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Late v. United States

United States District Court, M.D. Pennsylvania

March 3, 2015

CHRISTINA LATE AND NATHAN ARMOLT, AS PARENTS AND NATURAL GUARDIANS OF D.A., A MINOR AND IN THEIR OWN RIGHT, Plaintiffs,
v.
UNITED STATES OF AMERICA, Defendant.

MEMORANDUM

SYLVIA H. RAMBO, District Judge.

In this medical malpractice action brought by the minor child's parents against the United States pursuant to the Federal Tort Claims Act ("FTCA"), the United States has moved to limit Plaintiffs' future medical expenses claim to no more than $100, 000.00, or alternatively, to be treated like a private litigant under Pennsylvania law. (Doc. 62.) The principle issue raised herein is whether this court has jurisdiction to order the United States to provide funding for the periodic payments of a future medical expenses award in excess of $100, 000.00 "by means of an annuity contract, trust, or other qualified funding plan, " as mandated by Pennsylvania's periodic payment statute. See 40 P.S. § 1303.509(b)(6). For the following reasons, the court holds that it may order the parties to place an award into an annuity contract, trust, or other qualified funding plan. Accordingly, the court will grant the motion to the extent the United States seeks to be treated like a private litigant under Pennsylvania law and deny the motion to the extent the United States seeks to limit Plaintiffs' future medical expenses claim to no more than $100, 000.00.

I. Background

Plaintiffs, Christina Late and Nathan Armolt, filed this action on behalf of their minor son, D.A., alleging that he suffers from severe and permanent physical and neurological injuries as a result of negligent obstetrical care rendered by Dr. Thomas Orndorf on February 21, 2012, at Chambersburg Hospital, a federally supported hospital located within the Middle District of Pennsylvania. (Doc. 1.) Plaintiffs seek, inter alia, future medical expenses in excess of $15, 000, 000.00. (Doc. 62, p. 8 of 26.)

This matter was initially scheduled for trial on September 15, 2014. However, on August 29, 2014, the parties filed a joint motion to continue trial, namely on the basis that D.A.'s potential future medical expenses are highly contested due to the difficulty in ascertaining the full extent of brain injury in a child under the age of four. (Doc. 52.) The parties represented that a continuance of two years would provide D.A. with the opportunity to receive additional medical care and participate in physical, occupational, and speech therapy, and that his progress, or lack thereof, would place the medical experts and treating physicians in a better position to opine as to his prognoses and future care needs. ( Id. ) The court granted the motion on September 8, 2014. (Doc. 53.)

On November, 24, 2014, the United States filed the instant motion and supporting brief seeking to limit Plaintiffs' future medical expenses claim to no more than $100, 000.00 or, alternatively, to treat the United States like a private litigant under Pennsylvania law (Docs. 61 & 62), to which Plaintiffs responded on December 29, 2014 (Doc. 65). The United States replied on January 12, 2015. (Doc. 66.) Thus, the matter is ripe for disposition.

II. Legal Standard

The United States has brought the instant motion pursuant to Federal Rule of Procedure 12(b)(1), which allows a court to dismiss a claim for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The motion amounts to a factual attack on the court's jurisdiction because it challenges not merely an alleged pleading deficiency, but rather the actual failure of Plaintiffs' future damages claim to comport with the jurisdictional prerequisites of the FTCA. United States ex rel. Atkinson v. Pennsylvania Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007). As such, no presumptive truthfulness attaches to the allegations in the complaint, and the court may consider and weigh evidence outside the pleadings to determine if it has jurisdiction. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000) ; Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977).

III. Discussion

The FTCA waives the federal government's sovereign immunity in tort actions and makes the United States liable "in the same manner and to the same extent as a private individual under like circumstances, " depending upon the law of the state where the tort occurred. 28 U.S.C. § 2674; Cibula v. United States, 664 F.3d 428, 430 (4th Cir. 2012) (citing 28 U.S.C. § 1346(b)(1)) (stating that courts determine the United States's liability "in accordance with the law of the place where the [negligent] act or omission occurred"). Pennsylvania law controls the manner and extent of the United States's liability in this case.

