U.S. Government, As Tortfeasor, Must Pay Damages into SNT

In a medical malpratice action brought against the U.S. government, a federal district court rules that the government must pay damages for a plaintiff's future medical costs into a special needs trust, just as any other negligence defendant would be required to do. Dutra v. U.S.(W.D. Wash., No. C04-5025, Oct. 23, 2006).

Jose Dutra, a minor, was awarded more than $4.4 million in damages in a medical malpractice lawsuit after he sustained substantial brain damage from the negligent treatment of a doctor insured by the U.S. government. The government proposed that $3.7 million of the award, which the court allotted to future medical treatment, go into a reversionary trust payable to the federal government at Jose's death. The government also resisted the plaintiff's proposal that the award be paid into a special needs trust, so that Jose would still be eligible for Medicaid.

The U.S. District Court for the Western District of Washington denies the U.S. government's proposal and orders that the $3.7 million be paid into a special needs trust. First, the court reasons that creating a reversionary trust would create a conflict of interest for the trustee, who would be divided between providing for Jose's medical needs and ensuring that the government received some residue from the trust. Second, the court holds that such a trust would also conflict with state law, which does not terminate payments for future medical treatment upon the death of the plaintiff. Third, the court finds that such payment would violate state law that requires that the proposal be in the best interest of the plaintiff. The court notes that as a tortfeasor in a private civil action, the government is obligated to pay for the damages it caused to Jose, and creating a reversionary trust would subvert that obligation.

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