the recipient. Moreover, this assignment allows the state to follow the federal directive to pursue third parties that may be liable for the costs of medical care. Although the state may not file a lien, the assignment does give the state the ability to pursue the third parties directly.

The foregoing analysis convinces us that there is no need to engage in an arduous or belabored statutory construction to harmonize the three federal statutes. Taking notice of the plain meaning of each is sufficient to achieve harmony. The anti-lien provision protects the personal property of a medical assistance recipient — here, Hoff's cause of action — from a state's effort to recover for medical expenses. The assignment transfers to the state the recipient's right to recover medical expenses, and therefore the ability to pursue directly potentially liable third parties for medical assistance expenses paid. The anti-lien provision protects all of a recipient's nonassigned rights to recover. The recovery provision, on the other hand, requires that the state pursue the third parties for medical expenses paid by the state, and the state does so under the assignment. The result is that the anti-lien provision operates in harmony with other federal Medicaid provisions and gives effect to all of the provisions.

The three federal statutes reflect dual federal objectives: first, protection of the recipient's limited assets from encroachment by the state for reimbursement for medical expenses paid; second, requiring recovery and reimbursement from third parties liable for the recipient's medical expenses that were paid by Medicaid. The statutes reflect these objectives by insulating the recipient's property from the state's recovery through the anti-lien provision, while at the same time requiring assignment to the state of the recipient's right to collect from third parties liable for the costs of medical care paid by the state and by requiring the state to exercise its recovery rights.

It is critical to note that the federal scheme reflects the concept that the assigned right to recover for medical expenses is no longer the property of the medical assistance recipient and therefore the anti-lien provision does not prohibit a state from pursuing recovery under this assigned right. Essentially, at the time of an accident, the injured party acquires in tort one or more rights of action or claims against those responsible for the injuries. These rights of action or claims can be likened to a "bundle of sticks." See United States v. Ben-Hur, 20 F.3d 313, 317-18 (7th Cir. 1994) (stating that property rights are likened to "bundle of sticks," each stick separately alienable); In re Nelson, 92 B.R. 837, 842 (Bankr.D.Minn. 1988) (reflecting the implicit concept that property rights are divisible). As a condition of receiving medical assistance from a state, a medical assistance recipient assigns to the state one stick from that bundle — the specific claim to recover medical expenses from those responsible for the injuries. At this point, the state becomes the sole owner of the claim against any third parties for medical expenses. But the recipient retains ownership of the remaining sticks in the bundle — that is to say, the claims for pain and suffering, emotional distress, disability, disfigurement, loss of earnings, and loss of earning capacity. To the extent that any settlement with the responsible third parties is for this larger bundle of sticks (the original tort action minus the claim for medical care), the settlement proceeds are the recipient's personal property, and as such are protected by the federal anti-lien provision.

The dissent expresses concern about our willingness to recognize these separate claims and cites a medical assistance eligibility case, In re Welfare of K.S., as support for its analysis. In K.S., we attempted to determine the availability of certain assets for purposes of medical assistance eligibility. 427 N.W.2d 653, 658-59 (Minn. 1988). Specifically, we addressed whether the purpose for which a tort settlement fund was received affected the fund's availability for medical assistance eligibility. Id at 659. We do not disagree with the holding in K.S., but do not see its relevance to the case before us. In K.S., we concluded that the state medical assistance subrogation provision, Minn. Stat. § 256B.37, indicated a clear legislative intent that the availability of a settlement fund for medical assistance eligibility purposes does not depend on the purpose for which the settlement was received. K.S., 427 N.W.2d at 659. We also noted that the medical assistance lien provision indicated a legislative intent to place the burden of medical assistance on the tortfeasor and therefore on the tort recovery. Id. at 660. However, because the issue before the court in K.S. was eligibility for medical assistance and not the validity of a medical assistance lien, we did not address the federal anti-lien provision and its impact on state medical assistance laws. As developed in detail below, the federal anti-lien provision is critical to the resolution of the case before us.

