State News : South Dakota

South Dakota Supreme Court

Whitesell v. Rapid Soft Water & Acuity

James Leach/Charles Larson

Issue: Whether a workers’ compensation carrier must pay the full amount of medical expenses incurred or whether it has to simply reimburse the health carrier for expenses actually paid.

The background of this case is not all that important, but the holding will have significant impacts going forward. This was a workers’ compensation claim whether the insurer denied surgery to the cervical spine. The department held a hearing and found the surgery was related to the work injury and the employer and insurer were responsible for the surgery.

Claimant had very good health insurance, which paid for the cervical fusion. The amount billed by the health providers was over $100,000. However, the amount paid by the health carrier was just over $20,000. After the department’s decision, the insurer reimbursed the health carrier their $20,000, and paid the claimant his out of pocket expenses. The claimant filed a motion with the department seeking to require the insurer to pay the full amount of the charges.

The department held the insurer satisfied its obligation by reimbursing the health carrier for what was actually paid. The circuit court reversed and held the full amount of the bills had to be paid to the health carrier, with the claimant’s attorney receiving a fee on those bills. The matter was appealed to the South Dakota Supreme Court.

The court reversed and held the insurer’s obligation was only to reimburse the health carrier for payments actually made. The applicable statute indicates that in the event a denied claim is later determined to be compensable, the insurer shall immediately "reimburse" the parties who made payments. The court said the plain language of the statute must be applied, and rejected the claimant’s argument that this would encourage wrongful denials.

This decision will have a huge impact going forward. With the requirement that everyone have health insurance, we will hopefully see more claims where a claimant has personal health insurance. If health insurance pays for something that is later determined to be responsible, your obligation is to reimburse the health carrier. The amount paid by the health carrier will be a substantial reduction on what was charged, depending on the health carrier.

Isack v. Acuity

Jon Sogn/Rick Orr

Issue: Whether the claimant’s attorney in a third party action is entitled to an attorney fee on the amount recovered by the insurer.

The claimant in this case was in a horrible automobile accident (semi versus car), and will be living in an assisted living facility his entire life. The claimant brought suit against the driver of the semi seeking damages from the accident. The claimant was also receiving benefits from the insurer as the injury occurred while he was working.

The insurer paid for medical expenses, and was to be reimbursed when the claimant settled with the semi driver. The insurer also received a credit on future "like damages" that the claimant received (lost time and medical benefits). The question was whether the insurer had to pay a fee to the claimant’s attorney for recovery of past and future medical expenses. The court held the insurer had to pay a fee, but the decision was very factual, and will not have much impact going forward.

The court indicated an insurer can hire its own attorney to protect its subrogation interest, and to negotiate the future credit. The insurer is not required to pay a fee to the claimant’s attorney as long as the insurer’s attorney takes an active role and actively participates in the litigation. The finding in this case was that the insurer’s attorney’s contribution was "de minimum" when compared to the work of the claimant’s attorney. The court could have held that an insurer is never allowed to protect its own interest, which would have had a huge impact on future claims. Instead, the decision states it is a factual question on whether the attorney did enough to warrant not paying the claimant’s attorney.

While this was case adverse to the insurer, it likely will not have any real bearing on future cases. The court’s language allows for a carrier to protect its own interest and avoid paying an attorney fee, but only if their attorney actively participates and substantially contributes to resolving the underlying claim.

South Dakota Department of Labor

Jacobson v. Rupp Masonry Construction

Robert A. Christenson/Eric Kerkvliet

Issue: Whether employer’s denial of specific medical benefits triggered the two year statute of limitations on future medicals.

Claimant suffered a work-related injury in 1987 that was primarily denied. The parties settled the dispute and Employer agreed to pay for future medical treatments directly and causally related to claimant’s alleged 1987 work injury. In 1998, Claimant suffered a slip and fall that was not work related and submitted medical bills related to that slip and fall to work comp. Employer denied medical benefits specifically associated with the slip and fall. On September 4, 2012, Claimant treated with Dr. Mitchell Johnson from Orthopedic Institute and Dr. Johnson recommended surgery. Dr. Johnson opined that the surgery was needed to correct problems caused by the 1987 injury. Employer filed for summary judgment stating that its denial of benefits in 1998 triggered the two year statute of limitations, barring Claimant’s claim for medical benefits.

The Department denied summary judgment and stated that the settlement agreement left open all medical benefits directly related to the 1987 injury. The 1998 denial only applied to that specific claim for medical benefits and did not prevent any future claim for medical benefits. Since SDCL 62-7-35 allows for a partial denial, the statute of limitations only applies to those benefits denied. In other words, the denial was too specific, and so it only applied to the dates of treatment identified. Moral of the story: it’s better to draft denial letters broadly.

Anderson v. Global Polymer Industries, Inc. and Cincinnati Insurance

Gary Schumacher/Charles Larson

Issue: Whether Claimant’s case should be dismissed for failure to prosecute.

I tried to get a case dismissed for failure to prosecute. There had been more than a year with no activity so it was up to the discretion of the department whether to dismiss the case. I was hoping that with one of the judges leaving, the other two would be a little more prone to get cases off of their desk. The motion to dismiss was denied as the claimant’s attorney had been gathering medical records within a couple weeks of the motion. While that should not count as "activity," the department felt it would be unfair to dismiss the claimant’s case.

Jordan Baker v. Rapid City Professional Hockey and Ace American Insurance Co

Steve Siegel/Greg Erlandson

Issue: Whether the collective bargaining agreement removes Claimant’s claim from the Department’s jurisdiction.

This is a case where a semi-professional hockey player was injured while playing hockey for the employer. The claimant sought medical treatment for his injury and the employer refused to pay for the treatment. The collective bargaining agreement specifically addressed how players would receive worker’s compensation benefits and directed that any disputes will be resolved through arbitration. Claimant filed a petition for benefits with the Department and Employer claimed the Department had no jurisdiction pursuant to the arbitration clause in the collective bargaining agreement.

