Desir v. The United States of America
Filing
145
MEMORANDUM OPINION. Signed by Judge Theodore D. Chuang on 2/26/2021. (heps, Deputy Clerk)
UNITED STATES DISTRICT COURT
DISTRICT OF MARYLAND
RONY DESIR,
Plaintiff,
V.
Civil Action No. TDC-17-3465
UNITED STATES OF AMERICA,
Defendant.
MEMORANDUM OPINION
Plaintiff Rony Desir filed this civil action against the United States of America ("the
Government") under the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 2671-2680 (2018),
based on a motor vehicle accident on August 29, 2014 in New York in which the vehicle he was
driving was struck fi-om the rear by a car operated by a United States Secret Service agent. After
a seven-day bench trial in November 2020,the Court found in favor ofDesir on liability and made
a preliminary finding of damages, subject to post-trial briefing. Having reviewed the submitted
briefing on damages,the Court finds that no hearing is necessary. See D. Md.Local R. 105.6. For
the reasons set forth below,the Court will revise the damages award.
BACKGROUND
After the bench trial, for the reasons stated on the record on November 19,2020,the Court
issued a preliminary finding of the following damages:
1.
Past Medical Expenses in the amount of $679,043, reduced by collateral source
offsets to $62,883;
2.
Future Medical and Life Care Expenses in the amount of$866,566;
3.
Past Lost Earnings in the amount of$197,516;
4.
Future Lost Earnings in the amount of $403,964;
5.
Past Pain and Suffering in the amount of $400,000; and
6.
Future Pain and Suffering in the amount of$800,000.
The parties have since submitted post-trial briefing on how the damages award should be
adjusted. At the outset, the parties agree that incurred medical expenses paid by Medicare and
subject to a Medicare lien, which currently total $22,145, should not be offset, and that the amount
may increase if Medicare asserts an additional lien. The parties also agree that collateral source
offsets should reduce Desk's future lost earnings by $154,482, resulting in an award of$249,482.
Throughout the Court's analysis, including in calculating the final damages award amounts, the
Court will round values to the nearest whole number.
DISCUSSION
As remaining disputes, the parties disagree on the amount of damages that should be
awarded for past medical expenses. Specifically,they disagree on whether and how much damages
should be awarded for(1)treatment by or paid for by Kaiser Permanente("Kaiser");(2)treatment
by University Place Orthopaedics LLP ("University Place")in New York;(3)treatment reflected
in unpaid bills incurred while Desir was a Medicare recipient; and(4)treatment reflected in unpaid
bills issued to Desir by various other medical providers. On lost earnings, the parties disagree on
the amount that Desk's past lost earnings should be offset by collateral sources and whether the
Court should deduct federal income taxes from the award offuture lost earnings.
I.
Legal Standards
The parties agree that New York law applies to this FTCA action. See 28 U.S.C. §
1346(b)(1) (stating that under the FTCA, the United States may be "liable to the claimant in
accordance with the law ofthe place where the act or omission occurred"); Cibula v. United States,
551 F.3d316,319(4thCir. 2009)(quoting28 U.S.C. § 1346(b)(1)).
New York law allows a plaintiffin a motor vehicle personal injury suit to recover damages
for medical "expenses incurred." N.Y. Ins. Law § 5102(a)(1)(McKinney 2020); see also id. §
5104(a)(providing the cause of action). For the reasons stated on the record during the bench trial
session on November 19,2020,the Court has found that a plaintiffincurs a medical expense when
the plaintiff becomes obligated to pay it, regardless of whether the plaintiff or another entity later
pays the expense. 11/19/20 Trial Tr. at 24-25, EOF No. 130.
Under New York law, once an adjudicator makes an initial determination of liability and
damages in a personal injury suit, the damages award is adjusted based on offsets from collateral
sources. See N.Y. C.P.L.R.§ 4545(McKinney 2020). When a plaintiffseeks damages for medical
care or lost earnings, evidence is admissible "to establish that any such past or future cost or
expense was or will, with reasonable certainty, be replaced or indemnified, in whole or in part,
from any collateral source, except for life insurance and those payments as to which there is a
statutory right of reimbursement." Id. For any expense that a court finds "was or will, with
reasonable certainty, be replaced or indemnified" by a collateral source, such as insurance, the
court "shall reduce the amount of the award by such finding, minus" the cost to the plaintiff of
premiums paid or necessary to maintain the insurance or other collateral source. Id. The
"reasonable certainty" standard is equivalent to a "clear and convincing evidence" standard and
requires that it be "highly probable" that a collateral source has or will pay for an expense the
plaintiffincurred. Kihl v. Pfeffer, 848 N.Y.S.2d 200,207(N.Y. App.Div.2007)(collecting cases).
