## Facts

- Members of the Estevez family were injured when their car collided with a United States Postal Service truck in New York.
- The plaintiffs sued the United States under the Federal Tort Claims Act (FTCA), alleging negligence by the postal truck driver.
- The court found the United States liable and awarded damages including past and future medical expenses, lost earnings, and pain and suffering.
- One plaintiff’s recovery was reduced based on comparative fault for failure to wear a seatbelt.
- In an earlier damages opinion, the court awarded significant future damages, including $750,000 to Joseph Estevez (a minor), and ordered that part of Joseph’s recovery be paid through an annuity over ten years rather than entirely as a lump sum.
- The United States moved for reconsideration and modification of the damages judgment under Local Civil Rule 6.3 and Federal Rules of Civil Procedure 59(e) and 60(a), challenging (i) the structured judgment/annuity requirement, (ii) the absence of an income-tax reduction in future lost earnings, and (iii) the court’s present-value treatment of future pain-and-suffering awards.

## Issues

1. In an FTCA case governed by New York law, may the court structure future-damages payments by requiring the United States to fund an annuity consistent with N.Y. CPLR § 5041, or must the award be paid as a lump sum?
2. Must future lost-earnings awards be reduced for federal income taxes to avoid an impermissible punitive component under the FTCA?
3. Must lump-sum awards for future pain and suffering be discounted to present value to account for the time value of money?

## Decision

- The court denied the Government’s motion for reconsideration.
- The court held it could structure the judgment for future damages in a manner consistent with New York’s structured-judgment statute, including requiring purchase of an annuity for Joseph’s future damages.
- The court declined to reduce future lost-earnings awards for federal income taxes because New York law does not require such a reduction and applying state compensatory-damages rules is not punitive under the FTCA.
- The court maintained its approach to discounting future damages to present value and rejected the claim that its future pain-and-suffering awards were improperly undiscounted.

## Legal Principles

- FTCA damages are determined “in the same manner and to the same extent” as a private person under like circumstances, using the law of the state where the tort occurred, subject to the FTCA’s bar on punitive damages and pre-judgment interest.  
- Where state law provides for structured judgments for large future-damages awards (including payment through an annuity valued at present cost), a federal court applying the FTCA may structure the judgment accordingly.
- Under New York law applied in FTCA actions, future lost earnings are not reduced by federal income taxes; using that state rule does not convert compensatory damages into punitive damages under 28 U.S.C. § 2674.
- Future damages may be discounted to present value under New York law, including within a structured-judgment framework for future pain and suffering.

## Conclusion

The court applied New York damages law in this FTCA action and refused to modify its judgment, upholding a structured future-damages award funded by an annuity, declining to subtract income taxes from future lost earnings, and maintaining present-value treatment of future damages consistent with New York’s statutory scheme.


Estevez v. United States, 74 F. Supp. 2d 305 (S.D.N.Y. 1999)