Opinion handed down on May 26, 2015
In February 2009, Dirk Askew underwent surgery at John Cochran Veterans Administration (“VA”) hospital in St. Louis, Missouri.[1] Askew was readmitted later in that month with complications.[2] The VA responded negligently to the complications, which led to severe injuries for Askew.[3] Askew and his wife sued the federal government under the Federal Tort Claims Act (“FTCA”) and requested a high amount of damages in a case tried only on the issue of damages.[4] Askew requested future medical damages to compensate him for medical expenses that he would incur after judgment.[5] The government requested that the court structure the future medical damages as a reversionary trust that would provide periodic payments to Askew and create a reversionary interest for the United States, where the unspent funds would revert back to the United States upon Askew’s death.[6] The district court declined to order a reversionary trust structure for future medical damages under the reasoning that the government failed to show it was in the best interest of the injured party, Askew.[7] The district court awarded the Askews over $8.25 million worth in damages.[8] The United States appealed the holding of the district court, arguing that the district court erred by failing to itemize Askew’s future medical damages and by refusing to create the reversionary trust for the award of future medical damages.[9] The U.S. Court of Appeals for the Eighth Circuit vacated the district court’s judgment and remanded the case for further proceedings.[10]
I. Facts and Holding
Askew was a U.S. veteran and a former employee of the U.S. Postal Service.[11] In February 2009, Askew underwent a cardiac stent placement at John Cochran Veterans Administration hospital in St. Louis, Missouri.[12] Askew was readmitted later in that same month with infections.[13] The VA admittedly responded negligently to the infections, which led to a severe anoxic brain injury and a leg amputation for Askew.[14]
Askew and his wife sued the federal government under the FTCA and requested non-economic damages, economic damages, and medical damages in a case tried only on the issue of damages.[15] Askew requested future medical damages to compensate him for medical expenses that he would incur after judgment.[16] The government requested that the court structure the future medical damages as a reversionary trust, which would provide periodic payments to Askew and allow the unspent funds to revert back to the United States upon Askew’s death.[17]
The district court declined to order a reversionary trust structure for future medical damages under the reasoning that the government failed to show it was in the best interest of the injured party, Askew.[18] The district court awarded $253,667 in past economic damages, $525,000 in past non-economic damages, $4,000,000 in future economic damages, $2,000,000 in future non-economic damages, and $1,525,000 to Askew’s wife for loss of consortium.[19]
The United States appealed the holding of the district court and argued that the district court erred by failing to itemize Askew’s future medical damages and by refusing to create the reversionary trust for the award of future medical damages.[20] The United States Court of Appeals for the Eighth Circuit disagreed with the district court’s holdings, vacated the judgment, and remanded the case for further proceedings.[21]
II. Legal Background
The FTCA acts as a limited waiver of sovereign immunity for the United States.[22] Under the FTCA, “[T]he United States may be held liable for certain tort claims ‘in the same manner and to the same extent as a private individual under like circumstances.’”[23] The “‘law of the place where the act or omission occurred’ determines whether the United States would be liable as a private individual.”[24] In determining whether “a private party would be treated in ‘like circumstances,’ a court may apply the ‘most reasonable analogy’ to the applicable state statute.”[25]
Under Missouri law, a court is required to itemize what portion of future economic damages constitutes future medical damages in a medical negligence cause of action against a private individual with facts similar to Askew’s.[26] Where the total damages awarded to a private individual exceeds $100,000, upon request of either party, the court “shall include in the judgment a requirement that future damages be paid in whole or in part in periodic or installment payments.”[27] Under Missouri law, the court “is required to create a ‘periodic payment schedule’ for future medical damages.”[28] If the plaintiff dies, the periodic payments continue “only for as long as necessary to enable the estate to satisfy medical expenses of the judgment creditor that were due and owing at the time of death.”[29]
The doctrine of sovereign immunity generally prevents courts from imposing ongoing obligations like continuing payments.[30] The FTCA’s limited waiver for money damages allows only for lump sum payments.[31] Thus, generally, a court cannot impose a periodic payment scheme like Missouri’s Section 538.220 to the federal government.
Under Missouri law, a court may “consider the needs of the plaintiff and the facts of the particular case in deciding what portion of future medical damages will be paid in a lump sum and what portion will be paid out over a periodic payment schedule that accords with the parameters set out in the statute.”[32]
III. Instant Decision
In vacating the district court’s judgment, the U.S. Court of Appeals for the Eighth Circuit held that the district court should have “specified Askew's future medical damages, created a reversionary trust to hold those funds, and ordered periodic payments of future medical damages from the trust, with the corpus of the trust to revert to the United States upon Askew's death.”[33] This approach, which is endorsed by several circuits when presented with circumstances similar to Askew’s, would “require the government to pay Askew's future medical damages, but would avoid unjustly enriching Askew's heirs with such moneys after his death.”[34] Thus, the “use of a reversionary trust would allow the court to hold the United States liable to the same extent as a private individual under ‘like circumstances.’”[35]
The district court erred when it held that a reversionary trust was inappropriate under the facts of this case “because it was not in Askew’s ‘best interest.’”[36] The governing standard under the FTCA is “whether the government is held liable to the same extent as a private individual under like circumstances” and not whether “it may be in [plaintiff’s] best interest for his heirs to receive ‘future medical damages.’”[37] The Eighth Circuit held that the latter remedy “does not best approximate the liability of a private party in like circumstances.”[38]
The Eighth Circuit, in reversing the district court’s judgment and remanding the case for further proceedings, held that the district court should first specify how much of the future economic damages are future medical damages, “in accordance with § 538.215.1.”[39] It held that the court below should then determine what portion of that amount should be paid in a lump sum and what portion of that amount should be paid periodically from a reversionary trust.[40]
IV. Comment
Applying the FTCA under Missouri law, the U.S. Court of Appeals for the Eighth Circuit correctly applied the “whether the government is held liable to the same extent as a private individual under like circumstances” standard.[41] Although the federal government typically cannot be subjected to an ongoing payment scheme, a reversionary trust with the United States holding the reversionary interest best put them in a position to be held liable to the same extent as a private individual under like circumstances. As Missouri law would typically hold a private individual liable and order a reversionary trust (or a scheme involving periodic payments), the FTCA standard required the reversionary trust.
[32] Id. at 1094 (citing Watts v. Lester E. Cox Med. Ctrs., 376 S.W.3d 633, 647 (Mo. 2012) (en banc)).
[40] Id.
