TAMMY LAGLER, Claimant and Appellee, v. MENARD, INCORPORATED and ZURICH AMERICAN INSURANCE CO., Defendants and Appellants.
#28255, #28266-a-DG
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
07/03/18
2018 S.D. 53
THE HONORABLE MARK BARNETT Judge
APPEAL FROM THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT HUGHES COUNTY, SOUTH DAKOTA; SCOTT N. HEIDEPRIEM, KASEY L. OLIVIER of Heidepriem, Purtell & Siegel LLP, Sioux Falls, South Dakota, Attorneys for claimant and appellee; J.G. SHULTZ of Woods, Fuller, Shultz & Smith, P.C., Sioux Falls, South Dakota, Attorneys for defendants and appellants; CONSIDERED ON BRIEFS ON FEBRUARY 12, 2018
[¶1.] Tammy Lagler suffered a workplace injury while employed by Menard Inc. The South Dakota Department of Labor and Regulation awarded Lagler lump-sum, permanent-total-disability compensation but denied her request for attorney’s fees. On appeal, the circuit court affirmed the Department’s decision to award compensation but reversed the decision to award it as a lump sum. The court also reversed the Department’s denial of attorney’s fees. The parties each appeal various aspects of the court’s decision. We affirm.
Facts and Procedural History
[¶2.] On April 21, 2007, then-47-year-old Lagler injured her right ankle while working in the garden center of the Sioux Falls Menards.1 While stepping off a raised platform, Lagler lost her balance and landed on her right foot. She heard a “pop” and
[¶3.] Lagler continued to work at Menards. For its part, Menards accommodated Lagler’s work restrictions. But Lagler continued to experience pain, and on June 6, 2007, she consulted Dr. William Bell, a board-certified orthopedic surgeon. Dr. Bell fit Lagler with a controlled-ankle-motion (CAM) boot and requested approval for a bone scan, which was approved by Menard’s insurer, Zurich American Insurance Co. On July 2, Dr. Bell reviewed the bone scan, diagnosed Lagler with compression fractures in her right foot, and determined she should continue wearing the CAM boot for another four weeks. By August 1, Lagler was still experiencing significant pain even though new imaging showed “solid union of her fractures.” Dr. Bell suspected the straps of the CAM boot were responsible for Lagler’s continuing pain. Although Dr. Bell concluded Lagler could safely transition out of wearing the boot, she continued to wear it.
[¶4.] Lagler’s condition did not improve, but physical examination revealed no objective reason for her pain. On September 5, 2007, writing in Lagler’s medical records, Dr. Bell noted: “[Lagler] is in for follow-up on her foot pain. She’s really not doing any better. She’s still complaining of a tremendous amount of kind of ankle, hind foot, mid foot pain.” On September 24, after receiving Zurich’s approval, Dr. Bell ordered magnetic resonance imaging (MRI) of Lagler’s right ankle and foot. Based on the MRI, Dr. Bell determined that there were no abnormalities and that Lagler’s ligaments and tendons were “intact without significant degenerative change.” Unable to identify a cause of Lagler’s continuing pain, Dr. Bell referred Lagler to another physician, with Zurich’s approval.
[¶5.] Lagler began seeing Dr. David Watts, another board-certified orthopedic surgeon. On October 2, 2007, Lagler reported pain along her right instep. Dr. Watts injected lidocaine, a local anesthetic, into Lagler’s posterior tibialis tendon, and she experienced nearly total relief. But when Dr. Watts asked Lagler to perform a single heel raise, she was not able to do so. Dr. Watts diagnosed Lagler with posterior tibialis tendinitis and concluded it was related to work. After conservative treatments were unsuccessful, Dr. Watts performed surgery on Lagler to repair the tendon. During surgery, Dr. Watts discovered that Lagler’s tendon was frayed. Dr. Watts concluded that because Lagler had continuous pain in the same area since the April 2007 accident, her tendinitis and subsequent surgery resulted from a work-related injury.
