786 F.3d 1091
8th Cir.2015Background
- Dirk Askew, a veteran, suffered severe anoxic brain injury and right-leg amputation after negligent post-operative care at a VA medical center in 2009.
- Askew and his wife sued the United States under the Federal Tort Claims Act (FTCA); the government did not dispute liability and the district court tried only damages.
- The district court awarded substantial past and future economic and non-economic damages, but did not itemize future medical damages separately nor create a reversionary trust; it declined the government’s request for a trust as not in Askew’s "best interest."
- Missouri law requires courts to itemize future medical damages and, on request, to order periodic payments for future damages in many cases (Mo. Rev. Stat. §§ 538.215, 538.220), with periodic payments terminating as specified on the plaintiff’s death.
- Because the FTCA waives sovereign immunity only for lump-sum money judgments, the Eighth Circuit held the district court could not impose an ongoing payment obligation on the United States but should approximate state-law periodic payments by: (1) specifying future medical damages and (2) placing an appropriate portion into a reversionary trust that pays periodic amounts to Askew and reverts unspent funds to the United States on his death.
- The court vacated and remanded for the district court to (a) identify the portion of future economic damages that are future medical damages, (b) decide what, if any, portion is lump sum versus placed in a reversionary trust, and (c) structure the trust and payment schedule to protect Askew’s recovery while allowing reversion to the United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court must itemize future medical damages under FTCA analogizing to Missouri law | Askew: court should specify future medical damages and protect award value; distrusts reversionary trust adequacy | U.S.: court should structure future medical damages in a reversionary trust so unspent funds revert to the government | Court: vacated and remanded — district court must itemize future medical damages and may place funds in a reversionary trust with periodic payments that revert on death |
| Whether a reversionary trust is permissible under FTCA despite sovereign-immunity limits on ongoing obligations | Askew: trust risks underpayment, trustee mismanagement, and inconsistent interest rate; may not be in his best interest | U.S.: reversionary trust permits approximation of state periodic-payment remedies without imposing ongoing sovereign obligations | Court: reversionary trust is an appropriate remedy to approximate state-law periodic payments and avoid unjust enrichment of heirs |
| Proper legal standard: "best interest" of plaintiff vs. "like circumstances" private-party liability | Askew: district court used "best interests" to reject trust (favoring plaintiff’s heirs) | U.S.: argues for trust to mirror private-party treatment under Missouri law | Court: governing standard is whether the U.S. is liable to same extent as a private individual under like circumstances — not plaintiff-best-interest test |
| How to account for interest, inflation, and trustee risk when calculating trust corpus | Askew: statutory interest may undercompensate; trust administrative/market risks threaten payments | U.S.: trust calculations should use government expert assumptions (lower award present value) | Court: district court may adjust schedule, account for medical inflation, use conservative return assumptions, select capable trustee, and limit trustee discretion to protect plaintiff’s recovery |
Key Cases Cited
- Lee v. United States, 765 F.3d 521 (5th Cir. 2014) (approving reversionary-trust approach to approximate state periodic-payment schemes under FTCA)
- Cibula v. United States, 664 F.3d 428 (4th Cir. 2012) (endorsing reversionary trust as FTCA remedy to mirror state-law periodic payments)
- Dutra v. United States, 478 F.3d 1090 (9th Cir. 2007) (recognizing reversionary trust to reconcile periodic-payment statutes with FTCA lump-sum judgments)
- Hill v. United States, 81 F.3d 118 (10th Cir. 1996) (discussing best-interests standard in contexts not governed by state periodic-payment mandates)
- Lozada ex rel. Lozada v. United States, 974 F.2d 986 (8th Cir. 1992) (use of most-reasonable-analogy to state law under FTCA)
- United States v. Olson, 546 U.S. 43 (2005) (FTCA interpretation principles regarding like-circumstances treatment)
- Watts v. Lester E. Cox Med. Ctrs., 376 S.W.3d 633 (Mo. 2012) (Missouri guidance on allocating lump sum vs. periodic payments and protecting plaintiff’s benefit)
- Vanhoy v. United States, 514 F.3d 447 (5th Cir. 2008) (rejecting reversionary trust where state statute required payments as charges are incurred)
- Hull by Hull v. United States, 971 F.2d 1499 (10th Cir. 1992) (applying best-interests approach in absence of state periodic-payment requirement)
- Frankel v. Heym, 466 F.2d 1226 (3d Cir. 1972) (noting FTCA’s waiver permits only lump-sum judgments)