II.
Past Medical Expenses
Desir has now clarified that he seeks a total of $258,609 in past medical expenses,
consisting of(1) $183,624 for medical expenses relating to Kaiser Permanente;(2) $22,145 for
expenses paid by Medicare;(3) $14,348 billed by University Place for treatment by Dr. Steven
Sheskier; and(4)$38,493 in other medical expenses for which he still has an outstanding balance.
A.
Kaiser Permanente
After trial, the Court initially included in its damages calculation $202,033 as the amount
of medical expenses charged by Kaiser, Desk's insurer and primary medical care provider during
the majority ofthe relevant events, but concluded that the full amount would be removed from the
preliminary damages award because it was offset by a collateral source, namely. Kaiser. The Court
reached this conclusion because the submitted records appeared to reflect that Kaiser had paid all
ofthose expenses in full.
Desir seeks that the final damages award include compensation for $183,624 ofthe Kaiser
medical expenses, because Kaiser currently has a lien against him in that amount for expenses it
paid for medical care arising fi om the August 29, 2014 accident, so he continues to be obligated
:
to pay those expenses. Before trial, the parties stipulated that "Kaiser asserts a subrogation claim
for past medical expenses in the amount of $183,623.64." Joint Proposed Pretrial Order at 16,
ECF No. 101. The Government, however, argues that although Desk incurred the medical
expenses, Kaiser's payment of those expenses constitutes an offsetting collateral source, and
Kaiser's lien does not render the prior payment of expenses subject to a "statutory right of
reimbursement" such that it would not be treated as a collateral source under N.Y. C.P.L.R. §
4545(a). The Government urges, in effect, that although Desir is liable to Kaiser for the lien, he
should not receive damages to pay that lien and instead should have to find the money on his own.
This assertion is incorrect for two reasons.
First, where the vast majority of the medical care at issue was provided by Kaiser
physicians and health care providers, the submitted Kaiser itemized statement report, Exhibit 25,
on its face lists only charges for services by Kaiser providers, and no evidence was provided ofthe
total amount of actual payments made by Kaiser to third-party medical providers, it is not at all
clear that the Kaiser report showing no current balance proves that Kaiser actually paid these
expenses such that it acted as a collateral source. Rather, the records could be fairly construed as
an itemization of services for internal accounting purposes which, when combined with the lien,
establishes a "future cost or expense" owed by Desir upon receipt of any judgment, absent a
collateral source.
See N.Y. C.P.L.R. § 4545(a). The Government, which has the burden to
establish collateral sources, has never established that there was any point at which there was
"reasonable certainty" that Kaiser had truly "replaced or indemnified" the medical expenses,
because there is no evidence that Kaiser ever conceded that Desir is no longer obligated to pay
them. Id. As such,the Kaiser itemized statement report and the lien collectively reflect that Desir
continues to be obligated to pay the Kaiser medical expenses, such that Kaiser's purported
payments do not constitute a collateral source.
Second, even if Kaiser's apparent payment of its own medical providers is properly
classified as a collateral source, Kaiser has a "statutory right of reimbursement" such that the
damages award should not be offset by the amount of the lien. As noted above, under New York
law,past medical expenses are not reduced by payments from a collateral source ifthat source has
"a statutory right of reimbursement." N.Y. C.P.L.R. § 4545(a). Here, it is undisputed that Desir's
Kaiser health insurance was provided through his wife, a federal employee,such that it was subject
to a contract with the United States Office of Personnel Management("0PM") pursuant to the
Federal Employees Health Benefits Act ("FEHBA"), 5 U.S.C. §§ 8901-8914 (2018). 0PM
requires that, through a contract with their policyholders, FEHBA insurers such as Kaiser must
maintain a right of subrogation or reimbursement and provide benefits "on the condition" that the
insurer "may pursue and receive subrogation and reimbursement recoveries pursuant to the
contract." 5 C.F.R. § 890.106(b)(2) (2020). This requirement is imposed for good reason:
FEHBA insurer recoveries "translate to premium cost savings for the federal government and
FEHB enrollees." Federal Employees Health Benefits Program; Subrogation and Reimbursement
Recovery, 80 Fed. Reg. 29203-01 (May 21, 2015). 0PM estimated that in 2014 alone, FEHBA
insurers recovered "approximately $126 million" through this system of reimbursement and
subrogation. Id.