[¶6.] Following surgery, Lagler was fitted with a progressive-weight-bearing CAM boot for rehabilitation. But on April 30, 2008, only three months after surgery, Lagler reported to P.A. Angela Majeres, who worked with Dr. Watts, that she had a resurgence of pain and new tenderness along her Achilles tendon. On June 2, Lagler returned to Dr. Watts and reported that while she no longer had pain in her
[¶7.] Lagler continued to experience worsening and new pain. On July 30, 2008, Dr. Watts diagnosed Lagler with “Achilles tendinitis with retrocalcaneal bursitis.” Retrocalcaneal bursitis is an inflammation of the bursa, which is a fluid-filled sac located between the tendon and bone. Dr. Watts opined that the immediate cause of the inflammation was a congenital deformity in Lagler’s foot known as “Haglund’s deformity,” which is a condition where the back of the heel pokes into the soft tissue near the Achilles tendon. In Dr. Watts’s opinion, wearing a CAM boot after the April 2007 injury caused Lagler to change her gait, which in turn caused her congenital condition to become symptomatic. Thus, Dr. Watts concluded that Lagler’s pain ultimately stemmed from her work-related injury. On August 6, 2008, Dr. Watts sought approval from Zurich to perform a second surgery on Lagler.
[¶8.] Zurich assigned claims specialist Mary Lemieux to Lagler’s case.2 Lemieux’s notes indicate she contacted Dr. Watts’s office on August 6, 2008, to request information on the proposed procedure. Viewing the delay as a refusal to cover the second surgery, Lagler filed a petition for a hearing with the Department on August 28. Lemieux’s notes during this time indicate she made several attempts to obtain information from Dr. Watts’s office. On September 15, records indicate a 5.8-minute-long telephone call occurred between Lemieux and one of more than fifty extensions at Dr. Watts’s office. Lemieux’s notes describe the September 15 call: “Angie Roberts, Dr. Watts’ nurse, called me. We discussed the etiology of this. Can be due to heels, i.e., pump bump but really it’s more of an idiopathic condition. Not related to ankle injury. Is she then disabled due to the Haglund’s? Yes, not due to the original injury.” Testimony would later establish, however, that not only was this conversation not noted in Lagler’s records, nobody in Dr. Watts’s office is named “Angie Roberts.” On September 17, without completing either an independent medical examination or an independent examination of Lagler’s medical records, Zurich sent a fax to Dr. Watts’s office that officially denied payment for Lagler’s second surgery. And on September 22, Zurich stopped all disability payments to Lagler.
[¶9.] On October 27, 2008, Lagler was examined by another orthopedic surgeon, Dr. Eric Watson. Dr. Watson agreed with Dr. Watts’s diagnosis regarding Haglund’s deformity and retrocalcaneal bursitis. Dr. Watson also concluded that the surgery proposed by Dr. Watts would relieve Lagler’s pain, but Dr. Watson did not express an opinion as to whether Lagler’s April 2007 injury caused her current symptoms. Believing that Lagler was running out of nonsurgical options, Dr. Watson recommended Lagler undergo a second surgery to correct her Haglund’s deformity and to remove the inflamed bursa.
[¶10.] After first denying coverage for a second surgery and terminating compensation, Zurich then engaged Dr. Richard Farnham to conduct an independent examination of Lagler’s medical records.3 Dr.
[¶11.] On February 11, 2009, Lagler accepted Dr. Watson’s recommendation, and Dr. Watson performed the surgery on February 19. Following her second surgery, Lagler initially reported that her condition was improving. But by the end of April 2009, she complained of swelling in her foot. Dr. Watson directed Lagler to engage in only sedentary work until July 15 and to work no more than 35 hours per week as tolerable. Eventually, Lagler could not tolerate even 35 hours per week, so on June 11, 2010, Dr. Watson changed the restriction to a maximum of 30 hours per week. Dr. Watson also referred Lagler to Dr. Jerry Blow, another board-certified physician. Dr. Blow evaluated Lagler on August 19 and reviewed her medical records and Dr. Watts’s deposition. Dr. Blow agreed with Dr. Watts that Lagler’s April 2007 injury was responsible for her posterior tibialis tendinitis and retrocalcaneal bursitis.