In analyzing the jurisdictional issue, the Department held that SDCL 62-3-2 (work comp exclusive remedy for work injuries) precluded Claimant from seeking a remedy via arbitration as arbitration is contrary to law. The Department was quick to note that the arbitration clause was only unenforceable as it related to workers’ compensation matters and may be utilized for all other matters.

This case really has little bearing going forward. The interesting part is that I just saw where the Department signed an order allowing two parties to entire into a binding arbitration. The difference was that the Department entered the order allowing arbitration versus the parties simply putting it into a contract that is not approved by the Department.

Klinkner v. Lamont Company and Midwest Family Mutual Insurance Co.

Kara Semmler/JG Shultz

Issue: Whether certain withheld documents pursuant to Attorney Work Product are discoverable.

This is another case dealing with withheld documents and a motion to compel those documents. Claimant had a compensable injury to his hand in 2012. Eventually, Employer retained a nurse case manager on April 2, 2013. On April 9, 2013, Claimant’s attorney made contact with the nurse case manager and on April 10, 2013, Claimant’s attorney contacted Insurer. Claimant filed a petition for hearing on August 14, 2013. Employer answered the petition and denied any further benefits. Claimant sent discovery to Employer and Employer, who objected to the production of the nurse case manager notes claiming they were created in anticipation of litigation. Claimant moved to compel the production of the nurse case manager notes.

The Department used the same analysis as prior cases when determining whether the documents requested were protected by the attorney work product doctrine. Specifically, the Department held that "the test we apply for determining whether a document or tangible thing is attorney work product is whether in the light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation."

Employer argued that it anticipated litigation from the time Claimant hired an attorney. Claimant argued litigation could not be anticipated prior to the denial of benefits in Employer’s answer to the petition. The Department disregarded both arguments. It stated that the fact that Claimant hires an attorney to insure his rights are protected does not automatically signal that litigation is imminent. In this case, the correspondence from Claimant’s attorney was focused on insuring that the claims process proceeded smoothly. The Department also held that the date of denial was not pivotal as litigation could be anticipated prior to a denial, thus prompting a petition for hearing. In the end, the Department found that the date Claimant filed his petition was the date Employer could anticipate litigation.

While the Department used the correct test, I believe it reached the wrong conclusion. It’s absurd to think that the insurer in this case didn’t anticipate litigation until the petition was filed. I think that if the decision was appealed, the circuit court would find a different date applied. This is a good warning to be careful what is in your notes, and the nurse case manager notes, as that information will likely be produced.

Clyde v. Hardees and American Family Insurance

Brad Lee/Jeremy Nauman

Issue: Whether sheltered employment is considered regularly and continuously available employment to defeat a perm total claim

This case deals with a worker who was injured at Hardees and suffered elbow and cervical pain. It was a compensable claim. Claimant was given permanent work restrictions of no push, pull or lift greater than 5-10 pounds and avoid repetitive bending or twisting of the cervical spine. Hardees was unable to accommodate those restrictions and Claimant was terminated.

Claimant filed for unemployment and received such benefits. Claimant made about 150 job contacts while receiving unemployment benefits. Employer denied indemnity benefits while Claimant was receiving unemployment benefits. Eventually, Employer arranged for Claimant to work for All Facilities, Inc. doing telephone survey work. Basically, Employer paid All Facilities, Inc. to hire Claimant, thus subsidizing Claimant’s wages with All Facilities, Inc. Claimant only worked for All Facilities, Inc. for a short time due to alleged increased pain symptoms from doing her work activities.

Eventually, Claimant made a perm total claim on the fact that she was 58 years old, had only a high school education, had no real work experience outside of fast food (was a stay at home mom for 20 years) and her physical condition limited the available jobs. Employer denied benefits. The Department held that Claimant carried her burden to show that she was obviously in the odd-lot disability category and that the burden shifted to Employer to show that some form of suitable work was regularly and continuously available to Claimant. Employer argued that the All Facilities, Inc. position met that burden.

Among her arguments against Employer’s allegation that the All Facilities, Inc. position met Employer’s burden, Claimant argued that the All Facilities, Inc. position was not a bona fide opportunity because it was sheltered employment. Basically, Claimant argued that the only she had the position with All Facilities, Inc. was because Employer was paying All Facilities, Inc. for every expense associated with Claimant’s employment at All Facilities, Inc. In relying on an US Department of Labor case and an Illinois work comp case, our Department held that a single offer of employment for a sheltered position does not meet the Employer’s burden to show that work is regularly and continuously available to Claimant that fits within her work restrictions and meets or exceeds her workers’ compensation rate. This case applied to a perm total case, and likely will not have an impact on non-PTD cases.

On a side note, the Department also held that receiving unemployment benefits does not automatically mean that Claimant is not disabled for purposes of workers’ compensation.

If you have any questions, please contact Charlie Larson at 605-336-2424 orcalarson@bgpw.com. Thanks!

Issue: Whether a workers’ compensation carrier must pay the full amount of medical expenses incurred or whether it has to simply reimburse the health carrier for expenses actually paid.

The background of this case is not all that important, but the holding will have significant impacts going forward. This was a workers’ compensation claim whether the insurer denied surgery to the cervical spine. The department held a hearing and found the surgery was related to the work injury and the employer and insurer were responsible for the surgery.

Claimant had very good health insurance, which paid for the cervical fusion. The amount billed by the health providers was over $100,000. However, the amount paid by the health carrier was just over $20,000. After the department’s decision, the insurer reimbursed the health carrier their $20,000, and paid the claimant his out of pocket expenses. The claimant filed a motion with the department seeking to require the insurer to pay the full amount of the charges.

The department held the insurer satisfied its obligation by reimbursing the health carrier for what was actually paid. The circuit court reversed and held the full amount of the bills had to be paid to the health carrier, with the claimant’s attorney receiving a fee on those bills. The matter was appealed to the South Dakota Supreme Court.

