#25605-aff in pt, rev in pt & rem-GAS

2011 S.D. 1

                            IN THE SUPREME COURT
                                    OF THE
                           STATE OF SOUTH DAKOTA

                                        * * * *

MICHELE G. STUCKEY,                               Appellee,

v.

STURGIS PIZZA RANCH and
NATIONWIDE MUTUAL INSURANCE
COMPANY,                                          Appellants.

                                        * * * *

                   APPEAL FROM THE CIRCUIT COURT OF
                       THE SIXTH JUDICIAL CIRCUIT
                     HUGHES COUNTY, SOUTH DAKOTA

                                        * * * *

                       HONORABLE MARK C. BARNETT
                                 Judge

                                        * * * *
Wm. JASON GROVES
Rapid City, South Dakota
and
DAVID S. BARARI
VERNE GOODSELL of
Goodsell Quinn, LLP
Rapid City, South Dakota                          Attorneys for appellee.

DENNIS W. FINCH of
Finch Maks, Prof. LLC
Rapid City, South Dakota                          Attorneys for appellants.

                                        * * * *
                                                  ARGUED OCTOBER 6, 2010

                                                  OPINION FILED 01/12/11
#25605

SEVERSON, Justice

[¶1.]        Michele Stuckey initiated this workers’ compensation proceeding to

secure future benefits for a work-related injury. The Department of Labor did not

award Stuckey a lump sum of future disability benefits, but it did award a partial

lump sum to cover her attorney’s fees, costs, and litigation expenses. It also

approved a life care plan for Stuckey’s future medical care. The circuit court

reversed the Department’s denial of a lump sum award of future disability benefits

but affirmed all other aspects of the Department’s decision. We affirm in part,

reverse in part, and remand.

                                  BACKGROUND

[¶2.]        Stuckey was employed by the Pizza Ranch restaurant (Employer) in

Sturgis, South Dakota. Stuckey suffered a work-related injury on October 8, 2003,

when her left hand was crushed in a machine used to flatten pizza dough. She

returned to work following the injury and worked until February 23, 2004. By that

time, her condition had deteriorated significantly, and she was diagnosed with

Reflex Sympathetic Dystrophy and Complex Regional Pain Syndrome. As a result

of her injury, Stuckey is unable to care for herself, her family, and her residence.

She requires assistance for personal care, meal preparation, and housekeeping.

[¶3.]        At the time of her injury, Stuckey was the primary wage-earner for her

family and the sole caretaker of her thirteen-year-old daughter and disabled

husband. Her gross weekly wage was $298.52, and her net weekly wage was

approximately $250. Based on the date of her injury, Stuckey’s weekly workers’

compensation rate is now $249, which Employer has consistently paid. Stuckey


                                         -1-
#25605

receives an additional $97 per month from Social Security. Her current sources of

income include her weekly workers’ compensation benefits, Medicare benefits, and

Social Security benefits payable to her, her husband, and her daughter. Although

her weekly workers’ compensation benefits are not taxed, they partially offset her

Social Security benefits.

[¶4.]        In March 2004, Stuckey retained an attorney to represent her

concerning product liability and workers’ compensation matters. In August 2004,

Stuckey’s attorney filed a petition for hearing with the Department. Stuckey

alleged that she is unable to return to work due to her injury and requested

“medical benefits and disability benefits as may be determined by the Department.”

In November 2005, after she served her petition and a request for admissions,

Employer agreed that Stuckey is permanently and totally disabled. In January

2006, the Department entered an order declaring Stuckey permanently and totally

disabled and entitled to lifetime benefits under SDCL 62-4-7.

[¶5.]        The case continued to resolve several issues, including:

             1.     Whether Stuckey is entitled to a lump sum award of future
                    disability benefits under SDCL 62-7-6.

             2.     Whether Stuckey is entitled to a partial lump sum award of
                    future disability benefits to cover her attorney’s fees, costs, and
                    litigation expenses under SDCL 62-7-6.