[¶12.] The financial and emotional impact of the foregoing on Lagler was severe. While she continued to work throughout 2007, she had no income between September 2008 and April 2009. And after returning to work, her physical limitations reduced the number of hours she could work in a week and, therefore, her income. Lagler did not have medical insurance, so when Zurich denied coverage for the second surgery, she had to borrow money from family members and cash in part of her retirement to make the down payment for the surgery. Zurich’s termination of all workers’-compensation payments further reduced her ability to meet her financial obligations. In February 2011, Lagler’s mortgagee foreclosed on her home. Lagler’s daughter offered her a home in Winner, South Dakota, and Lagler accepted because of both her need for a home and the emotional support her daughter could provide. Lagler terminated her employment with Menards on April 11, 2011. After moving to Winner, Lagler begin seeing Dr. Teresa Marts, who changed Lagler’s work restrictions to sedentary only.
[¶13.] Lagler’s workers’-compensation claim came before the Department for the first time on May 10, 2011. The parties agreed to bifurcate the proceedings. At the May 10 hearing, the Department considered whether Lagler’s April 2007 injury was a major contributing cause of her need for two ankle surgeries. The Department issued a decision favorable to Lagler on September 9, 2011, concluding that both surgeries were compensable. The Department entered factual findings and legal conclusions on October 24. On February 3, 2012, the Department issued an order awarding Lagler $22,096 in unpaid medical bills and prejudgment interest.
[¶14.] On September 20, 2012, the Department held a second hearing. At the second hearing, the Department considered whether Lagler was entitled to permanent-total-disability (PTD) compensation. The Department issued a decision favorable to Lagler on January 11, 2013. The Department admitted evidence that the Social Security Administration found Lagler to be “disabled as of April 10, 2011.” The Department also found that Lagler did not purposefully leave the Sioux Falls job market and that given her physical impairment, age, training, and experience, she would not be able to find
[¶15.] On December 2, 2014, the Department held a third hearing. This hearing addressed the questions whether Lagler was entitled to a lump-sum award and attorney’s fees. At the hearing, P.A. Majeres—the only person named “Angie” in Dr. Watts’s office who was also involved in Lagler’s care—testified but denied even knowing who Lemieux was, let alone having told her that Lagler’s condition was unrelated to the April 2007 injury. Lemieux did not testify at the hearing. Even so, finding that Lemieux exercised “some diligence,” the Department concluded that although Zurich’s decision to deny further compensation was incorrect, it was not vexatious or without reasonable cause. The Department issued a decision on April 29, 2015, granting Lagler’s request for a lump-sum award but denying her request for attorney’s fees. The Department issued factual findings and legal conclusions reflecting its decision on June 4. And on June 29, the Department entered a final order, incorporating the June 4 factual findings and legal conclusions. The Department awarded Lagler $526,768 in total.5
[¶16.] On July 13, 2015, Menard and Zurich filed a notice of appeal to the circuit court. They appealed the following: (1) the Department’s October 24, 2011 factual findings and legal conclusions; (2) the Department’s February 3, 2012 order; (3) the Department’s February 11, 2013 factual findings and legal conclusions; (4) the Department’s June 4, 2015 factual findings and legal conclusions; and (5) the Department’s June 29, 2015 order. In a statement of issues filed the same day, Menard and Zurich challenged both the award of compensation and the decision to award it as a lump sum. Lagler did not file a notice of review, but on July 15, she did file a statement of issues that challenged the Department’s denial of her request for attorney’s fees.