The court reversed and held the insurer’s obligation was only to reimburse the health carrier for payments actually made. The applicable statute indicates that in the event a denied claim is later determined to be compensable, the insurer shall immediately "reimburse" the parties who made payments. The court said the plain language of the statute must be applied, and rejected the claimant’s argument that this would encourage wrongful denials.

This decision will have a huge impact going forward. With the requirement that everyone have health insurance, we will hopefully see more claims where a claimant has personal health insurance. If health insurance pays for something that is later determined to be responsible, your obligation is to reimburse the health carrier. The amount paid by the health carrier will be a substantial reduction on what was charged, depending on the health carrier.

This was my case so if you have questions on it, please give me a call at 605-336-2424 or email me atcalarson@bgpw.com.   Thanks!

Charlie Larson

South Dakota Department of Labor

Halstead v. J & R Well Drilling Services LLC and Zurich North America

James Sword/William Fuller

Judge Donald W. Hageman

This case involves a rather significant injury involving a 30 year old individual. The claim was that claimant was entitled to vocational rehabilitation benefits for a petroleum engineering degree. Claimant suffered an injury in July 2006 as he worked as a derrick hand for a drilling company. This was extremely strenuous and hard work. He had previously worked as a firefighter, roofer, and a cook. Claimant attended high school but did not have any formal education after that. After Claimant’s injury, all doctors agreed he was limited to sedentary physical activity, could not return to his usual and customary employment as an oil field worker/derrick hand, and that his prior jobs as a firefighter, roofer, and cook were no longer suitable for him due. Claimant chose to attend the University of Wyoming to obtain a four year degree in petroleum engineering. Petroleum engineers start making between $60,000 and $70,000, and will earn much more with some experience.

In order to be entitled to vocational rehabilitation benefits, a claimant must establish a five part test. This test is as follows: (1) the employee must be unable to return to his usual and customary line of employment; (2) rehabilitation must be necessary to restore the employee to suitable, substantial and gainful employment; (3) the program of rehabilitation must be a reasonable means of restoring the employee to employment; (4) the employee must file a claim with the employer requesting the benefits; and (5) the employee must actually pursue a reasonable program of rehabilitation.

The employer and insurer were challenging element (3) of the analysis as they claimed the program claimant sought elevated his status in life, and thus was not reasonable. The South Dakota Supreme Court has indicated that an insurer cannot be forced to pay for an educational program that would allow an employee to elevate his status in life. Claimant was making approximately $41,000 before his injury, and would make at least $60,000 to $70,000 starting off as a petroleum engineer. The Department agreed that the petroleum engineering degree was not reasonable and claimant was not entitled to have that benefit covered. The employer and insurer did not have to pay for any of claimant’s schooling.

Reiman v. Zylstra Body & Frame and Dakota Truck Underwriters/Auto Owners

Rex Hagg/Michael McKnight and Charles A. Larson/Rick Orr

Judge Donald W. Hageman

The Reiman decision has a number of issues. The first was whether Reiman’s work activities are a major contributing cause of his knee condition and need for bilateral knee replacements. The second issue was which insurer was responsible for the surgeries and claimant’s condition. The third issue is whether claimant was permanently and totally disabled.

Claimant worked for employer from 1986 to March of 2010 as an auto body repairman and painter. He was required to stoop, squat, and kneel between 33-66% of the time. He was 51 years old at the time of the hearing, and completed nine years of schooling. He later obtained his GED with the assistance of his wife (my wife hits me) but had difficulty reading and writing.

Claimant sought treatment for his knees between 2003 and June of 2006. At that time, Dakota Truck Underwriters was the insurer for employer. Dakota Truck Underwriters paid for treatment to claimant’s knees through 2006. After June of 2006, employer was insured by Auto Owners.

Claimant sustained an injury to his other knee in 2007, and ultimately ended up treating for both of his knees. He continued to complaint of knee pain in 2008 and also of low back pain. Claimant was told his knees would continue to worsen over time and there was nothing he could do to stop the degenerative processes in his knees. There was mention as early as 2007 of the potential for knee replacements. Claimant elected to go through with conservative treatments and physical therapy and wanted to postpone the knee replacement as long as possible.

Claimant was ultimately laid off from his job in March of 2010. He testified his knees continued to worsen after he was laid off. When he had another set of MRIs in June of 2010, it showed additional degeneration. Claimant had his left knee replaced in March of 2011. Claimant’s treating doctors opined claimant’s work activities at employer were a major contributing cause of his need for knee replacements, and his current condition. While claimant had been diagnosed with degenerative disease within his knees, the finding was that the work activities accelerated the degeneration and caused the need for a total knee replacement. Claimant was given a five pound lifting restriction and was precluded from bending, stooping, and kneeling.

Auto Owners retained Dr. Segal, an orthopedic surgeon, to conduct an IME. Dr. Segal opined claimant was not a candidate for knee replacement and claimant’s work activities were not a major contributing cause for his current conditions. Dr. Emerson was hired by Dakota Truck Underwriters and likewise opined the work activities were not a major contributing cause and claimant was not a candidate for total knee replacement.

The Department accepted the opinions of the treating doctors over the IME doctors. The Department found the operating surgeon was in a much better position to opine on causation as he actually saw the inside of claimant’s knee instead of simply looking at films, and used that surgical knowledge when forming his opinion. The Department found the treating doctors’ opinions were of greater weight, and rejected the opinions of Drs. Emerson and Segal. The Department thus found that claimant’s condition was related to his work activities at employer.

The second issue was whether Dakota Truck Underwriters or Auto Owners was responsible for benefits. This was governed by the last injurious exposure rule. The Department found that claimant’s condition was due to cumulative injuries. The injuries occurred over time as claimant continued working on his knees. Since Auto Owners was the last employer on the risk, it was found responsible for the condition, which includes both medical and indemnity.