Significantly, the FEHBA provides that these contractual subrogation and reimbursement
requirements "supersede and preempt" state laws that would otherwise bar such recovery. 5
U.S.C. § 8902(m)(l); Coventry Health Care ofMo., Inc. v. Nevils, 137 S. Ct. 1190, 1194 (2017)
(upholding the preemption provision of 5 U.S.C. § 8902(m)(l) and holding that it is compatible
with the Supremacy Clause of the United States Constitution). In Nevils, the United States
Supreme Court specifically held that it was the federal statute, the FEHBA, that gave contract
terms adopted pursuant to the FEHBA preemptive force, and noted that many federal statutes leave
the "context-specific force of the preemption to contractual terms." Nevils, 137 S. Ct. at 1198.
Where the FEHBA has effectively granted the force of a federal statute to contractual subrogation
and reimbursement terms adopted pursuant to the FEHBA, the Court finds that the FEHBA
provides a federal statutory right ofreimbursement to Kaiser, and that the right applies to Kaiser's
lien against Desir. See Calingo v. Meridian Resource Co., LLC, No. 11-CV-628(VB), 2013 WL
1250448, at *1, *4 (S.D.N.Y. Feb. 20, 2013)(holding that an insurer of a federal employee and
his spouse under the FEHBA, by virtue of a contractual right to reimbursement, had a statutory
right of reimbursement under 5 U.S.C. § 8902(m)(l) that preempted a conflicting provision in
N.Y. Gen. Oblig. § 5-335). Accordingly,the Kaiser medical expenses are not subject to offset by
a collateral source.
A contrary reading, which would preclude plaintiffs like Desir from recovering damages
in order to satisfy a lien imposed pursuant to such a subrogation or reimbursement clause, would
lead to the perverse result that a plaintiff who succeeds in holding a defendant liable would not be
able to recover for medical expenses it remains obligated to pay, and that a FEHBA insurer may
be unable to secure reimbursement for its payment of medical expenses even when a financially
viable defendant has been found liable, with adverse financial implications for the federal
government.
Lastly, the Government also argues that even if Desir may receive damages relating to the
Kaiser medical expenses, the amount should be less than $183,624 because "not all ofthe medical
services provided by Kaiser relate to" the injuries for which the Government is liable. Def.'s
Opp'n at 7, ECF No. 136. At trial, however, Dr. Paul Christo testified that the Kaiser records
reflected medical expenses reasonably related to the August 29, 2014 accident, and the
Government has offered no contrary evidence or calculations upon which to base any reduction.
Moreover, where Kaiser recorded total treatment expenses of $202,033 but seeks less here, the
lien amount fairly reflects the costs of treatment for Desir's injuries stemming from the accident.
The Court will therefore award Desir $183,624 in past medical expenses relating to Kaiser.
B.
Medicare
Desir became a Medicare Part A recipient in October 2017 and a Medicare Part B recipient
in October 2018. The parties have agreed that by law, Medicare payments do not count as an
offsetting collateral source, because Medicare has a statutory lien allowing it to recover its
payments from the proceeds of the judgment. See 42 U.S.C, § 1395y(b)(2)(2018). The parties
therefore agree that the amount of Medicare's lien, $22,145, should be included in the damages
award. The Court agrees with Desir that ifthe amount of Medicare's lien increases, the increased
amount should be reflected in the damages award as well.
