Hull by Hull v. U.S.

• Decision Date: 10 August 1992
• Docket Number: 91-5092,Nos. 91-5091,s. 91-5091
• Citation: 971 F.2d 1499
• Parties: , 23 Fed.R.Serv.3d 601 Phillip Lee HULL, a minor, by his natural parents, guardians, and personal representatives; Phillip Gene HULL and Tanya Lee Hull, husband and wife; Phillip Gene Hull, individually; Tanya Lee Hull, individually, Plaintiffs-Appellees/Cross-Appellants, v. UNITED STATES of America, Defendant-Appellant/Cross-Appellee, Judith A. Finn, Ph.D., J.D., Guardian ad litem for Phillip Lee Hull, Movant/Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1499

971 F.2d 1499

61 USLW 2108, 23 Fed.R.Serv.3d 601

Phillip Lee HULL, a minor, by his natural parents guardians, and personal representatives; Phillip Gene HULL and Tanya Lee Hull, husband and wife; Phillip Gene Hull individually; Tanya Lee Hull, individually Plaintiffs-Appellees/Cross-Appellants, v. UNITED STATES of America, Defendant-Appellant/Cross-Appellee Judith A. Finn, Ph.D., J.D., Guardian ad litem for Phillip Lee Hull, Movant/Cross-Appellee.

Nos. 91-5091, 91-5092.

United States Court of Appeals, Tenth Circuit.

Aug. 10, 1992.

William G. Cole, Atty., Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C. (Stuart M. Gerson, Asst. Atty. Gen., Washington, D.C., Tony M. Graham, United States Attorney, Tulsa, Okl., and Barbara C. Biddle, Attorney, Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., with him on the briefs), for defendant-appellant/cross-appellee.

Stephen C. Wolfe, Wolfe & Vogle, P.C., Tulsa, Okl., for plaintiffs-appellees/cross-appellants.

Judith A. Finn, Ph.D., J.D., Tulsa, Okl., on the brief, as movant/cross-appellee.

Before TACHA and EBEL, Circuit Judges, and ROGERS, Senior District Judge. ^*

EBEL, Circuit Judge.

The parents of a handicapped child brought this civil action for monetary damages against the government pursuant to the Federal Tort Claims Act ("FTCA"). Because the government admitted liability for medical malpractice prior to trial, the district court held a bench trial on the issue of damages only and awarded the plaintiffs over eight million dollars, most of which was to be placed in a trust.

This case primarily raises questions about the computation and structuring of damage payments to a handicapped child under the FTCA. Specifically, we address the following issues on appeal: (1) the district court's power to order the parties to place the damages awarded to the handicapped child in a trust that will fully revert to the government upon the child's death; (2) the date on which interest on the award should begin to accrue; (3) whether the guardian ad litem's fees should be considered attorney's fees deductible from the damages award or costs assessed against the government; and (4) the propriety of various damages awarded. For the reasons stated below, we vacate the district court's decision and remand for proceedings consistent with this opinion.

I. FACTS

On June 28, 1987, Phillip Lee Hull ("Lee") was born at the Claremore Indian Hospital in Oklahoma, which is owned and operated by the United States ("the government"). The government admits that its doctors were negligent before and during Lee's delivery. As a result of the doctors' malpractice, Lee received the following injuries: severe hypoxic ischemic encephalopathy (brain damage), cerebral palsy, with spastic quadriplegia, and developmental delay. Lee will require constant aid and therapy for the rest of his life.

In December 1988, Phillip Gene Hull and Tanya Lee Hull ("the parents") brought this civil action on behalf of their infant son and on their own behalf for monetary damages under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346(b), 2671-2680. On behalf of Lee, the parents sought damages for economic losses (including lost wages; lost earning capacity; medical treatment costs; and special housing and transportation costs) and noneconomic losses (including loss of enjoyment of life; mental and physical pain, suffering, and disfigurement, past, present, and future; and permanent disability). On their own behalf, the parents sought damages for pain and suffering; loss of Lee's household services; and loss or impairment of the aid, comfort, society, and companionship of Lee.

Due to the government's admission of liability and causation, the District Court for the Northern District of Oklahoma held a bench trial for the sole purpose of determining damages. On the government's motion, the court appointed Judith A. Finn as a guardian ad litem to represent Lee's interests.

