PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
ANDREW L. CIBULA, Individually,
and as parent and next friend of
his minor son J.A.C.; JENNIFER L.
CIBULA, Individually, and as parent
and next friend of her minor son
J.A.C., No. 07-2127
Plaintiffs-Appellees,
v.
UNITED STATES OF AMERICA,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Gerald Bruce Lee, District Judge.
(1:05-cv-01386-GBL-TRJ)
Argued: October 28, 2008
Decided: January 5, 2009
Before MOTZ, GREGORY, and DUNCAN, Circuit Judges.
Reversed and remanded by published opinion. Judge Gregory
wrote the opinion, in which Judge Motz and Judge Duncan
joined.
COUNSEL
ARGUED: William George Cole, UNITED STATES
DEPARTMENT OF JUSTICE, Washington, D.C., for Appel-
2 CIBULA v. UNITED STATES
lant. Stuart Alan Raphael, HUNTON & WILLIAMS, L.L.P.,
McLean, Virginia, for Appellees. ON BRIEF: Jeffrey S.
Bucholtz, Acting Assistant Attorney General, Chuck Rosen-
berg, United States Attorney, William Kanter, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C.,
for Appellant. Bruce J. Klores, Thomas W. Mitchell, BRUCE
J. KLORES & ASSOCIATES, P.C., Washington, D.C.;
Thomas J. Cawley, HUNTON & WILLIAMS, L.L.P.,
McLean, Virginia; George P. Sibley, III, HUNTON & WIL-
LIAMS, L.L.P., Richmond, Virginia, for Appellees.
GREGORY, Circuit Judge:
The United States of America appeals the district court’s
decision not to place damages for future medical expenses,
awarded in a Federal Tort Claims Act ("FTCA") action, into
a reversionary trust. We find that the district court erred in
applying Virginia law to this question. Therefore, we reverse
the decision and remand the case to the district court for a
proper application of California law.
I.
Appellees are Andrew Cibula, a Commander in the U.S.
Navy who is an active-duty pilot and aerospace engineer; Jen-
nifer Cibula, his wife; and "J.C.", their son. The events giving
rise to this case involve the negligence of doctors at the Bal-
boa Naval Medical Center in San Diego, California, in 1997,
while Mrs. Cibula was pregnant with J.C. The Cibulas were
stationed in San Diego at the time, although they currently
live in Virginia. Mrs. Cibula was taking several medications
during her pregnancy, and her doctors failed to monitor the
development of the fetus properly, even after she complained
repeatedly of cramping and reduced fetal movement that
should have alerted the doctors to complications with the
pregnancy. The doctors’ negligence resulted in oxygen depri-
CIBULA v. UNITED STATES 3
vation to the fetus. Mrs. Cibula underwent an emergency cae-
sarean section, and J.C. was born weighing slightly more than
five pounds—in the bottom tenth percentile of infants his age.
Doctors subsequently determined that J.C. had suffered a
brain hemorrhage in the days prior to his delivery and that he
had developed cerebral palsy.
After a bench trial, the U.S. District Court for the Eastern
District of Virginia awarded the Cibulas $28,389,289 in dam-
ages (present value): $2,704,800 in past care costs,
$22,823,718 in future care costs, $2,360,771 in lost future
earnings, $250,000 for J.C.’s pain and suffering, and
$250,000 for Mrs. Cibula’s pain and suffering. Applying Vir-
ginia law, the court found that the Cibulas were entitled to one
lump-sum payment of damages, which was to be placed in a
trust administered by a court-appointed guardian ad litem.
The United States disputes neither the findings of fact nor the
award of damages.
The primary issue in this case is whether the district court
erred in failing to place the damages awarded to the Cibulas
into a reversionary trust. The United States contends that
§ 667.7 of the California Civil Procedure Code applies as the
law of the place where the incident occurred,* and that it
*Section 667.7 provides, in relevant part:
(a) In any action for injury or damages against a provider of health care
services, a superior court shall, at the request of either party, enter a judg-
ment ordering that money damages or its equivalent for future damages of
the judgment creditor be paid in whole or in part by periodic payments
rather than by a lump-sum payment if the award equals or exceeds fifty
thousand dollars ($50,000) in future damages.