The Government further asserts that, for those medical bills with outstanding balances
which Desir seeks to have included in the damages award, if the treatment occurred while Desir
was a Medicare recipient, the expenses included in the damages award should be limited to the
amount ofMedicare's statutory lien, on the grounds that"any remaining balance is not recoverable
because there is no obligation" to pay. Def.'s Opp'n at 5. The Government acknowledges,
however, that while "participating provider[s]" may not seek payment beyond what Medicare
directly pays,"non-participating physicians" may seek payment from a patient for the difference
between what Medicare pays and the full expense, subject to a statutory limit. Id. at 4-5 (citing 42
U.S.C. §§ 1395w-4(g)(l)(A)(i),(2)(C)). Even when using a participating provider, a patient may
still encounter out-of-pocket costs such as deductibles and copayments. See Medicare.gov,Lower
costs with assignment, https://www.medicare.gov/your-medicare-costs/part-a-costs/lower-costswith-assignment (last visited Feb. 24, 2021) (identifying costs that may still occur with
participating providers); Fed. R. Evid. 201(b)(2). A patient also may use an out-of-network
provider which opted out of Medicare and can therefore charge the entire cost of treatment to the
patient. See id. (explaining "private contracts").
Where there are multiple scenarios under which Desir, as a Medicare recipient, could still
be responsible for certain Medicare expenses,and he has submitted bills with outstanding balances,
it is fair to infer that the medical providers billed in good faith and were not seeking payments
from Desir that they were not authorized to seek. He therefore has met his initial burden to show
that he incurred these expenses. The Government provided no evidence to show that these bills
were improper in that all of these providers were actually obligated to accept only Medicare's
payment without billing Desir for any portion of their services. The Government also has not
shown that there is a "reasonable certainty" that Desir is no longer required to pay these bills
because they are subject to be offset by a collateral source. N.Y. C.P.L.R. § 4545. Thus,the Court
will not reject the additional medical bills solely because Desir was a Medicare recipient at the
time of the services.
C.
University Place
In its preliminary damages award, the Court tallied medical expenses charged to Desir by
University Place for the treatment by Dr. Steven Sheskier, who conducted Desir's second ankle
surgery. Although the Government now objects to including these expenses based on a lack of
evidence to show that they were incurred, at trial the Court accepted into evidence Exhibit 46, a
University Place financial statement, which lists charges for treatment by Dr. Sheskier and an
unpaid balance of $14,476 as of December 2015, which undisputedly related to Desir's ankle
injury. Where the Government offered no evidence to show that University Place wrote off the
charges or received payment for the charges from a collateral source, Desir has shown by a
preponderance of evidence that he was obligated to pay those expenses and thus incurred them.
Although Desir has now offered, with his post-trial briefing, documentation that he remains liable
to University Place for $14,348, based on a contractual assignment, the Court need not accept the
document to reach this conclusion. The Court will therefore include Desir's request of$14,348 in
University Place expenses in the final damage award.
D.
Other Medical Expenses
Desir's request for $38,493 in damages reflected in other medical bills for which he has an
unpaid balance are based on the charges in Exhibits 26, 27, 28, 29, 30, 33, 34, 35, 36, 37, 38, 40,
42,43,44,45,47, and 48. The Government continues to object to including in the damages award
certain of these medical expenses on the grounds that (1) there is no longer an obligation to pay
because the statute oflimitations has run; and(2)there was a lack ofproof of an expense incurred,
including in some instances a lack of proof that the treatment was related to Desir's ankle injury.
1.
Statute of Limitations
The Government argues that because the statute of limitations has now expired for some
or all ofthese unpaid medical bills, they do not constitute medical expenses "incurred" under New
York law. This argument, however, provides no basis to conclude that Desir did not actually incur
the expenses, as he was actually obligated to pay them at the time the treatment occurred. Under
New York law, neither the insurance law nor the collateral source offset law recognizes an expired
statute of limitations as a basis to omit from damages an expense otherwise incurred. See N.Y.