2. State Medical Assistance Lien

Having set forth the federal law, we must now juxtapose the federal anti-lien provision and Minnesota's medical assistance lien to determine whether compliance with both is impossible or whether the state law is an obstacle to accomplishment of the purposes of the federal Medicaid scheme. The state lien provision gives the state a lien for the cost of care "upon any and all causes of action" which accrue to the medical assistance recipient as a result of the injuries that necessitated the medical care. Minn. Stat. § 256B.042, subd. 1. But as previously noted, these causes of action or claims are the personal property of the medical assistance recipient. See Royal Mineral Ass'n, 132 Minn. at 236, 156 N.W. at 130; see also Mattson, 95 Minn. at 488, 104 N.W. at 448. Therefore, the state medical assistance lien provision appears to conflict with the federal anti-lien provision and should be subjected to a preemption analysis.

Under conflict preemption, federal law preempts state law when compliance with both is impossible or when the state statute is an obstacle to the purposes of the federal scheme. See Fla. Lime Avocado Growers, 373 U.S. at 142-43; Hines, 312 U.S. at 67. Here, the federal anti-lien statute prohibits placing a lien upon a medical assistance recipient's personal property before the recipient's death. This provision can coexist with the federal assignment provision because the assignment removes from the property of the recipient his claim for medical care. Yet the state's medical assistance lien provision allows a lien to be placed on a variety of claims that are still the recipient's personal property. This result is in direct conflict with the federal anti-lien provision. Therefore, we conclude that compliance with both provisions is not possible because the federal law prohibits exactly what the state law allows.

Having concluded that the state lien provision is in conflict with federal law, we are now presented with two options for the ultimate fate of the state law. One option is to hold that the state law is preempted entirely. However, preemption is disfavored, and a state law should be preempted only to the extent that it is in conflict with federal law. See Weber v. Heaney, 995 F.2d 872, 875 (8th Cir. 1993); Forster, 437 N.W.2d at 658. But given the clear and broad prohibition of the "no lien" language in the federal anti-lien provision, we are not able to ascertain an appropriate limiting construction to the state's medical assistance lien provision. Therefore, we hold that section 256B.042, Minnesota's medical assistance lien statute, is preempted to the extent that it allows a lien for medical assistance paid to be placed on a medical assistance recipient's cause of action before a recipient's death.

II.

Having held that the state cannot place a lien on a medical assistance recipient's personal property on account of medical assistance paid before the recipient's death, we must determine whether the state can otherwise recover under the assignment obtained under section 256B.056, subd. 6, Minnesota's assignment statute. To make this determination, we must juxtapose federal Medicaid law and Minnesota's assignment statute to determine whether compliance with both is also impossible or whether the state law is an obstacle to accomplishment of the purposes of the federal Medicaid scheme.

The Minnesota assignment statute, like the federal assignment law, requires an assignment of the medical assistance recipient's rights to medical expenses. The specific assignment language reads as follows:

The state agency shall require from any applicant or recipient of medical assistance the assignment of any rights to medical support and third party payments. * * * By signing an application for medical assistance, a person assigns to the department of human services all rights the person may have to medical support or payments for medical expenses from any other person or entity on their own or their dependent's behalf and agrees to cooperate with the state in establishing paternity and obtaining third party payments.

Minn. Stat. § 256B.056, subd. 6. It also provides that an applicant must agree to apply " all proceeds received or receivable by the person * * * from any third person liable for the costs of medical care * * *." Id. (emphasis added).

In the "all proceeds" sentence, reading the clause "for the costs of medical care" to modify "any third person liable" appears to be the more conventional reading of the language of the statute; therefore, we will first proceed to analyze this interpretation of the language. If under this reading preemption is not required, our analysis of this provision will be complete. However, if we conclude that this reading requires preemption in whole or in part, we will then look further to determine whether the statute is susceptible to another interpretation that does not raise a constitutional defect. See Hince v. O'Keefe, 632 N.W.2d 577, 582 (Minn. 2001) (explaining that we are under an obligation to interpret our statutes to avoid constitutional defects).

