Dirk Askew; Beulah Askew v. United States of America

United States Court of Appeals
For the Eighth Circuit
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No. 14-1205
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Dirk Askew; Beulah Askew,
lllllllllllllllllllll Plaintiffs - Appellees,
v.
United States of America,
lllllllllllllllllllll Defendant - Appellant.
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Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
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Submitted: September 8, 2014
Filed: May 26, 2015
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Before BYE, COLLOTON, and GRUENDER, Circuit Judges.
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COLLOTON, Circuit Judge.
Dirk Askew is a veteran of the United States Armed Services and a former
employee of the United States Postal Service. In February 2009, Askew underwent
a cardiac stent placement at the John Cochran Veterans Administration Medical
Center in St. Louis. He was readmitted later in the month with an infection, and it is
uncontested that the medical center responded negligently. As a result of the

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infection and attendant loss of blood, Askew suffered severe anoxic brain injury and
the amputation of his right leg. Askew and his wife later sued the government in the
district court under the Federal Tort Claims Act.
The United States did not dispute liability, and the case was tried to the court
on damages. Askew and his wife sought non-economic, economic, and medical
damages. One component of the requested award was future medical damages,
designed to compensate Askew for medical expenses that he would incur after the
judgment. The government requested that the court structure these future medical
damages as a reversionary trust by providing for periodic payments from the trust to
Askew and a reversionary interest in favor of the United States. Under that approach,
any unspent funds upon Askew’s death would revert to the United States.
The district court declined to order a reversionary trust, reasoning that the
government had failed to show that it was in the best interests of the injured party.
The district court awarded $253,667 in past economic damages, $525,000 in past
non-economic damages, $4,000,000 in future economic damages, and $2,000,000 in
future non-economic damages to Dirk Askew. The court awarded $1,525,000 to
Askew’s wife for loss of consortium. The United States appeals, arguing that the
district court erred by failing to itemize future medical damages and by refusing to
create a reversionary trust for the award of future medical damages. For the reasons
that follow, we vacate the judgment and remand for further proceedings.
The Federal Tort Claims Act operates as a limited waiver of sovereign
immunity for the United States. Under the Act, the 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.” 28 U.S.C. § 2674. The “law of the place where
the act or omission occurred” determines whether the United States would be liable
as a private individual. 28 U.S.C. § 1346(b)(1). In determining how a private party
would be treated in “like circumstances,” a court may apply the “most reasonable
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analogy” to the applicable state statute. Lozada ex rel. Lozada v. United States, 974
F.2d 986, 988-89 (8th Cir. 1992); see generally United States v. Olson, 546 U.S. 43,
46-47 (2005).
Under the Missouri law that governs a medical negligence action against a
private individual in circumstances like those at issue here, a court is required to
itemize what portion of future economic damages constitutes “future medical
damages.” Mo. Rev. Stat. § 538.215.1. Where the total damages award exceeds
$100,000, the court, upon the request of any party, “shall include in the judgment a
requirement that future damages be paid in whole or in part in periodic or installment
payments.” Id. § 538.220.2. The court is required to create a “periodic payment
schedule” for future medical damages. Id. § 538.220.2. If the plaintiff dies, periodic
payments of future medical expenses 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.” Id. § 538.220.5.
The district court could not strictly apply the periodic payment scheme of
§ 538.220 to the federal government, because sovereign immunity prevents the
imposition of ongoing obligations like continuing payments. The waiver for “money
damages” granted by the Federal Tort Claims Act allows only lump-sum money
judgments. See Lee v. United States, 765 F.3d 521, 529 (5th Cir. 2014); Frankel v.
Heym, 466 F.2d 1226, 1228-29 (3d Cir. 1972).
But to best approximate the results contemplated by the Missouri statutes, 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. This remedy—endorsed by several circuits in
comparable circumstances—would require the government to pay Askew’s future
medical damages, but would avoid unjustly enriching Askew’s heirs with such
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moneys after his death. See Lee, 765 F.3d at 526-29; Cibula v. United States, 664
F.3d 428, 435 (4th Cir. 2012); Dutra v. United States, 478 F.3d 1090, 1091-92 (9th
Cir. 2007); Hill v. United States, 81 F.3d 118, 121 (10th Cir. 1996). 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.”
The district court, citing decisions of the Tenth Circuit, thought a reversionary
trust was inappropriate because it was not in Askew’s “best interest.” The governing
standard under the statute, however, is whether the government is held liable to the
same extent as a private individual under like circumstances. While it may be in
Askew’s best interest for his heirs to receive “future medical damages” after Askew
dies, that remedy does not best approximate the liability of a private party in like
circumstances. The Tenth Circuit applied the “best interests” standard in situations
where state law did not require courts to structure certain damages in the form of
periodic payments that would cease upon the plaintiff’s death. See Hill, 81 F.3d at
121; Hull by Hull v. United States, 971 F.2d 1499, 1505 (10th Cir. 1992). The Fifth
Circuit’s rejection of a reversionary trust in Vanhoy v. United States, 514 F.3d 447
(5th Cir. 2008), also provides no reason to eschew that remedy here. The state statute
at issue in Vanhoy—unlike the Missouri periodic payment scheme—required that
future medical damages be paid out of a state compensation fund “as those charges
are incurred” and “for as long as care is required,” so a reversionary trust could not
afford like treatment. Id. at 451-53; see Lee, 765 F.3d at 528-29.
Under Missouri law, a trial 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.” Watts v. Lester E.
Cox Med. Ctrs., 376 S.W.3d 633, 647 (Mo. 2012) (en banc). On remand, therefore,
the district court first should specify what amount of future economic damages are
future medical damages, in accordance with § 538.215.1. Once that amount is
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specified, the court should determine what portion, if any, will be paid in a lump sum,
and what portion will be placed in a reversionary trust for periodic payment to
Askew.
The Askews express concern that a reversionary trust would be insufficient to
compensate Askew for his future medical expenses. They urge that the statutory
interest rate prescribed for future periodic payments is inconsistent with the rate of
investment at which the government’s expert opined that funds could be invested, so
the award when reduced to present value would not cover Askew’s future medical
expenses. Under Missouri law, however, a trial court should establish a periodic
payment schedule that ensures that the plaintiff will receive the benefit of the award
for future medical care. Watts, 376 S.W.3d at 648. The district court thus may
recognize that “use of an inconsistent future damages interest rate” could deprive the
plaintiff of the full value of the award. Id. The court also may account for medical
inflation and administrative costs of the trust in making the award.
The Askews also object that a trust remedy would subject them to risk that
there would be insufficient funds to meet each periodic payment if the trustee makes
imprudent investment decisions or if investments generate a lower rate-of-return than
what the district court projects in calculating the award. But the district court may
minimize such risk by selecting a capable trustee and by applying a conservative
projected rate-of-return when calculating the damages award to be placed in the trust.
Although underperformance is a risk, a plaintiff proceeding against a private
individual faces a related risk that the defendant would be unable to meet future
periodic payments due to market conditions or financial insolvency. The reversionary
trust remedy is still the most reasonable analogy to the relief available against a
private individual in like circumstances under Missouri law.
The Askews raise additional administrative concerns about a remedy that
includes a reversionary trust. We are confident, however, that the district court can
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identify and appoint an appropriate trustee and establish a mandatory payment
schedule that will cabin the trustee’s discretion. If the trustee fails to perform, then
the court may intervene as necessary.
We vacate the judgment of the district court and remand for further
proceedings consistent with this opinion.
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