             3.     Whether the Department erred by approving a life care
                    plan for Stuckey’s future medical care.

In January 2008, Stuckey filed a partial motion for directed decision requesting

approval of a life care plan. In March 2008, the Department granted Stuckey’s

motion but determined that genuine issues of material fact existed as to the


                                          -2-
#25605

reasonableness and medical necessity of two treatments in the life care plan. The

Department addressed the remaining issues in April 2009. The Department did not

award Stuckey a lump sum of future disability benefits, but it did award a partial

lump sum to cover her attorney’s fees, costs, and litigation expenses. The circuit

court reversed the Department’s denial of a lump sum award of future disability

benefits but affirmed all other aspects of the Department’s decision. Employer

appeals.

                            ANALYSIS AND DECISION

[¶6.]         1.    Whether Stuckey is entitled to a lump sum award of
                    future disability benefits under SDCL 62-7-6.

[¶7.]         Employer argues that the Department erred by awarding Stuckey a

lump sum of future disability benefits under SDCL 62-7-6. 1 South Dakota’s



1.      SDCL 62-7-6 provides:

              An employer or employee who desires to have any unpaid
              compensation paid in a lump sum may petition the Department
              of Labor asking that the compensation be paid in that manner.
              If, upon proper notice to interested parties and proper showing
              before the [D]epartment, it appears in the best interests of the
              employee that the compensation be paid in a lump sum, the
              [S]ecretary of [L]abor may order the commutation of the
              compensation to an equivalent lump-sum amount. That amount
              shall equal the total sum of the probable future payments
              capitalized at their present value on the basis of interest
              calculated at a rate per year set by the [D]epartment with
              annual rests in accordance with rules promulgated pursuant to
              chapter 1-26. If there is an admission or adjudication of
              permanent total disability, the [S]ecretary may order payment
              of all or part of the unpaid compensation in a lump sum under
              the following circumstances:
                      (1)   If the employee has exceptional financial need that
                            arose as a result of reduced income due to the
                            injury; or
                                                             (continued . . .)
                                           -3-
#25605

workers’ compensation statutes do not favor lump sum awards. After all, the

primary emphasis must be providing an injured employee with a reliable stream of

income to replace lost wages. Steinmetz v. State, D.O.C. Star Acad., 2008 S.D. 87, ¶

10, 756 N.W.2d 392, 396 (quoting Thomas v. Custer State Hosp., 511 N.W.2d 576,

580 (S.D. 1994)).

             Since compensation is a segment of a total income insurance
             system, it ordinarily does its share of the job only if it can be
             depended on to supply periodic income benefits replacing a
             portion of lost earnings. If a . . . totally disabled worker gives up
             these reliable periodic payments in exchange for a large sum of
             cash immediately in hand, experience has shown that in many
             cases the lump sum is soon dissipated and the [worker] is right
             back where [she] would have been if [workers’] compensation
             had never existed.

Id. ¶ 8, 756 N.W.2d at 395 (quoting Enger v. F.M.C., 2000 S.D. 48, ¶ 11, 609 N.W.2d

132, 135). Lump sum awards “must be made in accordance with the goal of

preserving future wage replacement benefits.” Thomas, 511 N.W.2d at 581.

Ultimately, “[t]he allowance of a lump sum award is the exception and not the

general rule.” Steinmetz, 2008 S.D. 87, ¶ 8, 756 N.W.2d at 395 (quoting Enger, 2000

S.D. 48, ¶ 11, 609 N.W.2d at 135).


________________________
(. . . continued)
                      (2)    If necessary to pay the attorney’s fees, costs and
                             expenses approved by the [D]epartment under § 62-
                             7-36.
               If a partial lump sum payment is made, the amount of the
               weekly benefit shall be reduced by the same percentage that the
               partial lump sum bears to the total lump sum computation. The
               remaining weekly benefit is subject to the cost of living
               allowance provided by § 62-4-7. Any compensation due to
               beneficiaries under §§ 62-4-12 to 62-4-22, inclusive, may not be
               paid in a lump sum, except for the remarriage lump sum
               provided in § 62-4-12.