Under the foregoing construction of the statute, when "for the costs of medical care" is read to modify "any third person liable," "all proceeds" is not limited to payments received or receivable for medical care and includes any payments ("all proceeds") from third parties who are liable for medical care. Thus, the assignment provision appears to give the state an assignment for more than what the federal law mandates because the federal law only requires that states obtain an assignment of the medical assistance recipient's right to recover medical expenses from liable third parties. However, the state's ability to recover medical expenses paid is not limited to a recovery only from a recipient's right to recover for medical expenses. Therefore, it appears that the statute may be broader than federal law and should be subjected to a preemption analysis.

While Minnesota's assignment provision appears broader than the federal requirement, this does not mean that the statute and federal law are in conflict per se. The federal assignment requirement appears to set a minimum requirement for what state plans for medical assistance must contain and for what recipients must assign, but there is no indication that the federal assignment requirement sets a maximum that states cannot exceed. Unlike the anti-lien provision, the assignment provision contains no explicit prohibition or restriction. So compliance with both the federal assignment requirement and the state assignment requirement is possible; the state provision just goes above and beyond what the federal provision absolutely requires. However, the breadth of the state assignment may implicate the second form of conflict preemption if it interferes with the purposes of the federal Medicaid scheme.

Under the state assignment provision, the state is not only assigned the recipient's right to payments for medical care, but is also assigned the rights to "all proceeds" from third parties liable for medical care. The implication of the "all proceeds" language is that the state has a right to any payment made to a medical assistance recipient by a third party liable for the recipient's medical care — including settlement proceeds from a cause of action exclusive of medical expenses. The rights to these other causes of action are not required to be assigned by the federal assignment provision, and as we have already concluded, these nonassigned rights to recover or claims are protected by the anti-lien provision. The state cannot place a lien on this property during the recipient's life because it is personal property of the recipient.

Despite the foregoing restriction, the state's broad assignment right allows the state to take by an assignment what is protected by the anti-lien provision. Allowing the state to expand the range of the required assignment to defeat the anti-lien provision interferes with the federal scheme. In essence, it circumvents the anti-lien provision and eliminates the efficacy of that provision's protection. The purpose of the anti-lien provision is to protect the recipient's limited assets, including nonassigned rights to recover, and the assignment statute frustrates this purpose. Therefore, we conclude that under the foregoing reading of Minnesota's assignment statute, the statute is broader than its federal counterpart and interferes with the purposes of the federal Medicaid scheme generally and the anti-lien provision in particular.

Accordingly, we conclude that under this construction the statute is preempted in part. To the extent that the state assignment provision gives the state rights to more than the recipient's claim for medical expenses, it should be preempted by federal law. However, to the extent that the state assignment mirrors the federal assignment provision and requires that medical assistance recipients assign to the state all rights to payment for medical care from third parties liable for the injuries that necessitated medical assistance, the state assignment provision should not be preempted.

Alternative Interpretation

As noted earlier, we are under an obligation to interpret our statutes to avoid constitutional defects. Hince, 632 N.W.2d at 582. Therefore, if the state assignment provision is susceptible to an alternative interpretation that allows it to operate in harmony with the federal Medicaid scheme and not be preempted, we must apply that interpretation. Here, the state medical assistance assignment provision differs from the federal mandate in one important respect — the "all proceeds" sentence. It reads, "[t]o be eligible for medical assistance a person must have applied or must agree to apply all proceeds received or receivable by the person or the person's spouse from any third person liable for the costs of medical care for the person, the spouse, and children." Minn. Stat. § 256B.056, subd. 6. The "all proceeds" sentence is apparently a state innovation and not required by the federal law.

Our first interpretation of this statute would give the state the right to all proceeds received from liable third parties. Recovery under this interpretation is not limited to proceeds for medical care. But this section is susceptible to an alternative interpretation. The clause "for the costs of medical care" can be read to modify either "all proceeds" or "from any third person liable."