The Pennsylvania Medical Care Availability and Reduction of Error Act ("MCARE Act") provides a comprehensive scheme for the method by which a judgment for future medical expenses must be satisfied in medical malpractice actions. As is relevant to the present case, the MCARE Act provides that a judgment for future medical and other related expenses in excess of $100, 000.00 "shall be paid as periodic payments." 40 P.S. § 1303.509(b)(1). The trier of fact is required to make a specific finding as to the amount of future damages "by year, " id. at § 1303.509(a)(2)(i), and "may vary the amount... from year to year for the expected life of the claimant to account for different annual expenditure requirements, " id. at § 1303.509(b)(1). The trier of fact may also "incorporate into any future medical expense award adjustments to account for reasonably anticipated inflation and medical care improvements." Id. at § 1303.509(b)(2). The future damages must then "be paid in the years that the trier of fact finds they will accrue." Id. at § 1303.509(b)(3). The statute further provides that "[e]ach party liable for all or a portion of the judgment shall provide funding for the awarded periodic payments... by means of an annuity contract, trust[, ] or other qualified funding plan which is approved by the court." Id. at § 1303.509(b)(6). Upon the death of the claimant, the periodic payments terminate for all medical expenses not yet due. Id. at § 1303.509(b)(5).

Pursuant to the "like circumstances" requirement of the FTCA, see 28 U.S.C. § 2674, it would appear that, under Pennsylvania law, the United States should provide funding for periodic payments of a future medical expenses award in excess of $100, 000.00 by means of an annuity contract, trust, or other qualified funding plan. However, relying almost exclusively on Frankel v. Heym, 466 F.2d 1226 (3d Cir. 1982), the United States argues that the court is precluded from imposing future medical damages against the United States in any form except a lump-sum money judgment and, therefore, the court would exceed its jurisdiction if it ordered the United States to comply with Pennsylvania's periodic payment scheme. The United States contends that the court must instead limit Plaintiffs' claims for future medical damages to the statute's $100, 000.00 threshold for lump-sum payments. See 40 P.S. § 1303.509(b)(8) (stating that future damages for medical expenses will not be awarded in periodic payments "if the claimant objects and stipulates that the total amount [of the award], without reduction to present value, does not exceed $100, 000."). The United States's argument is unavailing. Even assuming that funding the periodic payments by an annuity contract, trust, or other qualified funding plan involves something other than a lump-sum payment, the court finds that it is authorized to craft a judgment in excess of $100, 000.00 against the United States in order to comply with the MCARE Act.

In Frankel, the Third Circuit denied the United States's proposal to have an award for future medical damages take the form of a reversionary trust for the benefit of the permanently disabled plaintiff. Frankel, 466 F.2d at 1228. Under the trust agreement, the United States would have been required to supplement the trust as needed throughout the plaintiff's life, and any trust funds remaining at the time of the plaintiff's death would revert to the United States. Id. After examining the relevant jurisdictional statute for suits brought under the FTCA, which, among other things, "authorizes district courts to entertain civil actions on claims against the United States, for money damages, "[1] see 28 U.S.C. § 1346 (emphasis supplied), the Third Circuit concluded that "district court[s] should not make other than lump-sum money judgments" in FTCA cases. Frankel, 466 F.2d at 1228-29. The court reasoned that the federal waiver of sovereign immunity incorporates the traditional common law rule that damages must be awarded in lump-sum judgments, and that lump-sum money judgments are preferable to judgments that would impose a continuing burden upon the judiciary to supervise the award. Id. The court added that, "[i]f novel awards are to be permitted against the government, Congress should affirmatively authorize them." Id. at 1229.

Although the Third Circuit's decision in Frankel may initially appear to foreclose the application of Pennsylvania's periodic payment scheme to the United States, Frankel is distinguishable from the matter sub judice. Unlike the proposed reversionary trust in Frankel, Pennsylvania's periodic payment scheme would not subject the United States to ongoing obligations in violation of the FTCA. See, e.g., Lee v. United States, 765 F.3d 521, 529 (5th Cir. 2014) ("[A]wards constituting continuing obligations on the United States are not appropriate under the FTCA."); Hull v. United States, 971 F.2d 1499, 1505 (10th Cir. 1992) ("[C]ourts cannot subject the government to ongoing obligations like the continuing payments proposed in Frankel. "). To the contrary, the MCARE Act requires the trier of fact to determine the specific dollar amount due for each year future medical expenses are awarded. Thereafter, the sum total of the future damages award is calculated from the annual allocations, and the liable party must provide funding for the awarded payments by means of an annuity contract, trust, or other qualified funding plan. ...


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