                                          -4-
#25605

[¶8.]        But SDCL 62-7-6 does allow for a lump sum award of future disability

benefits in certain circumstances. First, an injured employee must establish that a

lump sum award is in her best interest. SDCL 62-7-6(1). Second, in the case of an

injured employee who is permanently and totally disabled, a lump sum may be

awarded if she establishes that she has an “exceptional financial need that arose as

a result of reduced income due to the injury” or that a lump sum award is

“necessary to pay attorney’s fees, costs, and expenses.” SDCL 62-7-6(2). The

injured employee bears the ultimate burden of proving all facts essential to

sustaining an award of compensation by a preponderance of the evidence. Darling

v. W. River Masonry, Inc., 2010 S.D. 4, ¶ 11, 777 N.W.2d 363, 367 (citing Titus v.

Sioux Valley Hosp., 2003 S.D. 22, ¶ 11, 658 N.W.2d 388, 390).

[¶9.]        The issue whether a lump sum award is in Stuckey’s immediate best

interest has not been raised by the parties on appeal. We therefore turn to the

question whether Stuckey established exceptional financial need. The circuit court,

relying on Stuckey’s unique circumstances and the reduction of her income

following her injury, reversed the Department’s conclusion that she failed to

establish exceptional financial need:

             There is no dispute that [Stuckey] has suffered a profound
             disability. Before the injury, [Stuckey] was the sole
             breadwinner for her family. As the result of her injury,
             [Stuckey] has lost the capacity to provide necessities for herself,
             her teenage daughter, and her husband who also suffers a
             disability. . . . As a result of her injury, [Stuckey’s] income has
             been reduced. At the time of her injury, [Stuckey] was making
             $298.52 per week or $1,293.59 per month. . . . [Stuckey’s]
             weekly workers’ compensation amount is $249, which is $1,079
             per month. . . . The report of Doris Eizember reveals that
             [Stuckey] receives an additional $97 per month from Social
             Security. With that amount, [Stuckey’s] monthly income is

                                         -5-
#25605

             $1,176. This means [Stuckey’s] post-injury income is $117.59
             less per month than prior to her injury and $1,411.08 less per
             year. In its April 6, 2009, Decision, the Department found that
             [Stuckey’s] income did not substantially decrease. Likewise,
             [Employer] argues [Stuckey’s] income “really did not even
             decrease.” However, [Stuckey’s] decrease in monthly income as
             a result of her injury is nearly 10%. While this percent decrease
             may not be substantial to a person who was making $5,000 a
             month prior to injury, that is not the case for a person in the
             position of [Stuckey].

[¶10.]       The circuit court reviewed the Department’s denial of a lump sum

award of future disability benefits under the de novo standard of review. But to

clarify, the determination whether to award a lump sum is a mixed question of law

and fact and requires a compound inquiry. Steinmetz, 2008 S.D. 87, ¶ 6, 756

N.W.2d at 395; Enger, 2000 S.D. 48, ¶ 10, 609 N.W.2d at 134. See Stockwell v.

Stockwell, 2010 S.D. 79, ¶ 15, 790 N.W.2d 52, 58. We are asked to review not only

the Department’s factual findings concerning exceptional financial need but also the

Department’s application of that legal standard to the facts.

[¶11.]       Different standards of review apply to these two inquiries. The

Department’s findings of fact are, of course, reviewed under the clearly erroneous

standard. See SDCL 1-26-36(5). But the standard of review for the second inquiry

– the application of law to fact – depends on the nature of the inquiry:

             If application of the rule of law to the facts requires an inquiry
             that is ‘essentially factual’ – one that is founded ‘on the
             application of the fact-finding tribunal’s experience with the
             mainsprings of human conduct’ – the concerns of judicial
             administration will favor the [Department], and the
             [Department’s] determination should be classified as one of fact
             reviewable under the clearly erroneous standard. If, on the
             other hand, the question requires us to consider legal concepts
             in the mix of fact and law and to exercise judgment about the
             values that animate legal principles, then the concerns of


                                         -6-
#25605

             judicial administration will favor the appellate court, and the
             question should be classified as one of law and reviewed de novo.

