Stokes v. United States ex rel. Indian Health Serv. & Chickasaw Nation Med. Ctr.

• Citation: 967 F.3d 1034
• Decision Date: 29 July 2020
• Docket Number: Nos. 19-7034 & 19-7035,s. 19-7034 & 19-7035
• Parties: Alexis STOKES, individually and as guardian and next friend of Baby Boy D.S., a minor; Taylor Stokes, individually and as guardian and next friend of Baby Boy D.S., a minor, Plaintiffs - Appellees/Cross-Appellants, v. UNITED STATES of America, ex rel. Indian Health Service & Chickasaw Nation Medical Center, an agency of the Chickasaw Nation, Defendant - Appellant/Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

967 F.3d 1034

Alexis STOKES, individually and as guardian and next friend of Baby Boy D.S., a minor; Taylor Stokes, individually and as guardian and next friend of Baby Boy D.S., a minor, Plaintiffs - Appellees/Cross-Appellants,

v.UNITED STATES of America, ex rel. Indian Health Service & Chickasaw Nation Medical Center, an agency of the Chickasaw Nation, Defendant - Appellant/Cross-Appellee.

Nos. 19-7034 & 19-7035

United States Court of Appeals, Tenth Circuit.

FILED July 29, 2020

Casen B. Ross, Attorney, Appellate Staff, United States Department of Justice, Civil Division, Washington, D.C. (Robert P. Charrow, General Counsel, Brian Stimson, Principal Deputy General Counsel for Litigation, United States Department of Health and Human Services; Joseph H. Hunt, Assistant Attorney General, Brian J. Kuester, United States Attorney, Susan Stidham Brandon, Assistant United States Attorney, and Abby C. Wright, Attorney, Appellate Staff, United States Department of Justice, Civil Division, Washington, D.C., with him on the briefs), for Defendant-Appellant.

George W. Braly of Braly, Braly, Speed & Morris, PLLC, Ada, Oklahoma (William W. Speed and Sheila Southard of Braly, Braly, Speed & Morris, PLLC, Ada, Oklahoma, and Lawrence R. Murphy Jr. of Smolen Law, Tulsa, Oklahoma, with him on the briefs), for Plaintiffs-Appellees.

Before BRISCOE, McHUGH, and MORITZ, Circuit Judges.

MORITZ, Circuit Judge.

The district court awarded damages to Baby Boy D.S. (Baby Stokes) and his parents, Alexis Stokes and Taylor Stokes, (collectively, the Stokes) in this Federal Tort Claims Act (FTCA), 28 U.S.C. § 2674, action. The government appeals, arguing that the district court erred in structuring damage payments. The Stokes cross appeal, arguing that the district court erred both by miscalculating the present value of a portion of the award and by awarding too little in noneconomic damages. For the reasons explained below, we affirm in part, vacate in part, and remand.

Background

An employee of a federally supported health center failed to properly administer a drug to Alexis Stokes while she gave birth to Baby Stokes. As a result, Baby Stokes suffers from "cerebral palsy

and spastic quadriplegia," along with other disabilities, and his life expectancy is 22 years. App. vol. 2, 79.

The Stokes brought this FTCA case against the government. After a bench trial, the district court found the government liable and ordered it to pay a total of $15.9 million in damages, including the cost of Baby Stokes's future care and noneconomic damages. As relevant to this appeal, the district court (1) ordered the government to pay the cost of Baby Stokes's future care into a trust, granting the government a diminishing reversionary interest in the trust and permitting the trustee to withdraw funds as needed to provide for Baby Stokes; (2) applied a zero-percent discount rate in calculating the present value of the award for Baby Stokes's future care; and (3) awarded Baby Stokes $1,000,000 in noneconomic damages, Alexis Stokes $500,000 in noneconomic damages, and Taylor Stokes $400,000 in noneconomic damages.¹ The government and the Stokes both appeal.

Analysis

On appeal, the government does not challenge liability or the amount of damages. It appeals only how the trust is structured with respect to the future-care award. In their cross-appeal, the Stokes argue that (1) the district court applied the wrong discount rate when calculating the present value of the future-care award and (2) their noneconomic damages are erroneously low.²