If we interpret the statute such that "for the costs of medical care" modifies "all proceeds," we can avoid an interpretation that necessitates preempting part of the state statute. When we read the statute in this way, it gives the state no more rights against the recipient than the federal requirement. Under this interpretation of the statute's language, the state has assignment rights to all proceeds for medical care, but does not have rights in any other part of a recovery. Because our canons of interpretation instruct us to interpret statutes to avoid constitutional problems, we conclude that "for the costs of medical care" modifies "all proceeds." Therefore, we hold that when a medical assistance recipient has a cause or causes of action against potentially liable third parties for his injuries, the medical assistance assignment statute grants to the state an assignment right to all claims for medical care, but it does not grant an assignment right to any other claims or the recovery therefrom.

This limited interpretation of the statute allows the federal scheme to function appropriately. The state assignment provision is now functionally equivalent to the federal assignment provision. The state has an assignment of rights limited to the right to medical expenses and may no longer pursue "all proceeds" from third parties. Effectively, the state is entitled to an assignment of the recipient's right to recover for medical expenses against all third parties that are potentially liable for the injuries that necessitated medical assistance.

III.

The next question before this court is whether the statute granting the state a subrogation right is preempted by federal law. In addition to asserting statutory lien rights, the state also asserts a subrogation right to the settlement proceeds under Minn. Stat. § 256B.37, subd. 1. This provision gives the state a subrogation right "to the extent of the cost of medical care furnished" to any rights the medical assistance recipient may have under the cause of action "arising out of an occurrence that necessitated the payment of medical assistance." Id. The scope of the subrogation right is broader than the rights given to the state in the federal medical assistance assignment provision. The subrogation right is not limited to claims for medical expenses. In fact, the subrogation right specifically includes "all portions of the cause of action, notwithstanding any settlement allocation." Id. As we interpret the subrogation provision, it allows the state a subrogation right for the cost of care against any recovery on a cause of action arising out of the incident that necessitated medical assistance, even if the recovery also included claims other than for medical expenses.

The federal anti-lien provision does not explicitly prohibit states from asserting subrogation rights with respect to a medical assistance recipient's cause of action arising out of an occurrence that necessitated the payment of medical assistance. Therefore, the same is true here as with the assignment provision compliance with both federal and state laws is not impossible per se. But as with the assignment provision, we have to determine whether allowing a subrogation right outside of the state's assigned right to medical expenses would be an obstacle to the purposes of the federal Medicaid scheme. See Fla. Lime Avocado Growers, 373 U.S. at 142-43; Hines, 312 U.S. at 67 (stating that state law is preempted if it is an obstacle to accomplishment of federal purpose).

Our preemption analysis of the state's subrogation right will be very similar to the analysis of the state's assignment provision because a subrogation right has the same practical effect as an assignment — it puts the state in the shoes of the medical assistance recipient with respect to the recipient's rights against third parties for medical expenses. See Hermeling v. Minn. Fire Cas. Co., 548 N.W.2d 270, 273 (Minn. 1996) (explaining the distinction between subrogation and indemnity) (overruled on other grounds).

We have already concluded that the anti-lien provision prohibits a state from attempting to recover its medical assistance costs from the property of the recipient through a lien and that the state cannot require an assignment of more than the recipient's right to receive third-party payments for medical care. The federal scheme does permit a state to recover medical expenses paid by authorizing an assignment of those rights, but the anti-lien provision effectively prevents the state from recovering the costs of care directly from the recipient. Allowing the state to assert a subrogation right and thus get indirectly what it is prohibited from attaining directly would defeat the purpose of the federal anti-lien provision in the same manner as the broad assignment of rights discussed above. Pursuing a subrogation right allows an end-run around the protections of the anti-lien provision by using a subrogation right instead of a lien to take part of the recipient's personal property that is protected by the anti-lien provision. Essentially, for purposes of our preemption analysis, an assignment of rights to the state and the state's subrogation right are the same. Therefore, we hold that the state subrogation provision is preempted to the extent that it allows the state to assert a subrogation right against causes of action or settlements for other than medical expenses.