Darling, 2010 S.D. 4, ¶ 10, 777 N.W.2d at 366 (quoting McNeil v. Superior Siding,

Inc., 2009 S.D. 68, ¶ 6, 771 N.W.2d 345, 347-48 (quoting Permann v. S.D. Dep’t of

Labor, 411 N.W.2d 113, 119 (S.D. 1987) (quoting United States v. McConney, 728

F.3d 1195, 1202 (9th Cir. 1984)))). In reviewing the application of the exceptional

financial need standard to the facts, the concerns of judicial administration favor

the appellate court. After all, the determination whether to award a lump sum of

future disability benefits requires this Court to balance the public policy concerns

underlying South Dakota’s workers’ compensation system. We thus review the

Department’s application of the exceptional financial need standard to the facts

under the de novo standard of review.

[¶12.]       The circuit court made additional findings of fact concerning

exceptional financial need. See SDCL 1-26-36 (“A court shall enter its own findings

of fact and conclusions of law or may affirm the findings and conclusions entered by

the agency as part of its judgment.”). In making those additional findings, the

circuit court failed to recognize that while Stuckey’s weekly wages were taxed, her

weekly workers’ compensation benefits are not. Before her injury, Stuckey’s net

weekly wages averaged approximately $250. Currently, her weekly workers’

compensation benefits are approximately $249. Thus, Stuckey’s income remained

virtually the same, and Stuckey has not established that her present financial

circumstances have arisen as a result of her work-related injury. See Steinmetz,

2008 S.D. 87, ¶ 10, 756 N.W.2d at 396. Additionally, “[r]educed income alone is not

sufficient to show ‘exceptional financial need.’” Id. ¶ 12 n.3, 756 N.W.2d at 397 n.3.

                                         -7-
#25605

On these facts, the Department did not err by concluding that Stuckey failed to

establish exceptional financial need that arose as a result of reduced income due to

her injury. Therefore, we reverse the circuit court on this issue.

[¶13.]       2.     Whether Stuckey is entitled to a partial lump sum award
                    of future disability benefits to cover her attorney’s fees,
                    costs, and litigation expenses under SDCL 62-7-6.

[¶14.]       Employer argues that the Department erred by awarding Stuckey a

partial lump sum of future disability benefits to cover her attorney’s fees, costs, and

litigation expenses. SDCL 62-7-36 contemplates that an attorney representing an

injured employee is entitled to attorney’s fees representing a percentage of the

compensation he obtains for his client:

             Except as otherwise provided, fees for legal services under this
             title shall be subject to approval of the [D]epartment.
             Attorney[’s] fees may not exceed the percentage of the amount of
             compensation benefits secured as a result of the attorney’s
             involvement as follows:
             1)      Twenty-five percent of the disputed amount arrived at by
                     settlement of the parties;
             2)      Thirty percent of the disputed amount awarded by the
                     Department . . . after hearing or through appeal to circuit
                     court;
             3)      Thirty-five percent of the disputed amount awarded if an
                     appeal is successful to the Supreme Court.
             Attorney[’s] fees and costs may be paid in a lump sum on the
             present value of the settlement or adjudicated amount.

And SDCL 62-7-6 authorizes a lump sum award to cover attorney’s fees when

necessary and in the injured employee’s best interest. The purpose of a partial

lump sum for attorney’s fees is to ensure that injured employees will be able “to

employ competent legal representation to secure all compensation to which they are

legally entitled.” Enger, 2000 S.D. 48, ¶ 29, 609 N.W.2d at 138. After all, “[i]f

attorneys [were] denied fees for work prosecuted on behalf of an injured worker,

                                          -8-
#25605

there would be a chilling effect upon the ability of an injured party to obtain

adequate representation.” Stanton v. Hills Materials Co., 1996 S.D. 109, ¶ 20, 553

N.W.2d 793, 797 (Gilbertson, J., concurring).