[¶17.] The circuit court heard the appeal on December 21, 2015. On February 17, 2016, the court issued a decision affirming the Department’s decision regarding causation and Lagler’s entitlement to compensation. However, the court reversed the Department’s decision to award compensation as a lump sum. The court also reversed the Department’s denial of attorney’s fees. The court remanded the case back to the Department with instructions to recalculate the prejudgment interest due and to award Lagler reasonable attorney’s fees under
[¶18.] On remand, additional problems arose on both issues. The parties reached an agreement regarding the amount of prejudgment interest due. Despite the parties’ agreement, the Department deviated from the stipulated amount of $171,919 and instead awarded $156,691. And in the circuit court’s decision, the court noted that Lagler “produced evidence of reasonableness of her attorney’s fees[,]” which totaled $103,632. The court ordered those fees be reimbursed under
[¶19.] On June 17, 2016, Lagler filed a notice of appeal to the circuit court.6 She appealed the following: (1) the Department’s April 29, 2015 decision; (2) the Department’s June 4, 2015 factual findings, legal conclusions, and order; (3) the Department’s June 29, 2015 order; and (4) the Department’s June 6, 2016 order. In a statement of issues filed on June 21, 2016, Lagler challenged the Department’s calculation of prejudgment interest and attorney’s fees. And although the court had already rejected Lagler’s request for a lump-sum award in the first appeal, Lagler challenged the Department’s denial of her request for a lump-sum award. Finally, Lagler requested taxation of disbursements in the amount of $7,443. Menard and Zurich filed a notice of review and statement of issues on July 6 addressing the issue of attorney’s fees. For the first time in the history of this workers’-compensation case, Menard and Zurich argued that because Lagler failed to file a notice of review in the first appeal regarding the Department’s initial denial of her request for attorney’s fees, neither the Department nor the circuit court had jurisdiction over that matter after the Department’s initial decision.
[¶20.] The circuit court considered the second appeal on October 4, 2016. The court rejected Menard and Zurich’s jurisdictional argument and reaffirmed its February 17, 2016 decision. The court affirmed the Department’s denial of Lagler’s request for a lump-sum award. The court reversed the Department’s calculation of prejudgment interest and attorney’s fees. The court also denied Lagler’s request for taxable disbursements. Instead of remanding, the court ordered Menard and Zurich to pay Lagler the amount stipulated by the parties in regard to prejudgment interest. The court also instructed the parties that it would resolve the attorney’s-fees issue either by agreement of the parties or after further proceedings. On January 20, 2017, Lagler submitted a motion to the circuit court that requested attorney’s fees. After a hearing on March 20, the court issued an order on April 4 that awarded Lagler $144,824 in attorney’s fees.7
[¶21.] Now before this Court, Menard and Zurich appeal the circuit court’s April 4, 2017 order. By notice of review, Lagler appeals the court’s February 17, 2016 decision, its January 11, 2017 decision, and its April 4, 2017 order. The parties raise the following issues:
- Whether the circuit court erred by affirming the Department’s decision to award Lagler permanent-total-disability compensation.
- Whether the circuit court erred by reversing the Department’s decision to deny Lagler’s request for attorney’s fees.
- Whether the circuit court erred by reversing the Department’s decision to award compensation to Lagler in a lump sum.
- Whether the circuit court erred by declining to tax additional expenditures of Lagler’s.
[¶22.] The central issue in this appeal is the adjudication of Lagler’s right to workers’ compensation, which occurred in a formal setting. Therefore, this appeal is governed by South Dakota’s Administrative Procedures Act,
Analysis and Decision
[¶23.] 1. Whether the circuit court erred by affirming the Department’s decision to award Lagler permanent-total-disability compensation.