...
(c) However, money damages awarded for loss of future earnings shall
not be reduced or payments terminated by reason of the death of the judg-
ment creditor, but shall be paid to persons to whom the judgment creditor
owed a duty of support, as provided by law, immediately prior to his
death. In such cases the court which rendered the original judgment, may,
4 CIBULA v. UNITED STATES
requires the periodic payment of future damages awarded in
a medical malpractice case whenever a party to the suit
requests it, with payments ceasing upon the death of the bene-
ficiary. Yet, the FTCA has been interpreted to prohibit ongo-
ing obligations against the United States. Hull v. United
States, 971 F.2d 1499, 1505 (10th Cir. 1992); Frankel v.
Heym, 466 F.2d 1226, 1228-29 (3d Cir. 1972). The United
States argues, however, that in this case, a reversionary trust
is the best way to effectuate the FTCA’s requirement that the
United States be held liable "in the same manner and to the
same extent as a private individual under like circumstances."
28 U.S.C. § 2674 (2000).
upon petition of any party in interest, modify the judgment to award and
apportion the unpaid future damages in accordance with this subdivision.
...
(e) As used in this section:
(1) "Future damages" includes damages for future medical treatment,
care or custody, loss of future earnings, loss of bodily function, or future
pain and suffering of the judgment creditor.
(2) "Periodic payments" means the payment of money or delivery of
other property to the judgment creditor at regular intervals.
...
(f) It is the intent of the Legislature in enacting this section to authorize
the entry of judgments in malpractice actions against health care providers
which provide for the payment of future damages through periodic pay-
ments rather than lump-sum payments. By authorizing periodic payment
judgments, it is the further intent of the Legislature that the courts will uti-
lize such judgments to provide compensation sufficient to meet the needs
of an injured plaintiff and those persons who are dependent on the plaintiff
for whatever period is necessary while eliminating the potential windfall
from a lump-sum recovery which was intended to provide for the care of
an injured plaintiff over an extended period who then dies shortly after the
judgment is paid, leaving the balance of the judgment award to persons
and purposes for which it was not intended. It is also the intent of the Leg-
islature that all elements of the periodic payment program be specified
with certainty in the judgment ordering such payments and that the judg-
ment not be subject to modification at some future time which might alter
the specifications of the original judgment.
CIBULA v. UNITED STATES 5
The reversionary trust would allow the United States to
make one lump-sum payment into the trust at the outset—
presumably satisfying the prohibition against ongoing
obligations—while the corpus of the trust would provide the
Cibulas with periodic payments for J.C.’s future medical care
and the balance would revert to the United States upon his
death. This, the United States argues, would approximate
§ 667.7. The appellees do not agree with the government’s
position.
This Court has jurisdiction pursuant to 28 U.S.C. § 1346(b)
(2000) and 28 U.S.C. § 1291 (2000).
II.
The FTCA requires the law of the place "where the act or
omission occurred" to be applied. 28 U.S.C. § 1346(b)(1).
The act or omission in this case occurred in California. Thus,
California choice-of-law rules govern our consideration, and
the district court held as much. In making a choice-of-law
determination, California undertakes a governmental interest
test, first adopted in Reich v. Purcell, 432 P.2d 727 (Cal.
1967). In that case, the Supreme Court of California had to
decide which law to apply when residents of California and
Ohio had an automobile collision in Missouri. Missouri had
a damages cap for wrongful death actions, while California
and Ohio did not. The court determined that Missouri’s inter-
est in applying its law related primarily to its residents, and
no party was a resident of Missouri. While determining the
plaintiffs’ proper domicile for the purposes of the conflicts
analysis, the court noted, "Although plaintiffs now reside in
California, their residence and domicile at the time of the
accident are the relevant residence and domicile." Id. at 730;
see also Summers v. Interstate Tractor & Equip. Co., 466
F.2d 42, 48 n.3 (9th Cir. 1972); Emery v. Emery, 289 P.2d
218, 223 (Cal. 1955). Thus, because the plaintiffs were resi-
dents of Ohio and not California for conflicts purposes, and
6 CIBULA v. UNITED STATES
since California had no damages cap to apply on behalf of the
defendant, the court applied Ohio law.