[¶15.]         The question whether Stuckey is entitled to a partial lump sum award

to cover her attorney’s fees, costs, and litigation expenses is also a mixed question of

law and fact that requires a compound inquiry. See Enger, 2000 S.D. 48, ¶ 27, 609

N.W.2d at 137. See also supra ¶ 10. We must review the Department’s factual

findings concerning the award of attorney’s fees, the determination that a partial

lump sum award is necessary and in Stuckey’s best interest, the decision to award

attorney’s fees, and the amount of the award. Again, the Department’s findings of

fact are reviewed under the clearly erroneous standard. See SDCL 1-26-36(5). Like

the application of the exceptional financial need standard to the facts, the

determination whether Stuckey has established that a partial lump sum award is

necessary and in her best interest is reviewed de novo. 2 See Enger, 2000 S.D. 48,

¶¶ 10, 27, 609 N.W.2d at 134, 137. See also supra ¶ 11. But the award and its

amount are reviewed under the abuse of discretion standard. See In re S.D.

Microsoft Antitrust Litig., 2005 S.D. 113, ¶ 27, 707 N.W.2d 85, 97-98 (citing

Anderson v. Aesoph, 2005 S.D. 56, ¶ 18, 697 N.W.2d 25, 31).




2.       The Department found that Stuckey “is unable to pay her attorney’s fees and
         expenses without a partial lump sum award” and that “a partial lump sum
         award for attorney’s fees will eliminate the offset for [Stuckey’s] [S]ocial
         [S]ecurity benefits.” The Department therefore concluded that a partial lump
         sum award was necessary and in Stuckey’s best interest. On appeal,
         Employer has not argued that these findings and conclusions were error.

                                          -9-
#25605

[¶16.]       Employer argues that the Department erred by awarding Stuckey a

partial lump sum because her attorney did not “secure” “disputed” disability

benefits as required by SDCL 62-7-36. The Department made several findings

concerning the involvement of Stuckey’s attorney in this case. The Department

found that her attorney collected medical proof of disability, deposed doctors, and

retained an expert to prepare a plan for her future medical care. The Department

also found that her attorney’s “involvement in this matter [was] extensive and

thorough” and that “[d]ue to [his] involvement, [Stuckey] received a determination

that she is permanently and totally disabled.” As to the argument that Stuckey’s

benefits were not disputed, the Department found that her attorney “repeatedly

asked [Employer] to admit that [she] was disabled” and that Employer did not agree

that Stuckey was disabled until November 2005. Given her attorney’s work on this

case, the Department concluded that “[a]n award of attorney’s fees, as permitted by

the statute, of thirty-percent . . . is reasonable and justified.” The Department’s

findings of fact concerning attorney’s fees are not clearly erroneous. On these facts,

the Department did not abuse its discretion by awarding Stuckey a partial lump

sum of thirty percent to cover her attorney’s fees, costs, and litigation expenses.

[¶17.]       3.     Whether the Department erred by approving a life care
                    plan for Stuckey’s future medical care.

[¶18.]       In May 2006, Linda Graham prepared a health care cost evaluation,

outlining Stuckey’s physical limitations and detailing the estimated costs of the

medical services Stuckey will need for the remainder of her life. In April 2007,

Graham prepared an updated evaluation or life care plan, providing that the

Sandstone Villa Care Community in Spearfish, South Dakota, is an appropriate

                                         - 10 -
#25605

place for Stuckey to live and receive medical attention. It also shows the estimated

costs of living at Sandstone, medications, treatments, psychological support, and

other therapies for the remainder of Stuckey’s life. The total estimated cost of the

life care plan is $2,883,960. The Department approved the course of treatment set

forth in Stuckey’s life care plan, and the circuit court affirmed.