When the state actually obtains the assignment of rights to third-party payments for medical expenses, subrogation is no longer appropriate because the state is now the owner of the medical assistance recipient's claim and no longer needs to be subrogated. See, e.g., Employers Mut. Cas. Co. v. A.C.C.T., Inc., 580 N.W.2d 490, 493 (Minn. 1998) (explaining that subrogation does not give a subrogee any independent rights, but merely allows a subrogee to step into the shoes of the subrogor). But subrogation may be appropriate in situations where medical assistance payments have begun before the assignment is made, when a medical assistance recipient refuses to make an assignment, or when an assignment is not properly made. In those circumstances, the state will still be able to assert a subrogation right to the extent of medical assistance payments made, but only as to the recipient's right to recover on a claim for medical expenses.

IV.

The state makes three additional arguments to supplement its main argument that the plain language of Minnesota's lien, assignment, and subrogation statutes does not conflict with federal law or the purposes behind the Medicaid provisions. These arguments are that the state's position is supported by (1) deference to HCFA's interpretation of the federal anti-lien provision, (2) decisions from other jurisdictions, specifically Washington and Utah, and (3) equitable considerations. None of these arguments are persuasive, and we will address each in turn.

A. Deference to HFCA

The state argues that we must defer to HCFA's interpretation of the federal anti-lien provision. The state asserts that HCFA has decided that the anti-lien provision does not bar a state from imposing a lien on a medical assistance recipient's rights to recover for other than medical care. Deference to agency interpretation is called for, however, only when there is an ambiguity in the expression of congressional intent. Chevron, 467 U.S. at 842 ("If the intent of Congress is clear, that is the end of the matter."); see also United States v. LaBonte, 520 U.S. 751, 762 n. 6 (1997) (concluding no ambiguity, and thus no need to decide whether Sentencing Guidelines Commission is owed deference). We have already concluded that there is no ambiguity in the statement that "[n]o lien may be imposed 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 * * *." 42 U.S.C. § 1396p(a)(1). Similarly, the federal assignment requirement and the third-party recovery provision are not ambiguous and interact smoothly with our interpretation of the anti-lien provision. Because the intent of Congress is clear, there is no need for deference to an agency interpretation on the grounds that the statute is ambiguous.

Even if we were to conclude that the federal assignment requirement and third-party recovery provision inject some ambiguity into federal law, agency deference is still not appropriate here. When an agency statement does not reflect formal rules or agency adjudications, yet attempts to address an ambiguity in the law, deference to the agency under Chevron is not appropriate. See Christensen v. Harris County, 529 U.S. 576, 587 (2000) (concluding that opinion letters, policy statements, agency manuals, and enforcement guidelines are not warranted Chevron-style deference). Such agency interpretations are only "entitled to respect * * * to the extent that those interpretations have the power to persuade." Id. (internal quotation marks omitted); see also Wis. Dep't of Health and Family Servs. v. Blumer, ___ U.S. ___, 122 St. Ct. 962, 976 (2002) ("The Secretary [of Health and Human Services'] position [regarding Medicaid law] warrants respectful consideration.").

The state urges us to defer to various agency letters, directives, and approvals demonstrating the agency's interpretation of the anti-lien provision as not prohibiting a state from recovering on third-party actions for other than medical care. These materials include a "Best Practices Guide" that cites Minnesota's subrogation statute as "model legislation" and various letters from HCFA's administrators to state administrators and others stating that medical assistance liens are not prohibited under federal law. These agency materials are not accorded deference because they do not reflect formal rules or adjudications. Christensen, 529 U.S. at 587. And, although these materials are entitled to some respect and may be used to persuade this court, we are not persuaded by the interpretations contained in these materials.