Finally, the question was whether claimant was permanently and totally disabled. Rick Ostrander testified on claimant’s behalf that claimant was obviously unemployable as his physical condition, in combination with his age, training and experience excluded him from the type of work that was available in his community. The Department also found that claimant was in continuous, severe, and debilitating pain that would make employment nearly impossible. The burden then shifted to the employer to find some work that was open and available and pay at least claimant’s workers’ compensation rate. Jim Carroll testified on behalf of both insurers and opined that if Dr. Lawlor’s restrictions were used, claimant was unable to work in the community and make his workers’ compensation rate. However, if Dr. Segal’s work restrictions were used, there was work available to claimant and claimant would benefit from vocational rehabilitation. The Department rejected Dr. Segal’s work restrictions, adopted Dr. Lawlor’s work restrictions, and thus accepted Jim Carroll’s opinion that claimant could not work under Dr. Lawlor’s work restrictions in the Rapid City labor market and make his workers’ compensation rate.

I know that the Reiman decision is currently on appeal. Please remember that all Department decisions are subject to appeal. The first appeal will go the Circuit Court level, and the losing party at the Circuit Court can always appeal it to the South Dakota Supreme Court.

If you have questions or would like additional information, please contact Charlie Larson at 605-731-0228 orcalarson@bgpw.com.  If you would like SD cheat sheets, let me know. 

Supreme Court of South Dakota

Schuelke vs. Belle Fourche Irrigation District and First Dakota Indemnity Company

Mike Simpson/Charles A. Larson

Issue: Whether the cumulative trauma doctrine prevents the application of the three year statute of limitation under SDCL-62-7-35.1.

Claimant started working for Employer in 1988 as a laborer and heavy equipment operator. Claimant’s main job was to dig trenches using an excavator or track hoe. He suffered a cumulative trauma injury in 2000 to his hands/wrists, treated and was released in 2004. The last payment of benefits was August 4, 2004, but Claimant continued to have problems. He decided to "tough it out" and not treat until 2009. Once he resumed treating, the claim was denied as there had been more than three years since the last payment of benefits.

After the denial, Claimant continued to seek medical attention and even underwent another surgery on May 25, 2010. Claimant’s treating physicians wrote to Insurer and stated that Claimant’s current care was related to his original claim. Additionally, Claimant’s doctors noted that his symptoms had accumulated over several years and were consistent with repetitive use injuries.

Claimant argued SDCL 62-7-35.1 (the three year limitations statute) did not apply to cumulative trauma injuries. The SD Supreme Court rejected Claimant’s argument and held that the three year limitations period applies to all injuries, including cumulative trauma injuries.

Waterman vs. Morningside Manor and MHA Insurance Company

Jolene R. Nasser and Dean Nasser/Charles A. Larson

Issue: Whether an amended petition related back to the original petition for purposes of determining the proper statute of limitations.

The department granted summary judgment finding that the Claimant’s claim was barred. This was purely a procedural issue. Without boring you with the details, the SD Supreme Court reversed the grant of summary judgment and held Claimant could proceed with her claim. The important thing to take away from this case is that the SD Supreme Court went out of its way to allow Claimant’s case to go forward. The Court ignored case law in South Dakota and made its ruling based, in part, on federal case law. This is another example of the Court issuing a results oriented ruling. This case is so fact specific that it will not have much impact on future cases.

Smith vs. Stan Houston Equipment Company and United Fire and Casualty Company

Mike Simpson/Michael S. McKnight

Issue: Whether the Claimant’s employment was a major contributing cause of his current condition and need for treatment.

Claimant, aged 53, worked for Employer for over ten years as a diesel mechanic. Claimant’s job required heavy lifting and regular twisting. He currently suffered from neck, shoulder and back pain. Employer denied the claim based on causation.

Claimant has a history of injuries. In November of 2008, Claimant had three incidents which he later claimed caused neck, back, shoulder, and arm pain. Claimant did not report any of these incidents to Work Comp and decided to work through the pain. However, the pain became too much and Claimant sought the help of a chiropractor. On the intake paperwork, Claimant marked that his pain was from an old injury and chronic in nature. Claimant listed the injury as a 1981 whiplash incident. Claimant did not tell the chiropractor, his orthopedic surgeon, physical therapist, or other doctors about the 2008 incidents until after treating for about 5 months.

In August 2010, Claimant petitioned the Department of Labor for a hearing. Claimant testified that he did not tell his various medical providers about the November 2008 incidence because he was submitting his claims to his health insurance carrier and he was concerned with getting treatment and getting back to work. The IME doctor testified that he believed Claimant was not injured when he hit his head in November 2008 because Claimant did not mention the incident to his treating physicians and because Claimant told the chiropractor he had chronic pain.

Claimant’s treating physicians noted that they learned of the November 2008 injury from Claimant’s attorney rather than Claimant but opined that the injuries were related to his work activities. Claimant’s treating physician noted that sustaining a hit to the top of the head hard enough to knock Claimant to the ground certainly caused damage to Claimant’s neck and herniated a disc in the cervical spine.

The Department issued a decision and found Claimant credible and accepted that the November 2008 incidence occurred. However, the Department determined that Claimant’s employment was not a major contributing cause of the current condition and need for treatment because it rejected Claimant’s treating physician’s opinion due to the fact that the treating physician’s opinion was based on mere assumptions and not facts directly related from Claimant to the physician. The Circuit Court affirmed the Department with a slight modification in the language of the Order.

The SD Supreme Court found that the Department’s findings of fact did not support the conclusions of law that Claimant failed to prove causation by a preponderance of the evidence. The Court noted that the Department found the Claimant credible and accepted the November 2008 incidents occurred. The Department also found that Claimant reported to multiple medical providers about the specific pain that he was experiencing. Finally the Department found that the experts all agreed that Claimant’s 2008 injuries could be a major contributing cause of Claimant’s current condition. The Court noted that it was therefore illogical that Claimant failed to establish causation. Additionally, the Court noted that Claimant’s treating physician’s opinion did contain the adequate foundation as Claimant’s treating physician had knowledge of the 2008 incidents before he offered his opinion on causation (here is that treater bias again).