Procedural Issues

[¶19.]         In January 2008, Stuckey filed a partial motion for directed decision on

the life care plan issue. The Department treated Stuckey’s motion as a motion for

summary judgment and granted it. Employer challenges the Department’s

approval of the life care plan on three procedural grounds:3 (1) that summary

judgment is a pretrial motion that was improperly utilized in a post-trial situation;

(2) that it was error for an administrative law judge who did not hear the case to

rule on Stuckey’s motion; and, (3) that summary judgment was improperly granted




3.       Stuckey argues that these procedural arguments should be deemed waived
         because Employer did not present these arguments or provide authority for
         them in the proceedings before the Department. It is true that “[a]n issue not
         raised at the [Department] level cannot be raised for the first time on
         appeal.” Action Mech., Inc. v. Deadwood Historic Pres. Comm’n, 2002 S.D.
         121, ¶ 50, 652 N.W.2d 742, 755 (citing State v. Nelson, 1998 S.D. 124, ¶ 7, 587
         N.W.2d 439, 443). And “the failure to cite authority in support of an issue . . .
         is a waiver of the right to present that issue on appeal.” Behrens v. Wedmore,
         2005 S.D. 79, ¶ 55, 698 N.W.2d 555, 577 (citing State v. Pellegrino, 1998 S.D.
         39, ¶ 22, 577 N.W.2d 590, 599). But on May 15, 2009, Employer filed a
         petition for review, alleging that the Department did not follow proper
         procedure in granting Stuckey’s motion on the life care plan. The brief in
         support of that petition provided citations to statutes and case law. Thus, a
         review of the record reveals that Employer properly raised these alleged
         procedural errors in the proceedings before the Department, and we will
         address them.


                                           - 11 -
#25605

because genuine issues of material fact existed. We address each of these

procedural arguments in turn.

[¶20.]         Employer argues that the Department improperly treated Stuckey’s

motion as a motion for summary judgment. In so doing, the Department relied on

ARSD 47:03:01:08, which provides:

               A claimant or an employer or its insurer may, anytime after
               expiration of 30 days from the filing of a petition, move with
               supporting affidavits for a summary judgment. The [D]ivision
               shall grant the summary judgment immediately if the pleadings,
               depositions, answers to interrogatories, and admissions on file,
               together with the affidavits, if any, show that there is no
               genuine issue as to any material fact and that the moving party
               is entitled to a judgment as a matter of law.

Employer, relying on SDCL 15-6-56(a), 4 argues that summary judgment is a

pretrial motion. Employer further argues that Stuckey’s motion was like a motion

for judgment as a matter of law under SDCL 15-6-50(a), 5 which is waived if not



4.       SDCL 15-6-56(a) provides:

               A party seeking to recover upon a claim, counterclaim, or cross-
               claim or to obtain a declaratory judgment may, at any time after
               the expiration of thirty days from the commencement of the
               action or after service of a motion for summary judgment by the
               adverse party, move with or without supporting affidavits for a
               summary judgment in his favor upon all or any part thereof.

5.       SDCL 15-6-50(a) provides:

               (1)   If during a trial by jury a party has been fully heard on an
                     issue and there is no legally sufficient evidentiary basis
                     for a reasonable jury to find for that party on that issue,
                     the court may determine the issue against that party and
                     may grant a motion for judgment as a matter of law
                     against that party with respect to a claim or defense that
                     cannot under the controlling law be maintained or
                     defeated without a favorable finding on that issue.
                                                              (continued . . .)
                                           - 12 -
#25605

made at trial. ARSD 47:03:01:08, the administrative rule on which the Department

relied, clearly provides that a party may move for summary judgment anytime after

thirty days have passed from the filing of the petition. The rule does not require

that the motion be made before the hearing. The Department therefore did not err

by treating Stuckey’s motion as a motion for summary judgment.

[¶21.]       Employer further argues that it was error for an administrative law

judge who did not hear the case to rule on Stuckey’s motion. In August 2007, an

evidentiary hearing was held in this case before Administrative Law Judge

Elizabeth Fullenkamp. Stuckey thereafter filed her motion. In March 2008, James

Marsh, the Director of the Department’s Division of Labor and Management,

entered a decision on Stuckey’s motion. To support its argument, Employer cites

SDCL 15-6-63:

             If by reason of death, sickness, or other disability or separation
             from office, a judge before whom an action has been tried is
             unable to perform the duties to be by him performed after a
             verdict is returned or findings of fact and conclusions of law are
             filed, then any other judge regularly sitting in or assigned to the
             court in which the action was tried may perform those duties;
             but if such other judge is satisfied that he cannot perform those
             duties because he did not preside at the trial or for any other
             reason, he may, in his discretion, grant a new trial.