The state has referenced two agency adjudications that, if relevant, would be entitled to deference under a Chevron analysis. The two adjudications were made by the Department of Health and Human Services Appeals Board (Board). Cal. Dep't of Health Servs., DAB No. 1504 (Dep't of Health Human Servs. Jan. 5, 1995); Wash. State Dep't of Soc. and Health Services, DAB No. 1561 (Dep't of Health Human Servs. Feb. 7, 1996). Both adjudications addressed whether HCFA properly withheld federal funds from a state program based on the state's failure to recover a sufficient amount from settlements between recipients and third-party tortfeasors. In both the California and Washington adjudications, the Board stated that HCFA properly characterized recoveries from third parties first as payments for medical care. The Board reasoned that "[t]his characterization prevents manipulation of tort awards by recipients who seek to prevent the public from being reimbursed for the funds it has advanced for their medical care (e.g., by suing for pain and suffering or lost wages rather than for medical costs)." DAB No. 1561, p. 5.

We need not defer to these agency adjudications because they do not address the central issue presented here, which is whether the federal anti-lien provision preempts state laws that purport to allow states to impose liens on recovery of amounts not designated as payment for medical expenses. Indeed, the agency adjudications do not mention the federal anti-lien provision.

We are nonetheless mindful of the concern expressed in the agency adjudications that Medicaid recipients could fashion a settlement to exclude payment for costs of medical care so as to avoid any obligation to reimburse the state and federal governments. But the state has options other than to ignore a clear provision in federal law that prohibits a lien from being imposed against the property of any individual on account of medical assistance paid. The state can protect its right to reimbursement by participating in the litigation so as to ensure recovery of medical costs paid. In this case, the state did not actively participate in the litigation until settlement, despite being a plaintiff on impleader. But the state did participate at the settlement and did release each defendant from any liability to the state for medical expenses. At this time, the state did establish its claim to part of the settlement proceeds — but in a dispute solely with Martin.

B. Other Jurisdictions

The state asserts its position is supported by decisions from Washington and Utah. However, in reaching their respective holdings, neither Washington nor Utah addressed the issue of preemption. In Wilson v. State, the Washington Supreme Court concluded that the federal anti-lien provision was irrelevant because the state placed a lien on the recovery itself, and therefore not on the "property" of the recipient. 10 P.3d 1061, 1065-66 (Wash. 2000). Similarly, in two companion cases, the Utah Supreme Court concluded that the anti-lien provision was not implicated when a state lien was placed on a settlement recovery. S.S. v. State, 972 P.2d 439, 442 (Utah 1998); Wallace v. Estate of Jackson, 972 P.2d 446, 448 (Utah 1998). The Utah court concluded that "payments made by a third party do not legally become the property of the recipient until after a valid settlement which must include reimbursement to the State for Medicaid benefits." Wallace, 972 P.2d at 448 (citing S.S., 972 P.2d at 442). Washington relied on Utah, which in turn relied on the New York case, Cricchio v. Pennisi, which also concluded that the lien on settlement proceeds attaches to the property of a third party. 683 N.E.2d 301, 306 (N.Y. 1997).

The New York court, and later the Washington and Utah courts, reached the conclusion that settlement proceeds were not the property of the medical assistance recipient. But when they reached this conclusion, they failed to unbundle the sticks that make up a personal injury action. These courts correctly recognize that the federally-required assignment of rights to third-party medical expense recoveries gives a state the right, up to the amount of the state's expenditures, to any recovery or settlement for that right to recover. To the extent that a settlement is for medical expenses, those proceeds are the property of the state by virtue of the required assignment. But these courts failed to recognize that a personal injury tort action against potentially liable third parties comprises more than a right to recover for medical expenses. The tort action includes claims for pain and suffering, emotional distress, loss of earnings, and other familiar tort claims. The part of any settlement attributable to these unassigned claims is the property of the medical assistance recipient during his life, and the state has no right to these claims under the assignment. So while the other states' courts are correct in their conclusions that a recovery for medical expenses is not the property of a medical assistance recipient, they ignore the part of the recovery or settlement for claims other than medical expenses. We are therefore unpersuaded by the analysis of the Washington and Utah courts on this issue.

