Shaw v. United States, No. 17-2136 (Fed. Cir. 2018)Annotate this Case
Scotty, born in 1979 at Madigan Army Medical Center, suffered injuries during childbirth, resulting in brain damage, cerebral palsy, seizures, and blindness, necessitating ongoing, around-the-clock care. The Shaws sued and agreed to a settlement, which stated that payments described in paragraph 5 and the purchase of annuities described in paragraph 6 “shall constitute a complete release.” Paragraph 5 provided that the government would pay: $500,000 to the Shaws; $500,000 to Scotty's medical trust; $850,000 to the Shaws’ attorneys; and, for the purchase of annuities to provide payments set forth in paragraph 6, $2,950,000.00. Paragraph 6 set forth the terms for the annuities. Four annuities are at issue: one each for Mr. and Ms. Shaw, one for the guardianship for the benefit of Scotty, and one for the medical trust. The government made each of the specified payments, including $2,846,095 to purchase the annuities. The agreement stated that payments from the annuities for Mr. and Ms. Shaw “are guaranteed for a period of twenty (20) years.” Paragraph 7 noted that the “settlement is contingent on a total, final cost of $4,800,000.00.” The annuities were purchased from ELNY, which later encountered financial difficulties and entered into court-ordered liquidation in 2012. The Shaws's annuity payments were reduced by 20%; payments to the guardianship and the medical trust were reduced by 62.4%. The Shaws sued. The Federal Circuit affirmed summary judgment in favor of the government, which was obligated to guarantee the annuity payments only for the first 20 years. The reduction in payments began after that period. The Shaws lacked standing to sue on behalf of the medical trust.