The Cibulas currently reside in Virginia, but their residence
and domicile at the time of the incidents giving rise to their
claim was California, and under California choice-of-law
principles, this is the relevant locus. The California Supreme
Court noted the rationale behind this rule: "At the time of the
accident the plans to change the family domicile were not def-
inite and fixed, and if the choice of law were made to turn on
events happening after the accident, forum shopping would be
encouraged." Reich, 432 P.2d at 730. Additionally, the Cali-
fornia legislature has indicated its interest in having § 667.7
apply:
By authorizing periodic payment judgments, it is the
further intent of the Legislature that the courts will
utilize such judgments to provide compensation suf-
ficient to meet the needs of an injured plaintiff and
those persons who are dependent on the plaintiff for
whatever period is necessary while eliminating the
potential windfall from a lump-sum recovery which
was intended to provide for the care of an injured
plaintiff over an extended period who then dies
shortly after the judgment is paid, leaving the bal-
ance of the judgment award to persons and purposes
for which it was not intended.
Cal. Civ. Proc. Code § 667.7(f). Finally, even if the United
States might be interpreted to "reside" in Virginia for the pur-
pose of the California governmental interest test, see Helver-
ing v. Stockholms Enskilda Bank, 293 U.S. 84, 91-93 (1934),
Virginia has not expressed its will regarding the periodic pay-
ment of medical malpractice damages, and its interest with
regard to the parties is therefore minimal in comparison to
that of California. Thus, under California’s governmental
interest test, California law should apply and not Virginia law.
CIBULA v. UNITED STATES 7
But the parties dispute whether § 667.7 is a substantive law
that must, under California choice-of-law principles, be
applied in this case or a procedural one that should not be
applied. In the decision below, the district court concluded,
"The ‘periodic payment’ provision of California law on which
the Government relies for this argument is a post-judgment,
remedial statute. It is not part of California’s substantive law
on medical negligence. Post-judgment, remedial matters such
as this are governed by federal law, and if no federal rule
exists, then by the law of the forum state." (J.A. 89-90.) Since
the district court was located in Virginia, it applied Virginia
law and held that "[u]nder the choice of law rules of the Com-
monwealth, as neither federal nor Virginia law provide for
periodic payments, the Government is not entitled to this rem-
edy." (J.A. 90.)
If a state’s law affects the substantive liability of the United
States, then federal courts have applied it in FTCA cases. This
approach was taken by the Supreme Court in Richards v.
United States, 369 U.S. 1 (1962), when it applied a nominally
procedural damage cap in favor of the United States because
of the substantive difference in outcome the law would make.
In that case, an airplane en route from Tulsa, Oklahoma, to
New York City crashed in Missouri. A negligence suit was
filed against the United States in the Northern District of
Oklahoma, and the question was which state’s law should
apply. The Court held that Oklahoma choice-of-law principles
should determine the governing law, since the act of negli-
gence occurred in Oklahoma. Because Oklahoma choice-of-
law provisions required a court to apply the substantive laws
of the place where the injury occurred, the Court applied Mis-
souri law—including its $15,000 cap on damages. Id.
One of the appellees’ arguments in this case is that an anal-
ysis under Erie Railroad Co. v. Tompkins, 304 U.S. 64
(1938), would result in the application of Virginia law. How-
ever, the Supreme Court squarely addressed this issue in Rich-
ards:
8 CIBULA v. UNITED STATES
And, because the issue of the applicable law is con-
trolled by a formal expression of the will of Con-
gress, we need not pause to consider the question
whether the conflict-of-laws rule applied in suits
where federal jurisdiction rests upon diversity of citi-
zenship shall be extended to a case such as this, in
which jurisdiction is based upon a federal statute. In
addition, and even though Congress has left to judi-
cial implication the task of giving content to its will
in selecting the controlling law, because of the for-
mal expression found in the Act itself, we are pre-
sented with a situation wholly distinguishable from
those cases in which our initial inquiry has been
whether the appropriate rule should be the simple
adoption of state law.