Additionally, the cases from New York, Utah, and Washington cannot be relied upon because of other problems in their analysis. In Cricchio, the New York court apparently concluded that New York's statutory analogue to the federal anti-lien provision was not violated by the imposition of a state lien because the state statute created an exception for the lien, yet the court did not explain how this state-created exception could trump the federal anti-lien provision. Cricchio, 683 N.E.2d at 304. But the state exception was not the basis for the court's holding; rather, the court relied upon the conclusion that the anti-lien provision was not violated because the lien attaches to the settlement proceeds which the court deemed to be the property of the third party. Id. at 305.

The dissent and the aforementioned cases implicitly acknowledge that whether the cause of action or settlement proceeds are the property of the recipient determines the applicability and relevance of the anti-lien provision. Each determines that the federal anti-lien provision is irrelevant by concluding that the settlement proceeds are no longer the property of the recipient. But, by doing so, they fail to grapple with the key issue that underlies our analysis. This key issue, in fact, is the property issue. Specifically, both the dissent and the cases cited gloss over why these causes of action are no longer the property of the medical assistance recipient. On the other hand, our analysis recognizes the limited nature of the required assignment. Therefore, after a full analysis, we conclude that the causes of action and claims for other than medical expenses and settlement proceeds therefrom — are the property of the recipient and therefore the federal anti-lien provision is relevant.

C. Equitable Considerations

We are also mindful of the state's equitable argument that it needs to preserve and recover Medicaid assets. But our resolution of the issue before us does not eliminate the state's ability to recover medical expenses when third parties are liable. Rather, our conclusion leaves the federal scheme intact and the state retains the assignment of a medical assistance recipient's right to recover for medical expenses against potentially liable third parties. Indisputably, the state's rights are limited — they only extend to a recipient's right to recover for medical expenses. The state has no interest under the assignment in any of the recipient's recoveries from third parties for claims other than for medical expenses. But the state does not have to wait for the recipient to initiate an action. Under harmonized federal and state law, medical assistance recipients are required to assign to the state their rights to receive payment for medical expenses from any potentially liable third parties. This assignment enables the state to acquire the recipient's property rights to this particular claim and to take independent legal action, or, as in this case, to be joined as a party to the recipient's action. Thus, the state can take an active role as a plaintiff in its own right and does not have to rely on the efforts of others to ensure a recovery of medical assistance expenses. Therefore, even though the method of obtaining medical assistance reimbursement that the state seeks in this litigation is not available to it, the state has other alternatives available to recover medical expenses.

The state uses Minnesota's guaranteed one-third recovery scheme to support its position. But the same rationale that would allow a medical assistance recipient to receive a guaranteed one-third recovery also would allow the state to take away that guarantee and leave the recipient with nothing until the state had been paid back in full. Thus, by emphasizing the reasonableness of its position, the state fails to acknowledge the logical consequences of its argument.

We also note that the dissent fails to consider that as a logical consequence of its reasoning, Minnesota's participation in the Medicaid program may be jeopardized. The current mechanism in section 256B.042, subd. 5, allowing a one-third guaranteed recovery to a plaintiff/recipient is much the same as the systems in California and Washington that were criticized by the Department of Health and Human Services' Departmental Appeals Board (Board) because specified percentages or amounts of third-party recoveries were given back to recipients. See Part IV, A, supra. Under a pure application of the Board's analysis as adopted by the dissent, Minnesota would be unable to guarantee any recovery to the recipient, because the Medicaid expenses must first be taken from any recovery, regardless of its "label." Thus, even under the dissent's analysis, Minnesota's third-party recovery system is in jeopardy.

Our decision also does justice to Hoff and other medical assistance recipients. The state has paid for Hoff's medical expenses and should be entitled to reimbursement when a third party is liable for those expenses. But, in the words of now Chief Justice Gerry L. Alexander of the Washington Supreme Court, "the fund should be replenished only from amounts that a Medicaid recipient receives as reimbursement for elements of damage for which the State has assumed responsibility." Wilson, 10 P.3d at 1070 (Alexander, J., dissenting). Here, the state attempts to recover for medical expenses from a settlement for a cause of action that included pain and suffering, loss of earnings, loss of earning potential, and disfigurement — none of which is compensated by the state through medical assistance. These claims belong to Hoff alone, and may provide some relief or an increase in quality of life that is not possible through medical care.