See Quist v. Leapley, 486 N.W.2d 265 (S.D. 1992); Hinman v. Hinman, 443 N.W.2d

660 (S.D. 1989). By contrast, ARSD 47:03:01:08 provides that “the [D]ivision,” and


________________________
(. . . continued)
               (2) Motions for judgment as a matter of law may be made at
                   any time before submission of the case to the jury. Such a
                   motion shall specify the judgment sought and the law and
                   the facts on which the moving party is entitled to the
                   judgment.

                                        - 13 -
#25605

not a particular administrative law judge, “shall grant the summary judgment[.]”

It is also important that no doctors testified at the hearing and their deposition

testimony was available for Director Marsh’s review. For these reasons, it was not

error for Director Marsh, an employee of the Division, to rule on Stuckey’s motion.

[¶22.]       Employer finally argues that the Department erred by granting

Stuckey’s summary judgment motion on the life care plan issue when it found that

genuine issues of material fact existed on two issues. The Department granted

Stuckey’s motion “with the exception that genuine issues of material fact exist[ed]

as to the appropriateness of a hot tub and treadmill.” There was no dispute that a

treadmill and hydrotherapy were reasonable and necessary medical treatments for

Stuckey. Rather, the dispute was whether a hot tub and an enclosure should be

placed in Stuckey’s home. The fact that a dispute existed as to this issue did not

prohibit the Department from granting Stuckey’s summary judgment motion on the

remaining issues concerning the life care plan.

Substantive Issue

[¶23.]       SDCL 62-4-1 governs an employer’s obligation to pay an injured

employee’s medical expenses for treatment of a work-related injury. This statute

provides in part:

             The employer shall provide necessary first aid, medical, surgical,
             and hospital services, or other suitable and proper care
             including medical and surgical supplies, apparatus, artificial
             members, and body aids during the disability or treatment of an
             employee within the provisions of this title. . . . The employee
             shall have the initial selection to secure the employee’s own
             physician, surgeon, or hospital services at the employer’s
             expense[.]



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SDCL 62-4-1. In interpreting this statute, we have stated that “[i]t is in the doctor’s

province to determine what is necessary or suitable and proper.” Streeter v. Canton

Sch. Dist., 2004 S.D. 30, ¶ 25, 677 N.W.2d 221, 226 (quoting Krier v. John Morrell &

Co., 473 N.W.2d 496, 498 (S.D. 1991)). And “[w]hen a disagreement arises as to the

treatment rendered or recommended by the physician, it is for the employer to show

that the treatment was not necessary or suitable and proper.” Id. (quoting Krier,

473 N.W.2d at 498). See Engel v. Prostrollo Motors, 2003 S.D. 2, ¶ 32, 656 N.W.2d

299, 304; Hanson v. Penrod Constr. Co., 425 N.W.2d 396, 399 (S.D. 1988).

[¶24.]       The parties, the Department, and the circuit court confused the record

in this case by using the term “life care plan.” This term is borrowed from tort law.

Life care plans are used primarily in personal injury cases where a jury must

render a verdict forecasting future costs of medical expenses. See Hebert v. Shelton,

11 So.3d 1197, 1206 (La. Ct. App. 2009) (“Our research reveals that the

overwhelming majority of cases involving life care plans are not workers’

compensation cases; rather, the life care plan is most often used to show an element

of damages for future care costs in a tort suit.”). Personal injury cases and workers’

compensation proceedings differ significantly. After all, unlike an injured

employee, injured parties in a tort suit do not have the statutory right to the

continuous payment of medical expenses. See SDCL 62-4-1. The term “life care

plan” is not used in South Dakota’s workers’ compensation statutes. Consequently,

the use of the term “life care plan” in workers’ compensation proceedings only adds

confusion.