South Dakota Department of Labor

Whittecar v. Metrix, LLC and Reliamax Insurance

Michael M. Hickey/J.G. Schultz

Issue: Whether Claimant’s employment was a major contributing cause of Claimant’s condition.

Claimant worked for Employer in the fall of 2006 doing sandblasting and powder coating on equipment surfaces. On March 7, 2007, Claimant was injured while working for Employer when a truck body was dropped on him. Claimant continued working the remainder of his shift and then went to the emergency room. The x-rays were negative and Claimant was discharged. Claimant treated with various doctors in 2007 for back, neck, and shoulder pain. Claimant was given work restrictions and returned to work within those restrictions until he was terminated in May of 2007 for reasons unrelated to the injury.

Claimant was involved in a motorcycle accident after his work injury in June of 2007. Claimant was thrown from his motorcycle and rendered unconscious. He was treated at the local emergency room and released as there were no broken bones. Following the motorcycle incident, Claimant went through an IME wherein the IME doctor determined that the Claimant’s allegations of pain were subjective without organic findings and opined that the March 7, 2007 work injury was not a major contributing cause of the ongoing problems. Additionally, Claimant was unable to obtain medical opinions as to causation from his treating physicians. Accordingly, Employer moved for summary judgment based on Claimant’s lack of medical causation opinions.

In response to Employer’s motion, Claimant submitted three identical written reports prepared by Claimant’s counsel and signed by Claimant’s treating doctors (which is becoming more common). The Department determined that the Claimant’s propounded reports were entitled to little or no weight as they were not precise and well supported by the evidence. The reports did not comment about Claimant’s current conditions nor the motorcycle accident that Claimant was involved in. To the contrary, the IME doctor’s written report discussed the history of pain, the motorcycle accident, and the lack of diagnostic findings to support Claimant’s allegations. The Department granted Employer’s motion for Summary Judgment and Claimant was entitled to no benefits.

Terveen vs. SD DOT and South Dakota Worker’s Compensation Fund

ALJ: Taya Runyan

Issue: Whether Claimant sustained an injury arising out of and in the course of his employment.

Claimant was employed by the South Dakota Department of Transportation at the Belle Fourche, South Dakota location as a Journey Transportation Technician. Claimant’s job mandated that he be on the road on a daily basis during the summer and approximately 70% of the time in the winter. On November 14, 2011, Claimant left Belle Fourche on a work-related trip to Yankton, South Dakota. Two days later, he was returning to Belle Fourche and was seriously injured in a single vehicle accident.

It was later learned that Claimant was injured when he deviated from his employment to do a job for another employer. Claimant argued that his deviation from the main road of travel was minimal and expected and/or condoned by the Employer. On the other hand, Employer argued that Claimant was engaged in a non work-related side trip when he was injured.

The Judge rejected Employer’s arguments and found the primary purpose of Claimant’s trip was for Employer-related business and the slight detour for the other employer did not automatically relieve Employer of liability for the injury. While there was a deviation in employment, the Judge found the deviation was not "substantial" as the personal detour was only a few miles off of the Claimant’s route home and was only going to take a little bit.

Voorhees vs. Raven Industries Inc. and Dakota Truck Underwriters

Russ Janklow/Michael S. McKnight (ALJ Duenwald)

Issue: Whether Claimant’s employment was a major contributing cause of the bilateral carpal tunnel syndrome.

Claimant was born in the Philippines and moved to the United States in 1998. Additionally, she was diagnosed with diabetes in 1988. After Claimant moved to the United States, she worked at a nursing home and as a seamstress in Huron, South Dakota. In 2003, she started working for Aerostar, which is a subsidiary of Raven Industries, sewing parachutes. There was a time from 2004 to 2005 that she was unemployed but returned to Aerostar in 2005. Between the years of 2007 and 2009, Claimant typically worked 10 hours per day and 5 or 6 days per week. Claimant’s job consisted of fine finger and hand movements of slight pinching, and gripping. She would also move her hands over the fabric, pushing the fabric through the machine. Claimant also worked as an inspector, which would entail pinching the fabric seam and pulling it through her pinched fingers in order to test the product.

In 2009, after Claimant started to work as an inspector, Claimant noticed that her hands became numb. She filed an incident report in April for numbness in her hands. Claimant met with Employer’s plant ergonomist, who recommended she wear gloves to alleviate the wrist pain and numbness. Claimant admitted that when she wore the gloves, she did not experience much pain. However, when the gloves were removed, Claimant’s hands would hurt. Claimant was also taught some ergonomic stretches for her hands and wrists and used over-the-counter pain reliever to alleviate the pain. Unfortunately, Claimant’s hand pain increased over time.

On November 3, 2011, Claimant filed another incident report with Employer and Insurer regarding the pain in her hands. Claimant immediately began treating the pain and was diagnosed with carpal tunnel syndrome, and had carpal tunnel release.

Employer offered the testimony of an occupational therapist and certified ergonomic evaluation specialist, who stated that the pain Claimant was experiencing was not related to work and instead related to non-occupational risk factors like gender, age, and diabetes. The ergonomic specialist also testified that Claimant’s work activities would not cause carpal tunnel syndrome.

Employer also submitted the testimony of two separate orthopedic surgeons that opined that Claimant did have carpal tunnel syndrome but that her diagnosis was not related to work and instead related to her gender, age, and diabetes. The IME doctors opined that there is scientific evidence that repetitive activities are not causally related to carpal tunnel syndrome.

The Department ruled that the work activities were a major contributing cause of Claimant’s carpal tunnel syndrome. The Department rejected the ergonomic specialist’s opinion because he did not observe the Claimant doing every job that she had prior to filing the First Report of Injury. Additionally, the Department held that the ergonomic specialist did not obtain accurate facts in determining his opinion and the opinion lacked foundation.