V.

We must now apply these holdings to the specific facts of this case. At the time of the accident, Hoff acquired a "bundle of sticks," which represented all of his potential rights to recover against those responsible for his injuries. As a condition of receiving medical assistance from the state, Martin, on Hoff's behalf, assigned to the state one stick from that bundle Hoff's specific right to recover medical expenses from those responsible for Hoff's injuries. At that point, the state became the sole owner of Hoff's right to recover against any third parties for medical expenses. But Hoff retained ownership of the remaining sticks in the bundle — that is to say, his right to recover for pain and suffering, emotional distress, disability, disfigurement, loss of earnings, and loss of earning capacity. To the extent that Martin's settlement with the defendants was for this larger bundle of sticks (the original tort action minus the right to recover for medical care), the proceeds are Hoff's personal property, and as such are protected by the federal anti-lien provision.

It is unclear from the record what claims or rights to recover were part of the settlements. Martin, in her memoranda of law to the district court and in her briefing on appeal, erroneously characterizes the nature of the settlements as only for Hoff's claims and not for the state's claim pleaded by Martin for the state as plaintiff on impleader (i.e., the state's assigned claim for medical expenses). The settlement agreement with the city specifically incorporated the amended complaint by reference and purported to encompass all claims stated in the amended complaint, which included Hoff's claim for medical expenses and the separately pleaded claim for medical expenses paid by the state. The settlement agreements with the township and Tlougan's estate were not as comprehensive as the agreement with the city and did not contain similar language that clearly encompassed all claims in the amended complaint. This omission calls into question whether the state's claim pleaded by Martin was included in the settlement with the township and Tlougan's estate. But these settlement agreements do contain sufficient language indicating that the settlement was in satisfaction of the state's claims, although this language is not as straightforward as that in the settlement agreement with the city. Therefore, based upon our reading of the record below, we conclude that the settlements with defendants included and released all claims in the amended complaint, including the state's claim for medical expenses.

The state initially received an assignment of Hoff's rights to recover for medical expenses against any potentially liable third parties, including defendants, but as part of the settlements the state released defendants from all further liability. Because of the assignment made in the medical assistance application and by virtue of the state's claim pleaded by Martin on impleader, the state's assigned claim for medical expenses was necessarily a part of the settlements. The result of the settlements and the releases is that the state's recovery of expenses from the defendants for Hoff's medical care is now limited to the settlement proceeds. Therefore, the state is entitled to that part of the settlements that represents a recovery on its claim for medical expenses.

We are not able to determine from the record what part of the settlement proceeds is attributable to Hoff's nonassigned personal injury claims and what part is attributable to the state's separately owned right to recover medical expenses. In fact, it appears that the district court did not make such a determination. Accordingly, the district court's grant of Martin's motion to dismiss the state's claim to any of the settlement proceeds was in error. The court's conclusion that the settlement proceeds were Hoff's sole and exclusive property is not supported by the record, and therefore we must remand to the district court for further proceedings and clarification on the distribution of the settlement proceeds between Hoff's claims and the state's claim. Ultimately, that part of the settlement proceeds attributable to payment for medical expenses belongs to the state under the assignment; the remainder of the proceeds belongs to Hoff.

On remand, the district court must specifically consider that the state's claim was part of the settlements and must specifically allocate the settlement proceeds among Hoff's nonassigned personal injury claims (excluding any recovery for medical care or expenses) and the state's separately owned claim for medical expenses. Here, it is important to remember that this case involves a settlement, and as with all settlements, represents a compromise of the parties' claims and damages. Had this case gone to trial, a jury would have been required to allocate the damages among the component claims. This court-approved settlement is no different and should be similarly allocated by the court in recognition of the nature of the settlement as a compromise. Once the court has made that allocation, that part of the settlement proceeds which represents payment for Hoff's medical expenses paid by the state must be awarded to the state; all other settlement proceeds belong to Hoff.

Reversed and remanded.