915 N.W.2d 707
S.D.2018Background
- Tammy Lagler injured her right ankle at work in April 2007 and underwent two surgeries (one in 2007–2008 sequence and a second in Feb. 2009) for posterior tibialis tendinitis and later for Haglund’s deformity/retrocalcaneal bursitis. Treating surgeons tied the conditions to the work injury; insurer Zurich initially denied coverage for the second surgery and stopped benefits.
- Zurich’s denial relied on a claims note from adjuster Mary Lemieux reporting a September 15, 2008 call attributing symptoms to idiopathic/Haglund’s causes; the note referenced a non-existent “Angie Roberts” and Lemieux did not obtain an independent medical exam before denying benefits.
- The Department of Labor awarded compensability for both surgeries, unpaid medical bills, and later permanent-total-disability (PTD) benefits under the odd-lot doctrine, but it denied claimant’s request for attorney’s fees and granted a lump-sum payment. Total awards (incl. interest) exceeded $500,000.
- The circuit court affirmed causation and PTD, reversed the lump-sum award, and reversed the Department’s denial of attorney’s fees; on remand some computations (interest, fee basis) generated further disputes and appeals. The Supreme Court affirmed the circuit court in all respects.
- Key legal questions: (1) whether Lagler established PTD (odd-lot) given residence change to Winner, SD; (2) whether insurer’s denial was "vexatious or without reasonable cause" so as to require attorney’s fees; (3) whether PTD should be paid as a lump sum; and (4) whether appellate disbursements could be taxed.
Issues
| Issue | Plaintiff's Argument (Lagler) | Defendant's Argument (Menard/Zurich) | Held |
|---|---|---|---|
| 1. Entitlement to permanent-total-disability (PTD) under odd-lot | Lagler: her condition, age, training, residence (Winner), failed work search, and vocational opinion show she is obviously unemployable and not a candidate for rehab | Menard/Zurich: insufficient causal proof to link second surgery to work; she left Sioux Falls job market; lacking reliable expert evidence of unemployability | Affirmed: PTD award upheld — Winner is claimant’s community; move was in good faith; claimant made prima facie showing and employer failed to show suitable work in her community |
| 2. Attorney’s fees — jurisdiction and merits under SDCL 58-12-3 | Lagler: her statement of additional issues preserved the fee issue; Zurich’s denial was without reasonable cause because investigation was inadequate | Menard/Zurich: claimant failed to file a notice of review, depriving court of jurisdiction; Zurich reasonably relied on its investigation | Court had jurisdiction (notice of appeal conferred it) and held insurer’s denial unreasonable — attorney’s fees awarded because adjuster failed to conduct a good-faith investigation |
| 3. Lump-sum payment of PTD under SDCL 62-7-6 | Lagler: exceptional financial need from reduced income and debts justified lump-sum | Menard/Zurich: oppose lump-sum (general disfavor); past-due TTD and other protections suffice | Reversed: lump-sum denied — court found payment plan, debts covered by past-due TTD, unstable investment plan, and potential adverse effect on SSD made lump-sum not in claimant’s best interests |
| 4. Taxation of additional disbursements under SDCL 15-17-37 | Lagler: seeks $7,443 in taxed disbursements | Menard/Zurich: oppose | Denied: most costs were not preserved (not appealed earlier) and appellate/remand costs are not recoverable under the statute’s narrow scope; court did not abuse discretion |
Key Cases Cited
- Fair v. Nash Finch Co., 728 N.W.2d 623 (S.D. 2007) (filing a notice of appeal transfers jurisdiction to the circuit court)
- Brown v. Douglas Sch. Dist., 650 N.W.2d 264 (S.D. 2002) (discusses consequences of failing to file notice of review)
- Stuckey v. Sturgis Pizza Ranch, 793 N.W.2d 378 (S.D. 2011) (lump-sum awards are disfavored; statutory standard for lump-sum payments)
- Eldridge v. Nw. G.F. Mut. Ins. Co., 221 N.W.2d 16 (S.D. 1974) (insurer must conduct a good-faith investigation; inadequate investigation makes denial unreasonable)
- Kern v. Progressive N. Ins. Co., 883 N.W.2d 511 (S.D. 2016) (agency factual finding on insurer reasonableness reviewed for clear error)