$1,999,900 Structured Settlement Enforced Against United States in Air Force Hospital Birth Injury Case

A family's son was born on July 29, 1985, at a U.S. Air Force hospital, quadriplegic, deaf and blind, with renal failure, seizures and other medical complications. His parents alleged that Air Force physicians negligently provided prenatal, delivery and newborn care. They sued the United States under the Federal Tort Claims Act in the Southern District of Florida on May 20, 1986.

The prognosis was grim from the start. The child spent his short life in military hospitals under the constant supervision of Air Force doctors, and his condition was described as 'extremely guarded.' Settlement talks began in the summer of 1986 and covered the parents' claim, the child's own claim, a trust for his medical care and attorney's fees. Frank Ladenburg of Tacoma, Washington, handled the negotiations for the family, and Ira Leesfield of Leesfield and Blackburn in Miami appeared with him as counsel for the plaintiffs.

By November 1986, with a February 1987 trial date approaching, Justice Department lawyers had taken over from the Air Force's medical law office. On November 12, Ladenburg accepted the government's counterproposal. At a status conference on November 18, government counsel told the court a settlement had been reached and was awaiting final approval. The agreement needed four levels of sign-off, and the Deputy Attorney General approved a structured settlement in an amount not to exceed $1,999,900 on November 26, 1986.

Two days later, on the evening of November 28, the child died at sixteen months old. The government then refused to go through with the deal. It argued that the case ended with his death, that the court lacked jurisdiction over what had become a contract dispute, that the terms were too indefinite, that a court had never approved the minor's settlement, that the papers were unsigned, and that his death made the annuities impossible to buy.

After evidentiary hearings in March 1987, U.S. District Judge Scott rejected each argument in an amended memorandum decision dated August 10, 1988. The court held that the settlement became binding on November 26, before the death, and that its terms were definite enough, with the details of the medical trust worked out afterward in a 29-page trust document. Court approval of a minor's settlement exists to protect the child, the judge wrote, and not to let the other side back out. The reversionary trust provision, which the government itself had bargained for, already accounted for the possibility that the boy would die, and it saved the government roughly $700,000.

The court denied the motion to dismiss, granted the motion to approve and enforce the settlement, found the deal to be in the child's best interest, and substituted the parents as parties. The judge wrote that the government 'must be held to honor its commitments.' The plaintiffs were directed to submit a proposed order and judgment enforcing the agreement, and the court kept jurisdiction to carry it out.