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[¶25.]       In its memorandum decision, the circuit court repeatedly referred to

the Department’s decision to “award” the life care plan. Employer thus argues that

Stuckey’s life care plan is effectively a lump sum award of future medical expenses

and is not authorized by South Dakota’s workers’ compensation law. Employer also

contends that a lump sum award of future medical expenses presents the risk that

those resources will be quickly exhausted, leaving Stuckey in precisely the same

position she would be in if workers’ compensation did not exist. See, e.g., Steinmetz,

2008 S.D. 87, ¶ 8, 756 N.W.2d at 395 (quoting Enger, 2000 S.D. 48, ¶ 11, 609

N.W.2d at 135). But a review of the record reveals that the Department only

considered whether the course of treatment set forth in the life care plan was

reasonable and medically necessary. The Department approved the course of

treatment as reasonable and medically necessary but did not “award” a lump sum

for the future medical expenses associated with it.

[¶26.]       Courts in other jurisdictions have similarly referred to “awards” of

future medical expenses, but they are not “awards” at all. Those courts recognize

that injured employees have a statutory right to the continuous payment of the

medical expenses related to their work-related injuries, but they are not entitled to

a lump sum payment of their future medical expenses. See Larson’s Workers’

Compensation Law § 94.01[5], 9-11 (2006) (citing Polavarapu v. Gen. Motors Corp.,

897 S.W.2d 63, 66 (Mo. Ct. App. 1995); Reed v. S. Baptist Hosp., 541 So.2d 233, 235

(La. Ct. App. 1989) (An injured employee “is not entitled to an award for future

medical expenses, but the right to claim such medical expenses is always reserved

to [him].”); Andersen v. Eagle Asbestos Co., 355 So.2d 1082, 1083 (La. Ct. App. 1978)


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(“The settled rule is that a workmen’s compensation claimant is not entitled to an

award for future medical expenses, but the right to claim such expenses is always

reserved to him, even though defendant’s liability for them arises only when they

are incurred.”)). See also SDCL 62-4-1. We find no case law awarding an injured

employee a lump sum for future medical expenses.

[¶27.]         There is little dispute in this case, if any, that some course of future

treatment is reasonable and medically necessary. On that issue, the experts

agreed. The Department thus approved the course of treatment set forth in the life

care plan as reasonable and medically necessary but did not “award” a lump sum

for the future medical expenses associated with it. In South Dakota, as in other

jurisdictions, injured employees have a statutory right to the payment of the

ongoing medical expenses related to their work-related injuries, but they are not

entitled to a lump sum payment of those expenses. See Larson’s Workers’

Compensation Law § 94.01[5], 9-11. An injured employee’s medical expenses are to

be paid as they are incurred. See id. When Stuckey incurs medical expenses in the

future, Employer may reimburse her or challenge the expenses as not necessary or

suitable and proper under SDCL 62-7-33. 6 Although we discourage the use of the



6.       SDCL 62-7-33 provides:

               Any payment, including medical payments under § 62-4-1, . . .
               made or to be made under this title may be reviewed by the
               Department of Labor pursuant to § 62-7-12 at the written
               request of the employer or of the employee on such review
               payments may be ended, diminished, increased, or awarded
               subject to the maximum or minimum amounts provided for in
               this title, if the [D]epartment finds that a change in the
               condition of the employee warrants such action. Any case in
                                                               (continued . . .)
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term “life care plan” in workers’ compensation proceedings, we affirm the

Department’s approval of the course of treatment set forth for Stuckey subject to

SDCL 62-7-33.

[¶28.]       Affirmed in part, reversed in part, and remanded.

[¶29.]       GILBERTSON, Chief Justice, and KONENKAMP, ZINTER, and

MEIERHENRY, Justices, concur.




________________________
(. . . continued)
               which there has been a determination of permanent total
               disability may be reviewed by the [D]epartment not less than
               every five years.

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