I. Structure of the Trust

The government argues that the district court erroneously structured Baby Stokes's future-care award by not approximating Oklahoma's periodic-payment statute to the fullest extent possible. The FTCA generally requires courts to hold the government liable for tort claims "in the same manner and to the same extent as a private individual under like circumstances," which includes applying relevant state law. § 2674 ; see Hill v. United States , 81 F.3d 118, 120–21 (10th Cir. 1996). In Oklahoma, private individuals ordered to pay more than $100,000 in future-care damages can request that they pay those damages through periodic payments instead of as a lump sum. Okla. Stat. tit. 23, § 9.3(C).³ Those payments may not continue for more than seven years. Id. If the recipient dies before all periodic payments are made, the statute explains that the "obligation of the defendant [payor] to make further payments ends." § 9.3(H). But courts cannot neatly apply this Oklahoma law to the federal government because they may not order the government to make periodic payments. Hull ex. rel. Hull v. United States , 971 F.2d 1499, 1505 (10th Cir. 1992). When facing a situation like this, courts must "approximate the result contemplated by the" state statute. Hill , 81 F.3d at 121. And one common way to approximate periodic-payment statutes is for the government to pay future damages into an account as a lump sum and then model disbursements from that account around the state's periodic-payment statute. See, e.g. , Dixon v. United States , 900 F.3d 1257, 1260–61 (11th Cir. 2018) (noting that district court "granted the government's request to make a single payment into a trust for periodic disbursement" to approximate Florida's periodic-payment statute); Lee v. United States , 765 F.3d 521, 527 (5th Cir. 2014) (vacating district court order because it "should have structured the [FTCA] damage award in a manner resembling" Texas's periodic-payment statute); Dutra v. United States , 478 F.3d 1090, 1092 (9th Cir. 2007) (explaining that "FTCA authorizes courts to craft remedies that approximate the results contemplated by state statutes, and nothing in the FTCA prevents district courts from ordering the United States to provide periodic payments in the form of a reversionary trust"; requiring that FTCA award approximate Washington's periodic-payment statute); Hill , 81 F.3d at 121 (ordering district court to create reversionary trust for FTCA award to approximate Colorado's periodic-payment statute).

Here, after trial and in anticipation of a damages award, the Stokes created a trust that (1) permitted the trustee to withdraw funds to care for Baby Stokes as needed and (2) granted the government a 14-year fractional reversionary interest in the future-care award.⁴ When the district court awarded damages, it approved this trust structure with one exception: citing § 9.3, it ordered that the trust be modified to ensure that "at the end of seven years no amount is payable to the government." App. vol. 2, 91.

Citing the requirement that it be treated the same as a private individual, the government asked the court to amend its order to more closely model the trust on Oklahoma law. See § 2674. Specifically, the government requested that the district court (1) order it to pay a lump sum for the amount of Baby Stokes's future-care award into an account, (2) order the trustee of that account to pay one-seventh of the lump sum to Baby Stokes each year for seven years, and (3) order that in the event Baby Stokes were to die before all payments were made, the remaining funds from the lump sum would revert to the government. The district court declined to modify the trust structure, stating that it "fashioned a remedy [that] approximated the result contemplated by state law but complied with federal law. Strict adherence to state law is not mandated." App. vol. 2, 153.

On appeal, the government argues that the district court erred by not "approximat[ing] the result contemplated by" § 9.3 as required by the FTCA. Hill , 81 F.3d at 121 ; see also § 2674. The parties agree that the district court failed to approximate all of § 9.3 ’s provisions.⁵ But they disagree on whether the district court was required to do so. Because we must hold the government liable for tort claims "in the same manner and to the same extent as a private individual under like circumstances," § 2674, we first consider how the statute would apply to a private party. Next, we determine whether the district court fully approximated that result for the government. In doing so, we interpret § 9.3 de novo.⁶ See Burlington N. & Santa Fe Ry. Co. v. Grant , 505 F.3d 1013, 1024 (10th Cir. 2007) ; Dixon , 900 F.3d at 1261 (reviewing de novo whether the district court erred in applying Florida's periodic-payment statute); Vanhoy v. United States , 514 F.3d 447, 451 (5th Cir. 2008) (noting that "[t]he question whether [Louisiana's Medical Malpractice Act] requires the district court to provide protection to the government in the form of a reversionary trust" is one of legal interpretation; reviewing "district court's ruling de novo"). And because we are interpreting an Oklahoma statute, we use Oklahoma's "rules of statutory construction." Ward v. Utah , 398 F.3d 1239, 1248 (10th Cir. 2005). So we will not look beyond the statute's text if "the language of the statute is plain and unambiguous." Antini v. Antini , 440 P.3d 57, 60 (Okla. 2019).

A. Application of § 9.3 to a Private Party

Turning to the text of § 9.3, the statute provides that "[u]pon request of a party, the court may order that future damages be paid ... in periodic payments." § 9.3(C) (emphasis added). As the Stokes argue, because § 9.3 permits a private party to request periodic payments, it gives the district court discretion whether to grant that request. See Okla. Pub. Emps. Ass'n v. State ex rel. Okla. Office of Pers. Mgmt. , 267 P.3d 838, 845 n.18 (Okla. 2011) ("The term ‘may’ is ordinarily construed as permissive ...."). Focusing on the word "may," the Stokes then argue that none of § 9.3 is mandatory because it "uses the word ‘may’ rather than ‘shall,’ thus defining the discretionary nature of implementing (or not) the statute." Aplee. Br. 16 (quoting § 9.3 ). But the Stokes's argument ignores the remainder of the statute, which repeatedly uses the term "shall" in describing the court's responsibilities. For...