647 F. 2d 34 - Poindexter v. United States

These two cases involve appeals from judgments in favor of the Government under the Federal Tort Claims Act (FTCA). In each case an administrative claim was filed more than one year but less than two years after the injury. The district court held in each case that the claim was barred by Ariz.Rev.Stat. § 23-1023 B, which precludes an injured worker who receives worker's compensation benefits from filing a suit against the tortfeasor more than one year after the injury.1 We reverse. The two-year federal statute of limitations governs, and the claims were timely filed under its provisions.

The facts are not disputed in either case. David Poindexter was killed in an airplane crash, as a result of what his survivors contend was negligence by employees of the Department of the Interior. His widow filed for and received death benefits from the Arizona State Compensation Fund. Almost two years after the accident, Poindexter's widow filed a claim under the FTCA, 28 U.S.C. §§ 2671-2680. One month after the claim was denied Poindexter's widow filed an action against the United States.

Jon Goulding was injured by what he claims was negligence by employees of the United States Army. He also received Arizona workers' compensation benefits and filed a claim under the FTCA one year and two months after the injury. When the Government failed to act on his claim for more than six months, he deemed the claim denied, as he was entitled to do under 28 U.S.C. § 2675(a), and commenced a civil action.

I. Arizona Law.

Arizona law provides that a worker injured by a third party who elects to receive workers' compensation may also file a common law tort action. If such an action is not brought within one year of the injury, however, the claim is assigned by operation of law to the party who paid the compensation benefits (usually an insurer). Ariz.Rev.Stat. § 23-1023.2

Although similar statutes in other states have been interpreted not to cut off the injured worker's cause of action after one year but merely to allow the insurance carrier also to bring suit to recover benefits paid, see, e. g., Kimbrell v. United States, 306 F.2d 98, 99 (6th Cir. 1962), the Arizona Supreme Court has clearly stated that under section 23-1023 the employee may not bring suit after one year. K. W. Dart Trucking Co. v. Noble, 116 Ariz. 9, 567 P.2d 325 (1977).

II. Federal Law.

Under the FTCA a claimant has two years after the cause of action accrues to file an administrative claim with the government agency responsible for the alleged injury. 28 U.S.C. § 2401(b). If the administrative claim is denied, the claimant has six months to file an action in district court. Id. If the administrative claim is not acted upon within six months, the claimant may deem the claim denied and commence a court action at any time thereafter. 28 U.S.C. § 2675(a). The purpose of requiring the plaintiff to file an administrative claim before bringing an action is to allow the agency to investigate the claim to determine whether it should be voluntarily paid or a settlement sought.

The administrative claims and civil actions in both Poindexter and Goulding were timely filed under the provisions of the FTCA. Thus, whether the suits were barred depends upon whether Ariz.Rev.Stat. § 23-1023 or 28 U.S.C. § 2401(b) applies here.

III. Which Law Applies?

As the district court noted, the FTCA required it to look to state law in determining whether a cause of action existed. See, e. g., Mundt v. United States, 611 F.2d 1257, 1259 (9th Cir. 1980). It is long settled, however, that the statute of limitations in the FTCA, 28 U.S.C. § 2401, governs in FTCA actions, even when the state period of limitations is longer or shorter. See, e. g., Kossick v. United States, 330 F.2d 933 (2d Cir. 1964); United States v. Westfall, 197 F.2d 765 (9th Cir. 1952); Young v. United States, 184 F.2d 587 (D.C.Cir.1950); Maryland ex rel. Burkhardt v. United States, 165 F.2d 869 (4th Cir. 1947). A court must look to state law for the purpose of defining the actionable wrong for which the United States shall be liable, but to federal law for the limitations of time within which the action must be brought. Kimbrell, supra, 306 F.2d at 99, (quoting Maryland ex rel. Burkhardt, supra).3 Ariz.Rev.Stat. § 23-1023 B cannot bar appellants' claims if it is a statute of limitations and not a substantive provision.

Although some of the provisions of Ariz.Rev.Stat. § 23-1023 are "substantive" and must be given effect in a Federal Tort Claims action, the provision cutting off the injured worker's cause of action after one year is a statute of limitations and is preempted by 28 U.S.C. § 2401(b). Section 23-1023 creates substantive rights insofar as it: (1) gives the insurance carrier a lien for the amount of benefits paid on any damages collected by the injured worker in a tort action; (2) prevents the worker from settling his or her tort action for less than the amount of benefits paid without the permission of the insurance carrier; and (3) allows the insurance carrier to sue to collect benefits paid if the injured worker does not sue. The provision that cuts off the injured worker's right to sue after one year, however, is not essential to the substantive rights created in favor of the insurance carrier. It functions as a statute of limitations and, as such, is preempted by the federal statute of limitations, 28 U.S.C. § 2401(b).

The Government argues that if the one-year limitation of Ariz.Rev.Stat. § 23-1023 B is not given effect, the United States would not be liable "in the same manner and to the same extent as a private individual under like circumstances," as required by 28 U.S.C. § 2674. This argument is unpersuasive. If the United States were to be treated here exactly like a private employer it would be entitled to have the suits dismissed as untimely, but there are several instances, specifically set forth in the FTCA, where the liability of the United States is not coextensive with that of a private person under state law. Richards v. United States, 369 U.S. 1, 13-14, 82 S.Ct. 585, 593, 7 L.Ed.2d 492 (1962).

Section 2674 is subject to its own express exceptions and those found elsewhere in the FTCA. These include the unavailability of prejudgment interest and punitive damages (§ 2674), and the exceptions listed in section 2680, as well as the limitation period. See id. at 14 n.28, 82 S.Ct. at 593. Furthermore, FTCA actions must be brought in federal court, 28 U.S.C. § 1346(b), where federal procedural rules are applied even if they are "outcome-determinative." Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). In enacting a federal statute of limitations, Congress decided to allow suits against the United States that might be barred against a private defendant by a shorter state limitations period, and to cut off suits that might be allowed against a private defendant by a longer state limitations period.

We would create even greater procedural anomalies in Federal Tort Claims actions if we held that Ariz.Rev.Stat. § 23-1023 B applies insofar as it operates as a statute of limitations. Section 23-1023 B requires the injured worker to file an "action" within one year. A claimant may not immediately bring a court action against the United States under the FTCA. He or she must first file an administrative claim with the appropriate agency, and may not file an action until the agency has denied the claim or has not acted on it within six months. 28 U.S.C. §§ 2401(b), 2675(a).

We are not entitled to assume that Arizona courts would consider an administrative claim filed under the Federal Tort Claims Act an "action", or that the filing of an administrative claim would otherwise suspend the running of the one-year time limit of section 23-1023 B. Thus, a worker injured by a federal employee would have to begin legal proceedings earlier than a worker injured by a private party. The worker would have to file an administrative claim within six months to be certain of being able to institute an action within one year. For us to hold that the filing of an administrative claim under the Federal Tort Claims Act constitutes an "action" under Ariz.Rev.Stat. § 23-1023 B or suspends the running of the time limit created by that statute would be at least as intrusive of the Arizona courts and statutes as our holding that the federal statute of limitations governs.

Insofar as Ariz.Rev.Stat. § 23-1023 operates a statute of limitation, it is preempted by 28 U.S.C. § 2401. The plaintiffs' actions are not time-barred. Insofar as the Arizona statute operates substantively, it is not affected by our holding.4

REVERSED and REMANDED.