The Department rejected the IME doctors’ opinions due to the fact that they gave much reliance to the ergonomic specialist’s opinion. Basically, the Department held that since the ergonomic specialist lacked foundation, so did the IME doctors. The Department accepted the treating physician’s opinion that the work activities were a major contributing cause of the carpal tunnel syndrome. This case shows the huge bias given to treating doctors’ opinions.

Sorenson vs. Harbor Bar LLC and Midwest Family Mutual Insurance Company

Kit McCahren/Steve Morgans (ALJ Hageman)

Issues: 1. Whether Claimant’s work related injury was a major contributing cause of her intracranial hemorrhage; and 2. Whether Claimant is permanently and totally disabled as a result of the work related injury.

Claimant and her brother lived in Watertown with her adoptive parents. Claimant initially had some difficulties common with foster children but eventually became a relatively stable and intelligent young woman. After graduating from high school, Claimant lived on her own and looked after her own finances. She worked several waitressing positions at that time and was capable of working a full time job. One of her positions was at the Harbor Bar in Watertown.

Claimant was working at Harbor Bar on December 31, 2009, when a fight broke out among the patrons shortly before midnight. Claimant attempted to break up the fight and eventually became involved in the fight. During the fight, Claimant was struck numerous times by a patron. After the fight ended, Claimant continued her shift but was noted to have black eyes and complained of a bad headache. It was also thought that Claimant had broken her nose during the fight.

On January 7, 2010, Claimant sought medical treatment at a local hospital. An MRI of Claimant’s head revealed a hemorrhage in Claimant’s brain. Claimant was transported to Sioux Falls where she underwent brain surgery on January 8, 2010. Ultimately, Claimant underwent three brain surgeries to alleviate the hemorrhage.

During Claimant’s hospitalization, she was diagnosed with Moya Moya disease, which is a vascular disease of the brain. The neurosurgeon testified that the condition was either congenital or developed in early childhood. Moya Moya disease is a situation where a network of new, small and less stable vessels grow in the brain and are prone to bleeding and puts the person at risk for a major vascular event.

After Claimant’s brain surgeries, she was evaluated by a licensed psychologist. The psychologist testified that Claimant suffered clear mental deficits particularly in the area of memory and date details. The psychologist noted that Claimant was depressed due to her loss of memory. He also noted that Claimant could not remember what she last ate or when and that she had lost the natural signals to tell us when we are hungry or full. The psychologist concluded that Claimant was totally disabled and that she was not capable of managing her own affairs. Likewise, Claimant’s neurosurgeon testified that her work related injury was a major contributing cause of her brain hemorrhage and need for medical treatment. The neurosurgeon stated that the fact that Claimant was punched was the likely cause of the brain hemorrhage.

Employer and Insurer utilized the testimony of a neurologist, who opined that the fight at the bar was not a major contributing cause of Claimant’s brain hemorrhage. The neurologist stated that the Moya Moya disease was the primary cause of the hemorrhage. The neurologist based the opinion on the fact that Claimant was able to continue her normal activities for a number of days following the fight. The neurologist also stated that the headache Claimant experienced would have been much more severe had it been related to the hemorrhage.

The Department held that Claimant’s work activities were a major contributing cause of her brain injury. The Department noted that it was undisputed Claimant was in a fight on December 31, 2009, and that she received injuries as a result of that fight. Also, the Department accepted the opinion of the treating physician and psychologist. Both doctors stated that the work activities, i.e., the bar fight, were a major contributing cause of the brain hemorrhage. The Department noted that the treating physician’s opinions were well documented by the medical record. Finally, the Department noted that Employer’s neurologist opined that the Moya Moya disease was "the" major contributing cause and did not opine on whether the bar fight could be "a" major contributing cause. Thus, the Employer’s neurologist’s opinion was rejected.

The Department also held that Claimant was permanently and totally disabled. The Department noted that the depression and loss of memory severely reduced Claimant’s functionality and Claimant was unable to take care of her own finances.

Gibson v. Human Services Center, State of South Dakota

Mike Bornitz/Robert Anderson (ALJ Duenwald)

Issue: Whether the April 24, 2010 work injury was a major contributing cause for the Claimant’s need for surgery and current condition.

Claimant was employed as a counselor at the Human Services Center in Yankton, South Dakota. On April 24, 2010, while assisting another counselor to physically restrain a patient, Claimant injured his back. Claimant initially reported that he suffered low back pain that radiated into his lower left side. Claimant treated with a local chiropractor and was off work for two days. The chiropractor utilized conservative treatments and on May 18, 2010, the Claimant reported that he no longer felt symptoms. Claimant was then released without restrictions and placed at MMI.

In July of 2010, Claimant went to his family physician and reported pain in his lower left back and hip that radiated into the lower leg. Claimant told his physician that this was the same pain he experienced in April. Claimant did not report any intervening accidents or injuries that could explain the pain. An MRI was taken and showed that Claimant suffered from disc herniations at L4-5 and L5-S1. Claimant had a discectomy on October 19, 2010, which was successful.

Prior to April of 2010, Claimant reported to his chiropractor that he had fallen down several stairs in his home and landed on his backside. However, an x-ray was taken of that event that did not reveal any issues with the bony structures in the Claimant’s spine. Additionally, the Claimant did not miss any work from that incident and the condition resolved.

Claimant’s treating chiropractor and physicians opined that the April work injury was a major contributing cause of the need for the discectomy. The treating doctors testified and explained that a large part of Claimant’s initial pain was due to inflammation and the other part of the pain is the herniation itself. This explained why Claimant initially thought his work injury had resolved itself but later it was determined that he had a herniated disc.

Employer offered the IME opinion of Dr. John Dowdle that Claimant’s condition and need for surgery was caused by the non-work related injury from the prior incident where he fell down the stairs. Dr. Dowdle stated that the April work injury was not a major contributing cause of Claimant’s back condition and need for surgery.

The Department accepted the opinions of Claimant’s treating physicians as they were corroborated by each other and were based on the record. The Department rejected the IME opinion as Dowdle was not familiar with Claimant’s case and did not have all the medical records.