Ins. Law § 5102(a)(1); N.Y. C.P.L.R. § 4545. Indeed, the Government itself cites no legal
authority to support its position. At best, the Government is arguing that because Desir has yet to
pay the bills, and the medical providers are now time-barred from bringing a civil action to compel
payment, there is the equivalent of a collateral source replacing the expense such that it should be
offset in full. The Government, however, cannot show that the expiration of the statute of
limitations, while removing an enforcement mechanism, creates a "reasonable certainty" that the
expense has now been "replaced or indemnified." See N.Y. C.P.L.R. § 4545(a). Where there is
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no evidence that these medical providers have actually written off the expenses, the debts remain
owed, and the medical providers can continue to seek to collect them from Desir, including by
referring them to collection agencies with potential adverse consequences for Desir's credit
history, can use them to offset future medical expenses incurred, and can refuse to provide future
medical care to Desir absent payment of the past expenses. Because the statute of limitations has
no bearing on whether medical expenses were actually incurred and do not establish reasonable
certainty that the debts are no longer owed,it does not provide a basis to alter the damages award.
2.
Lack of Proof
The Government also argues that Desir did not meet his burden of proof to establish that
the medical expenses with unpaid balances were actually incurred because he did not "testify that
he actually owes any money reflected on" the exhibits related to those providers. Def.'s Opp'n at
3. In its preliminary ruling, however, the Court concluded that the documentary evidence
supported the expenses incurred from all of the medical providers at issue in this category, with
the exception of Bay Surgery Centers and Tower Radiology, which are discussed below. The
Government's argument provides no basis to revisit that conclusion.
The Government more specifically objects to the expenses listed in Exhibits 26,29,30,40,
44, and 47 on the grounds that Desir "failed to establish that any medical care related to his back
is causally related to the motor vehicle accident." Id. at 6. It does so even though at trial, the
Government stated, in discussing Exhibits 26, 30, 40, 44, and 47,"We do not claim that the
services provided aren't related to Mr. Desk's ankle." 11/4/20 Trial Tr. at 45. In fact, the Court
already considered this issue and included in its preliminary damages award only those medical
expenses it deemed incurred to treat Desir's injuries from the motor vehicle accident, and it already
largely excluded the expenses listed in Exhibit 29(Tower Radiology)and Exhibit 40(Bay Surgery
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Centers). See infra part II.D.3. The Court included those other damages the Government now
challenges for two reasons.
First, Desir received treatment for his ankle injury from the providers listed in Exhibits 26,
30, and 44. In addition to his general testimony that the medical bills reflected treatment relating
to Desir's ankle injury, Dr. Christo also specifically testified about assessments of Desir's ankle
by Dr. Eric G. Dawson, whose medical charges are contained in Exhibit 26. Similarly, in Exhibit
30, Andrews Chiropractic Center listed "pain in right ankle and joints of right foot" as one of
Desir's symptoms. Ex. 30. As for Exhibit 44, the billing statement from Pro Spine and Pain
Medicine PLLC reflecting treatment by Dr. Syed Husain, Desir testified that he received treatment
from Dr. Husain in 2016 for pain related to his ankle injury.
Second, Exhibit 47, the bill from Absolute Chiropractic Care, itself reflects that the
referenced back treatment was causally connected to the August 29,2014 motor vehicle accident.
The bill contains the notation "Case Description: MVA 08/29/14" and relates to treatment within
the first two months after the accident. Ex. 47. The Court will therefore maintain the medical
expenses relating to all ofthese exhibits, with the exception of Exhibits 29 and 40.
3.
Final Calculations
Though the Court has declined to accept the Government's broad arguments for rejecting
some or all of the expenses in the medical bills with unpaid balances, it does not accept Desir's
requests in their entirety. As discussed above, the Court will not include in the damages award
Desir's request for $4,594 in medical expenses from Bay Surgery Centers and $5,401 from Tower
Radiology, Exhibit 40, the "Billing Summary" for Bay Surgery Centers, lists a total outstanding
charge of $4,594.00 in the column for "Insurance 1" and $0.00 in the "Patient" column. Ex. 40.
Where the only evidence presented relating to Bay Surgery Centers shows that the charges were
12
paid by insurance and there was no balance owed by Desir, the Court concludes that Desir has not
established that he incurred medical expenses from Bay Surgery Centers. Similarly, Exhibit 29,
Desir's "Personal Financial History" with Tower Radiology, lists a "Total Balance" of $5,401.17,
including an "Insurance Balance" of $5,355.00 and a "Patient Balance" of $46.17. Ex. 29. The
document also lists a previous payment of$181.01. Where the evidence shows that insurance paid
almost all of the charges from Tower Radiology, and Desir presented no other evidence on the
issue, the Court finds that Desir's total expenses incurred from Tower Radiology total $227, the
sum of the paid bill and the patient balance, and ■will award damages in that amount. This lower
amount is properly awarded because Dr. Gregory Guyton, an expert witness for the Government,
confirmed during his trial testimony that Tower Radiology conducted imaging of Desir's ankle
damage.
