Appealed from: U.S. Court of Federal Claims. Judge Yock
Before Archer, Chief Judge,*fn* Newman and Clevenger, Circuit Judges.
The Secretary of the Department of Health and Human Services (Secretary) appeals the judgment of the United States Claims Court*fn1 affirming the decision of the Special Master that in calculating lost earnings under the National Childhood Vaccine Injury Act of 1986, the Federal Insurance Contributions Act (FICA) tax is not an "appropriate tax" within the meaning of the statute to be deducted from the award. See 42 U.S.C. § 300aa-15(a)(3)(B). We reverse and remand.
Corey Euken contracted a residual seizure disorder after receiving diphtheria, pertussis, and tetanus (DPT) shots. The disorder caused a severe encephalopathy and resulted in Corey suffering developmental delays and mental disabilities. Corey's mother filed a petition on Corey's behalf for compensation under the National Childhood Vaccine Injury Act of 1986, 42 U.S.C. §§ 300aa-10 to 300aa-34 (1988 & Supp. IV 1992) (Vaccine Act). The petition alleged that Corey's injuries were suffered as a direct result of receiving the DPT shots.
The Vaccine Act established the National Vaccine Injury Compensation Program, 42 U.S.C. §§ 300aa-10 to 300aa-17. Under the Program individuals who claim to have either contracted or aggravated illnesses as a result of receiving certain vaccines, including DPT vaccines, can receive compensation from the government by filing a petition with the Court of Federal Claims. 42 U.S.C. § 300aa-11(a)(1). After a petition for compensation is filed, a special master is assigned to the case to determine entitlement and, if appropriate, the amount of compensation. See 42 U.S.C. § 300aa-12. Compensation is calculated and limited in amount by statute. See 42 U.S.C. § 300aa-15. The decision of the special master may be reviewed upon motion to the Court of Federal Claims. 42 U.S.C. § 300aa-12(e). If a petitioner is not satisfied with the judgment of the Court of Federal Claims, the decision may be appealed to this court. 42 U.S.C. § 300aa-12(f).
In Corey's case, the government conceded the issue of entitlement and the case was referred to a special master for a determination of the amount of compensation. Following an evidentiary hearing, the special master awarded compensation, which included an award of lost earnings pursuant to 42 U.S.C. § 300aa-15(a)(3)(B). That statute provides:
In the case of any person who has sustained a vaccine-related injury before attaining the age of 18 and whose earning capacity is or has been impaired by reason of such person's vaccine-related injury for which compensation is to be awarded and whose vaccine-related injury is of sufficient severity to permit reasonable anticipation that such person is likely to suffer impaired earning capacity at age 18 and beyond, compensation after attaining the age of 18 for loss of earnings determined on the basis of the average gross weekly earnings of workers in the private, non-farm sector, less appropriate taxes and the average cost of a health insurance policy, as determined by the Secretary.
42 U.S.C. § 300aa-15(a)(3)(B). The special master determined that earnings of the average worker during a forty year estimated work life beginning in the year 2007 would total $28,715.58 per year after deducting an amount equal to the income tax that would be paid by such a worker. The special master did not deduct FICA tax from such earnings. She reasoned that FICA is not an "appropriate tax" within the meaning of the statute because "Corey will not, as a normally employed person would, receive the FICA deductions back once he attains the age of 65."
The Secretary petitioned the Claims Court for review of the decision of the special master on the ground, inter alia that the special master erroneously failed to deduct FICA tax from the lost earnings award. The Claims Court affirmed the decision of the special master, stating that the arguments presented by the Secretary did not "compel a finding that FICA must be deducted from an award for lost earnings, even if it would be reasonable and acceptable to do so." The court concluded that "it appears to this Court that, based on the phrase 'appropriate taxes' in the statute and the special master's reasoning regarding what is an appropriate tax, this Court cannot say her determination was arbitrary, capricious, an abuse of discretion, or otherwise contrary to law." The Secretary appeals.
The issue in this case is one of statutory interpretation: whether the term "appropriate taxes," as used in the Vaccine Act, includes FICA tax. This court reviews issues of statutory interpretation under the Vaccine Act under a "not in accordance with the law" standard, see Whitecotton v. Secretary of Department of Health and Human Services, 17 F.3d 374, 376 (Fed. Cir. 1994). This is a de novo standard of review. ...