Richards, 369 U.S. at 7-8 (internal footnotes omitted). Thus,
because the FTCA contains an explicit instruction by Con-
gress regarding which law to use, courts should not engage in
their normal Erie analysis to make that determination. See
Smith v. United States, 507 U.S. 197, 201 (1993); United
States v. Saint Louis Univ., 336 F.3d 294, 300 (4th Cir. 2003).
Other courts have followed the Supreme Court’s lead in
applying the nominally procedural damage caps to FTCA
cases. The Seventh Circuit addressed the issue in Carter v.
United States, 333 F.3d 791 (7th Cir. 2003), which involved
a suit brought in Illinois for a tort that occurred in Maryland.
The court held that Maryland law should apply, including its
damages cap. The plaintiffs argued that the damages cap was
procedural. The court disagreed, finding that substantive law
"include[s] remedial law, such as the damages cap." Id. at
794. The court further noted that even if Maryland considered
the law to be procedural, federal courts would not because "Il-
linois, though it is the state in which the federal district court
that the plaintiff sued in is located, is not a forum state for
purposes of conflicts analysis under the Tort Claims Act." Id.
at 794. Instead, the court held, federal courts apply federal
CIBULA v. UNITED STATES 9
procedure, not state procedure. "So even if Maryland would
regard a damages cap as a procedural rule . . . it is not a fed-
eral procedural rule and so it did not bind the federal district
court in this case." Id. Thus, because the federal courts would
regard the damages cap as substantive and not procedural, the
cap should apply regardless of what the state would have
held.
The Third Circuit also addressed the issue in Gould Elec-
tronics Inc. v. United States, 220 F.3d 169 (3d Cir. 2000).
There, the court considered a negligence action brought in a
Pennsylvania court arising out of pollution from a battery
manufacturing plant in New York that was owned and oper-
ated by companies domiciled in Ohio. The Third Circuit,
under New York choice-of-law principles, applied the Ohio
contribution rule even though the appellants argued that it was
procedural. Id. at 179 n.10, 191. With regard to the effect the
choice-of-law decision might have on the eventual outcome of
the case, the court noted that because it "must apply the
‘whole law’ of the state where the act or omission occurred,
regardless of where the suit is filed. . . . [T]here can be no
forum shopping for substantive law under the FTCA." Id. at
191.
Finally, in Jackson v. United States, 881 F.2d 707, 712 (9th
Cir. 1989), the Ninth Circuit held that the FTCA "specifically
makes state law controlling to the extent needed to fix the
government’s substantive liability." But as to matters that do
not affect the substantive liability of the United States, federal
law controls. Id. Indeed, "issues not affecting the govern-
ment’s substantive liability are determined solely by federal
law; at most, state law provides only an interpretive guide to
the outcome of these issues." Id. Thus, case law instructs us
that the distinguishing feature between substantive and proce-
dural laws is the substantive liability of the United States, i.e.,
"the amount the government ultimately pays." Id.
Because application of § 667.7 would affect the govern-
ment’s ultimate liability, we find the district court’s conclu-
10 CIBULA v. UNITED STATES
sion that the statute is procedural to be in error. We therefore
remand this case to the district court to craft a remedy that
holds the government liable "in the same manner and to the
same extent as a private individual under like circumstances."
28 U.S.C. § 2674. In its opinion below, the district court did
not make findings to determine whether the creation of a
reversionary trust would, if properly structured, impose liabil-
ity on the government in the same manner and to the same
extent as a private individual invoking § 667.7. The detailed
economics involved in the case caution against our making a
specific ruling on the matter in the first instance.
III.
The district court erred in applying Virginia law to this
case. We therefore reverse that decision and remand the case
to the district court for further post-trial proceedings not
inconsistent with this opinion.
REVERSED AND REMANDED