Wieber vs. Morton Buildings, Inc. and American Zurich Insurance Company

Kit McCahren/Alan Peterson (ALJ Runyan)

Issue: What to include to determine the proper Workers’ Compensation rate.

The Employer and Insurer contended that appropriate Workers’ Compensation rate be calculated by Claimant’s wages in the fifty weeks prior to the injury, using his actual hours at straight time and excluding overtime multipliers, expense reimbursements, and crew bonuses. Claimant argued that the calculation of wages should include bad weather pay, crew bonus, holiday pay, meal/motel reimbursement, miscellaneous payments, personal time, profit sharing, overtime, training bonuses and vacation time.

In coming to its decision, the Department relied on SDCL 62-1-1(6) and determined that vacation, sick leave, holiday pay, etc. do not constitute earnings. Benefits from paid time off should not be calculated as earnings for Workers’ Compensation purposes because those amounts do not represent hours worked and should not be factored into the compensation rate. The Department excluded the crew bonus, the profit sharing, the motel and meal reimbursements, the bad weather pay, and the holiday pay.

McKinney vs. Rapid City Regional Hospital and FinCor Solutions

Jim Leach/Dennis Finch (first insurer); Charles A. Larson (second insurer)

Issue: Whether Claimant’s alleged 2007 work injury was an aggravation or recurrence of her 1998 compensable work injury.

Claimant experienced a work injury on August 28, 1998, while working for RCRH (who was self insured at the time). The 1998 work injury consisted of wrist and hand injuries. Claimant treated for her work injury and continued to do so over the years. Claimant had flare-ups, and filed another FROI in 2007 when FinCor was the insurer, although she was having the same issues.

Claimant and RCRH identified the same expert, who testified Claimant suffered a recurrence and everything was related to the 1998 claim. FinCor moved for summary judgment and the Department granted the motion as the experts testified Claimant suffered from a recurrence and found RCRH was still on the risk.

Milbrandt vs. Bibbs, Inc. and Dakota Truck Underwriters

Glenn Boomsma/Michael S. McKnight and Thomas J. Von Wald (ALJ Hageman)

Issue: Whether Claimant needed to personally exhaust the personal injury proceeds he received from a third-party tortfeasor before Insurer had to continue actual Workers’ Compensation benefits.

Claimant was employed by Employer as a long haul over-the-road trucker, and was in an accident caused by the negligence of a third party. He sustained injuries to his head, chest, neck, left shoulder, and right hip. Employer and Insurer accepted the injuries as compensable and benefits were paid. As a result of the May 30, 2007 accident, Milbrandt made a claim against the third-party tortfeasor who was responsible for the accident. In June of 2009, Milbrandt negotiated a settlement of $160,000.00 with the tortfeasor. After reducing the settlement amount for fees, costs and reimbursement to the Insurer for Workers’ Compensation benefits paid at the time of the settlement, Claimant was left with a net recovery of $73,541.32. The parties agreed that Employer and Insurer were entitled to an offset against Workers’ Compensation benefits in the amount of $73,541.32 pursuant to SDCL 62-4-38.

In September of 2011, Claimant continued to have pain in his right hip to the point where he needed a hip replacement. In January of 2012, Claimant had his right hip replaced. Insurer denied benefits for the hip replacement and in the alternative has requested an offset or credit against any benefits in the amount of $73,541.32. Claimant’s hip surgery and post-surgery care were mostly paid for by Medicare and Blue Cross Blue Shield supplemental insurance.

Employer and Insurer filed a motion for summary judgment making the argument that Milbrandt needed to personally exhaust the $73, 541.32 on medical bills and/or Worker’s Compensation benefits which become due in the future. Employer and Insurer argued that the offset should not be applied to any bills paid by Medicare and Blue Cross Blue Shield as the personal injury proceeds benefited Milbrandt personally and by having Medicare and Blue Cross Blue Shield pay his medical bills, Milbrandt was making a double recovery.

Claimant argued the actual medical bills versus the amounts paid by Medicare and Blue Cross Blue Shield, should be used to reduce the offset against future Workers’ Compensation benefits. Claimant argued that Employer and Insurer should not be able to benefit from his separate contractual obligation with Medicare and Blue Cross Blue Shield for health insurance.

In coming to its conclusion, the Department focused on the language in 62-4-38, which stated that "In the event the injured Employer recovers any like damages from such other person, the recovered damages shall be an offset against any Workers’ Compensation which the Employee would otherwise been entitled to receive." The Department determined this language meant that the benefits the Employee would otherwise have been entitled to receive means the amount the Employee would have been entitled to receive had the damages from the tortfeasor not been recovered. The Department went on to state that there was no question Claimant would be entitled to medical expenses if it is ultimately decided that the hip replacement is deemed compensable.

The Department held that in this case, the cost of the benefits which Milbrandt would be entitled, and to which the offset would apply, if his hip replacement is compensable, is the amounts actually paid by Medicare and Blue Cross Blue Shield and Milbrandt himself. The Department also noted that Milbrandt was not entitled to reduce the offset amount by the actual medical bills. However, in coming to its conclusion, the Department completely bypassed the well-accepted provision in Workers’ Compensation law that a Claimant may not make a double recovery. In this instance, the Employer and Insurer argued that Claimant made a double recovery because he was able to keep his personal injury proceeds while at the same time have a third-party pay his medical expenses without any form of reimbursement to that third-party. This decision defies common sense and is on appeal.

Dudash vs. City of Rapid City and Berkley Risk Administrators Company, LLC

Brad Lee/Tim Becker (ALJ Hageman)

Issue: Whether Employer and Insurer’s claim files needed to be turned over to Claimant pursuant to a discovery request.

The facts of the case aren’t important. The significance of this case is that the Department required the insurer’s claims file to be produced. The rule had been that the nurse case manger file was subject to production, but the claims file was off limits. This case changes that. Here, the Claimant filed a motion to compel seeking to get the claims file. The insurer argued the information was not relevant, and was protected by the work product doctrine.

