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We find that this, combined with DHS’s proposals in the interim
drafts indicating its intent to provide $25,130 annual payments
to Mr. Forste in settlement of all claims for personal injuries,
is evidence that the payments under paragraph 1 were intended as
compensation for tort or tort type personal injury claims for
which DHS could have been directly liable.
Respondent’s primary argument on brief is that all the
payments by DHS are simply retirement benefits. It is true that
DHS’s first proposal characterizes the $25,130 as a retirement
benefit. Even though Mr. Forste rejected this, respondent argues
that the $25,130 provided in paragraph 1 of the settlement
agreement appears to have been calculated by reference to the
retirement provisions of the director’s agreement. On the other
hand, Mr. Forste was not eligible for a regular or early
retirement. At age 49, he was eligible only for a severance
payment of up to 1 year’s salary ($69,000). DHS rejected the
idea of giving Mr. Forste a disability retirement, and in its
subsequent draft proposals DHS characterized its $25,130 offer as
being for personal injuries. Thus, it is reasonable to infer
that DHS did not intend that payments pursuant to paragraph 1 be
made to compensate Mr. Forste for retirement claims.
Respondent points out that DHS issued Forms W-2 for 1996 and
for prior years, in which it consistently reported the payments
it made under the settlement agreement as taxable income to Mr.
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