As for the remaining requested medical expenses, Desir presently requests the same
amounts sought at trial in medical expenses incurred from the following providers: $13,089 from
Proflex Physical Therapy (Exhibit 27); $1,000 from Manhattan Diagnostic Radiology (Exhibit 28);
$5,335 from Andrews Chiropractic Center (Exhibit 30); $238 from MedStarNRH Rehabilitation
Network (Exhibit 34); $1,871 from MedStar Physicians Billing Services (Exhibit 35); $1,800 from
NAPA Anesthesia Services (Exhibit 36); $171 from KCI Wound Care (Exhibit 37); $1,312 from
CVS (Coram) (Exhibit 38); $125 from the University of Maryland Charles Regional Medical
Center (Exhibit 42); $1,348 from Washington Open MRI (Exhibit 43); $394 from Pro Spine &
Pain Medicine PLLC (Exhibit 44); $1,675 from Absolute Chiropractic Care (Exhibit 47); and $43
from Northshore LIJ Medical Group (Exhibit 48). Presumably as a result of write-offs, he now
requests reduced expense amounts of $1,695 for Dr. Eric Dawson (Exhibit 26); $104 for Hanger
Clinic (Exhibit 33); and $268 for NYU Hospitals Center (Exhibit 45). Consistent with the Court's
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prior conclusions in calculating the preliminary damages award, the Court finds that these
expenses were incurred and will include them in the final damages award.
Based on the foregoing analysis, the Court will award damages of $250,812 for past
medical expenses, consisting of $183,624 for Kaiser medical expenses; $22,145 for Medicare
expenses; $14,348 for University Place expenses; and $30,695 for the remaining expenses.
III.
Lost Earnings
The parties have two remaining disputes regarding the damages for lost earnings, one
relating to past earnings and one relating to future earnings.
A.
Past Earnings
After trial, the Court's preliminary damages award included $197,516 in past lost earnings,
to be reduced by collateral sources. The parties agree that this amount should be offset by the
amount of private long-term disability payments, which totaled $104,560; by a 2018 lump sum
Social Security disability payment of $42,428; and by monthly Society Security disability
payments already received. As for monthly Social Security disability payments, before trial, the
parties stipulated that Desir "began to receive $1,236 per month in social security disability in
October 2018" and that he "has continued to receive monthly payments with cost of living
increases." Joint Proposed Pretrial Order at 16. The parties now agree that Desir received monthly
Social Security disability payments of$1,236 over 26 months, totaling $32,136, but they disagree
on whether the offset should include additional amounts paid to Desir as cost-of-living adjustments
("COLAs")in 2019 and 2020. The Government argues that the offset for Social Security disability
payments should include the 1.6 percent COLA for 2019 and the 1.3 percent COLA for 2020 listed
on the Social Security Administration's public website, which would result in an offset of$32,771
for these payments.
Social Security Administration, Cost-Of-Living Adjustments,
14
https://www.ssa.gov/oact/cola/colaseries.html (last visited Feb. 24, 2021). Desir argues that no
such adjustment should be made because the Government failed to present evidence at trial on the
specific amount of COLAs paid to Desir.
Here, the fact that Desir's monthly Social Security disability payments included COLAs
was in evidence in the form ofthe stipulation. Where that fact was undisputed,the Court will take
judicial notice ofthe published COLA rates and find that they provide "reasonable certainty" that
Desir's lost earnings were replaced, in part, by these additional amounts. See Fed. R. Evid.
201(b)(2), 201(d)(stating that the court may take judicial notice "at any stage ofthe proceeding").
The Court will therefore calculate the appropriate offset for past monthly Social Security disability
benefits payments to be $32,771, an amount that includes past COLAs. When this offset and the
collateral source offsets to which the parties have already agreed are subtracted from the $197,516
in past lost earnings, the final damages award for past lost eamings will be $17,757.