The Department held the claims file may have relevant information so that objection was overruled. The closer call was whether the information was protected as work product. The Department followed some recent federal cases (not work comp cases) that it is part of an insurer’s job to investigate claims. Therefore, simply investigating claims is not done in "anticipate of litigation" which is the standard on whether something is work product. In this case, the claim was compensable and so the investigation and claims’ handling was not done in anticipate of litigation. Once it appeared the claim was headed toward litigation (either a denial or an attorney’s involvement), all documents and notes from after that date did not have to be produced.

I’ve been waiting for a decision like this. It was only a matter of time that our Department started requiring the claims’ file to be produced. It is absolutely critical that you keep the claims’ file purely professional and do not put anything in your notes that you wouldn’t want Claimant or his/her attorney to read. For instance, do not put that the Claimant is a liar, is a perm total, or anything that could be used against you if your file has to be turned over.

I spoke to Claimant’s attorney about this decision. He said that several defense attorneys have simply been producing the claims’ file without a motion to compel (which shocked me) and he has had several motions to compel granted; I have not seen a Department decision requiring production yet. He told me he has one case where the adjuster wrote in the notes that she was going to find a way to get the claim denied. I don’t know what her intent was in writing that, but it doesn’t look good on paper, especially when she denied the claim shortly thereafter.

Conclusion

As always, we hope you find these summaries helpful. In order to evaluate a case, you must know what the Department has been doing lately. There were several important decisions lately and I know there will be a couple more Supreme Court decisions in the coming months and some of the department decisions above are being appealed (remember, all Department decisions are subject to appeal). We hope all is well and look forward to working with you all for another year. Please let us know if you have any questions.  You can reach me, Charlie Larson, at 605-336-2424 orcalarson@bgpw.com.

For all injuries occurring after July 1, 2013, the max comp rate is $691 and the min comp rate is $346.

Charlie Larson 605-336-2424; calarson@bgpw.com

Issue: When does a surveillance video need to be provided to Claimant’s attorney

Claimant sent Employer and Insurer interrogatories and requests for production asking to produce any surveillance evidence they had. Employer and Insurer objected to the request based on the work product doctrine and that the information sought was beyond the scope of discovery. The rule has been that surveillance must be turned over after the claimant’s deposition. However, employer and insurer refused to produce the surveillance after claimant’s deposition as they had not determined whether they would use the surveillance at hearing.

The department determined that surveillance materials were work product and not discoverable until the Employer and Insurer determine that it will use the surveillance, in any way, at hearing. The judge determined that if Employer and Insurer wanted to use the surveillance material at hearing, it must provide Claimant a copy of the materials at least 30 days prior to hearing. This is a change from previous rulings and will be interesting if the matter goes up on appeal.

Let me know if you have questions.  Charlie Larson (605) 336-2424 orcalarson@bgpw.com

The SD department handed down two more decisions where it ruled with the treating doctor on treatment recommendations.  It's nearly impossible to prove that treatment recommended by the treating doctor is not necessary, and most of the time it is not worth the fight.

Let me know if you have questions.  Charlie Larson (605) 336-2424 or calarson@bgpw.com 

This is an interesting decision regarding a parking lot case. Here, a husband came to his wife’s work during her morning break and shot and killed her in the parking lot. He then took his own life. It was undisputed that work had nothing to do with the martial conflicts they were having, yet a petition was filed because the murder took place on the employer premises. The department found the death did not arise out of the wife’s employment, the circuit court affirmed, and the SD Supreme Court also affirmed.

In order to arise out of the employment, the injury must have its origin in the hazard to which the employment exposed the employee. There are three possible categories to determine whether an injury has its origin (i.e. whether there is a causal connection) in the employment. These are: 1. Risks distinctly associated with the employee, which are always compensable. 2. Risks personal to the employee. These are generally non-compensable and defined as "risks so clearly personal that, even if they take effect while the employee is on the job, they could not possibly be attributed to the employment." 3. Neutral risks, which may be compensable under the positional risk doctrine.

Positional risk doctrine only applies in neutral risk situations. Positional risk involves situations where the only connection with the employment is that the work placed the employee at the particular place and time when he or she was injured by a neutral force (neither personal to the employee nor distinctly associated with the employment).

Under the positional risk doctrine, you apply the "but for" test: "An injury arises out of the employment if it would not have occurred but for the fact that the conditions and obligations of the employment placed claimant in the position where he or she was injured."

The HSBC case hinged on whether the death was from a neutral risk or a personal risk. The Court found the death arose from the personal risk (pressure from the pending divorce). "The positional risk doctrine requires that the risk must be one in which any other person then and there present would have met with irrespective of his employment." Since the husband would not have killed anyone but his wife, no other employee would have met with the same fate, and thus the positional risk doctrine did not apply.

Other assault cases may be compensable depending on the circumstances. For instance, fights between co-workers, when the employer brings the two employees together, the fight is about work, etc. Unfortunately, there is no bright-line rule and this will be fact specific in the future.

The claimant argued the employment contributed to the assault because the husband knew where she parked and the only time she was away from the kids was when she was at work (he wouldn’t have killed his wife in front of the kids). The court rejected this argument as the risk of assault must be increased by the employment. The Court said just because the wife was killed on the premises was not enough even if it provided the husband with the opportunity to kill her as the work did not have anything to do with the conflict between them.

The case also had a discussion about unexplained deaths, shifting presumptions and other legal mumbo jumbo. I’m not sure what significance this will have later on. I do not believe this case will have much bearing on future parking lot cases unless we can show that the injury was personal and not neutral. For instance, if someone trips in a pot hole in the parking lot, that’s a neutral risk because "but for" the work, the employee would not have been in that parking lot. However, if the employee’s knee simply gives out, that may be a personal risk and the "but for" test would not be used. The key will be how the department classifies the injury and risk.

If you have questions, please call me at 605-336-2424 or email me atcalarson@bgpw.com.  Thanks, Charlie Larson.