The court found that, with proper care, Lee would have a normal life expectancy of 69.8 years at the time of trial. On this basis, the court awarded Lee $5,527,872.37 for medical services and support, $784,717.50 for fund management, $1,601,474.00 for lost wages and impairment of earning capacity, and $250,000 for pain and suffering. In addition, the court awarded $150,000 to Mrs. Hull for pain and suffering and $100,000 to Mr. Hull for pain and suffering. In total, the court awarded $8,414,063.87.

The court instructed the government to pay the parents directly for their pain and suffering, but ordered that the damages awarded to Lee be placed into a trust fund managed by a third-party trustee. The record indicates that the court wanted to establish a trust that would revert fully to the government upon Lee's death. Apparently, the court desired such a reversionary provision because it was concerned that Lee's safety would be in jeopardy if his parents were to receive the unspent portion of this damage award upon Lee's death. However, the court believed that it lacked the power to impose a full reversionary provision absent the consent of the parents.

Instead, the court imposed a partial reversionary provision whereby if Lee were institutionalized during his life, any unspent funds remaining from the damage award would be divided at the time of his death as follows: His surviving parents or his estate would receive that percentage of the remaining trust funds obtained by dividing Lee's age at the time of institutionalization by 69.8, his life expectancy at the time of the trial. The remainder of the trust's assets would revert to the government. ¹ Thus, Lee's parents potentially would receive an economic benefit upon Lee's death to the extent that they chose to provide home care for him rather than to institutionalize him. The district court concluded that Lee would benefit from home care rather than institutional care, and it apparently felt that this provision would give the parents an incentive to provide such care. ² The parents agreed to this reverter provision.

The government appeals the form of the trust agreement, the date interest began to accrue, the district court's ruling that the government must pay the attorney's fees of the guardian ad litem as costs, and the amount of the various damage awards. The parents cross-appeal on the grounds that the district court failed to compensate them, or inadequately compensated them, for certain damages. The guardian ad litem, as cross-appellee, argues that it is in Lee's best interest for the trust fully to revert to the government upon his death and that the government should pay her fees as costs. We have jurisdiction to hear these appeals under 28 U.S.C. § 1291.

II. DISCUSSION

A. Form of the Trust

The government and the guardian ad litem argue that the district court should have established a trust that grants a full reversionary interest to the government upon Lee's death. In fact, they suggest that Lee's life may be compromised because the existing trust agreement provides that the parents inherit the entire trust assets if Lee dies while in their care.

During the trial below, the district judge apparently shared this concern and he expressed a desire to award Lee's damages in the form of a fully reversionary trust, whereby any funds remaining in the trust at the time of Hull's premature death would revert to the government. However, the district judge stated that he was not convinced that he had the power to impose such reversionary conditions on the trust when the parents did not agree to it:

[T]he real issue here is what is [in] the best interest of Phillip Lee Hull. If I had the power I would make every dollar awarded reversionary. I'm not convinced that I have that authority under the law. If I could, I would make every bit other than the attorney's fee award--that is, all amounts that would go into the trust should in my view be reversionary. That is, if anything were to happen to Phillip, if he were to die or if he were to be institutionalized.... I'm not at all convinced that I can enter such an order.

Government's App. at 177A; see also Findings of Fact and Conclusions of Law at 8, App. of Appellants at 38 ("Although the Court is firmly convinced that a structured settlement would be in the best interests of both parties, under the prevailing law, the Court cannot order such a settlement."). Accordingly, the judge granted a reversion to the government upon Hull's death only in the event that Lee was ever institutionalized; if Lee's parents cared for him at home until his death, then they would be entitled to the entire remainder of the trust's assets.

The scope of the district court's authority to specify the form of an award of damages is a question of law, which we review de novo. In re Ruti-Sweetwater, Inc., 836 F.2d 1263, 1266 (10th Cir.1988). For the reasons that follow, we hold that the district court has the inherent power to order the parties to place the money judgment into a fully reversionary trust if such an arrangement is in Lee's best interest. Accordingly, we remand in order to give the court the opportunity to establish a fully reversionary trust if it determines that such a trust is still appropriate. In making this determination, the court should consider that Lee's consent to such a trust, through his guardian ad litem, is a strong indication that the trust is in Lee's best interest.

The relevant jurisdictional statute for suits brought under the FTCA provides that

the district courts ... shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person,...