B.
Future Earnings
As for future lost eamings,the parties disagree on whether federal income taxes should be
deducted from Desir's future lost eamings. Under New York law, taxes are not deducted from a
personal injury damages award. Johnson v. Manhattan & Bronx Surface Transit Operating
Authority, 71 N.Y.2d 198, 206(1988).
In arguing that federal taxes should nevertheless be deducted, the Government cites
Flanneryfor Flannery v. United States, 718 F.2d 108 (4th Cir. 1983), in which the United States
Court of Appeals for the Fourth Circuit held that in an FTCA case, even ifthe applicable state law
bars deductions of federal income taxes from a damages award, federal income taxes must
nevertheless be deducted from a plaintiffs future lost eamings. Id. at 111. In reaching this
conclusion, the court first referenced the FTCA's bar on punitive damages, which provides that
15
the Government "shall not be liable for interest prior to judgment or for punitive damages." 28
U.SiC. § 2674; see Flannery, 718 F.3d at 110. The Fourth Circuit then reasoned that any award
that "gives more than the actual loss suffered by the claimant" constitutes punitive damages
prohibited by § 2674, and that a pre-income tax award would therefore be "punitive" because it
"gives the plaintiff more than is truly compensatory." Flannery, 718 F.2d at 111. The court also
concluded that the FTCA punitive damages prohibition also barred a damages award for loss of
capacity to enjoy life when a plaintiffis comatose,even though such an award was available under
state law, because such a plaintiff receives "no direct benefit" from such an award. Id.
Although the reasoning of Flannery would apply to the present case, the Supreme Court
effectively rejected its analysis in Molzof v. United States, 502 U.S. 301 (1992). In Molzof, the
district court denied FTCA damages for loss of enjoyment of life for a comatose patient, and the
United States Court of Appeals for the Seventh Circuit affirmed, explicitly adopting the "Fourth
Circuit's view" in Flannery that the FTCA prohibits such damages as punitive. Molzofv. United
States, 911 F.2d 18,22(7th Cir. 1990). The Supreme Court reversed, holding that the FTCA "bars
the recovery only of what are legally considered 'punitive damages' under traditional common-
law principles," namely,those that depend on a defendant's "intentional or egregious misconduct"
and that are imposed with the purpose "to punish"the defendant for such misconduct. Molzof,502
U.S. at 313. While Molzofdid not explicitly address the issue of whether federal income taxes
must be deducted from an FTCA damages award, its implication is unmistakable: gross future
lost earnings, awarded for simple negligence, are not "punitive" within the meaning of § 2674
because they do not depend on the defendant's intentional or egregious conduct. See id. Since
Molzof, several courts have invoked its reasoning in finding that the relevant state law applies to
the question of whether federal income taxes should be deducted from an FTCA damages award.
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See Kirchgessner v. United States, 958 F.2d 158, 163 (6th Cir. 1992) (stating that, in light of
Molzof, an award of gross future lost earnings does not constitute "punitive damages" under the
FTCA); Estevez v. United States,72 F. Supp. 2d 205,210(S.D.N.Y.1999)(holding that, pursuant
to Molzof,federal income taxes are not deducted from an FTCA damages award in a case governed
by New York law); see also Dawson v. United States, No. 1:1 ICVl 14, 2013 WL 2945061, at *4
(N.D. W.Va. June 14,2013)(declining to apply Flannery inlighX of Molzof). The Court therefore
will not deduct federal income taxes from the award of future lost earnings. Where the parties
otherwise agree that the Court's preliminary future lost earnings award should be reduced only by
$154,482 in offsets, the final future lost earnings award is $249,482.
CONCLUSION
For the foregoing reasons, the final damages award shall include the following amounts:
(1)Past Medical Expenses: $250,812; (2)Future Medical and Life Care Expenses: $866,566;(3)
Past Lost Earnings: $17,757;(4) Future Lost Earnings: $249,482;(5) Past Pain and Suffering:
$400,000; and(6)Future Pain and Suffering: $800,000. A separate Order shall issue.
Date: February 26,2021
THEODORE D. CHUAl
United States District Jut
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