[¶24.] Menard and Zurich first argue Lagler is not entitled to PTD compensation. They contend that Lagler failed to establish a causal connection between her April 2007 injury and the need for her second ankle surgery. They also contend that Lagler purposefully left the Sioux Falls job market and that consequently, PTD compensation is precluded. Finally, they contend Lagler’s claim was not supported by reliable expert testimony.
[¶25.] In South Dakota, workers’ compensation for injury or death is governed by
[¶26.] The Department concluded that Lagler “made a prima facie showing that she is obviously unemployable because of her physical condition, coupled with her education, training, and age.” But Menard and Zurich contend Lagler cannot be permanently, totally disabled because she had regular, suitable work available. They claim that “in South Dakota, the absence of a medical opinion supporting a complete release from work vitiates the right to disability benefits.” In their view, “unless a doctor established reliable work restrictions that Menards could not accommodate, Menard[] should have no exposure to additional disability benefits.” Thus, because Menards accommodated the work restrictions established by Lagler’s physicians, Menard and Zurich conclude there was a position available to Lagler: her job at Menards in Sioux Falls.
[¶27.] Menard and Zurich’s argument fails to consider an important part of
[¶28.] Even so, an employee may not relocate simply to avoid available work. An employee who “purposefully leaves the labor market” is not entitled to permanent-total-disability compensation. See
[¶29.] Menard and Zurich also contend that Lagler is required to produce expert-opinion evidence to establish that she is “obviously unemployable” and that she would not benefit from vocational rehabilitation. At the September 20, 2012 hearing, Lagler called Richard Ostrander, a vocational-rehabilitation counselor, to testify. Ostrander testified that Lagler is “obviously unemployable” and that she is not a candidate for vocational rehabilitation. During the appeal to the circuit court, Menard and Zurich challenged the basis of Ostrander’s opinion that Lagler is obviously unemployable. The court agreed, noting that Ostrander “admitted that he did not review all of [Lagler’s] medical records, and those records that he did have, were outdated.” The court further found that Ostrander was not aware of Dr. Watson’s most recent work restriction nor the later restriction advised by Dr. Marts. Thus, the court concluded that the Department’s reliance on Ostrander’s opinion was erroneous.
[¶30.] Regardless, the circuit court’s view of Ostrander’s opinion on Lagler’s employability does not support Menard and Zurich’s argument.
[¶31.] As for evidence of vocational rehabilitation,
[¶32.] The circuit court did not err by affirming the Department’s decision to award Lagler PTD compensation. Because Lagler’s residence is in Winner, the availability of employment opportunities in Sioux Falls is not relevant. Lagler did not purposefully leave the Sioux Falls job market; her departure was an incidental effect of finding replacement housing—a decision necessitated in part by Zurich’s denial of all workers’ compensation.
[¶33.] 2. Whether the circuit court erred by reversing the Department’s decision to deny Lagler’s request for attorney’s fees.
[¶34.] Next, Menard and Zurich argue that Lagler is not entitled to attorney’s fees. They contend that Lagler failed to file a notice of review from the Department’s initial decision and that consequently, the circuit court never had jurisdiction over this issue. They further contend that even if the court had jurisdiction, it erroneously set aside the Department’s finding that Zurich’s denial of workers’ compensation was not vexatious. Lagler responds that filing a statement of issues suffices to preserve an issue for review and that her failure to label the statement a notice of review is a mere technicality. She also responds that Zurich failed to properly investigate her entitlement to workers’ compensation.
[¶35.] a. Jurisdiction to review denial of attorney’s fees
[¶36.] The preliminary question to answer on this issue is whether the circuit court had appellate jurisdiction to review the Department’s decision to deny attorney’s fees as expressed in its April 29, 2015 decision, its June 4 factual findings and legal conclusions, and its June 29 order. Menard and Zurich contend that the statement of additional issues Lagler filed regarding the attorney’s-fees issue should not be considered a notice of review. They further contend that under Brown v. Douglas School District, 2002 S.D. 92, 650 N.W.2d 264, the failure to file a notice of
[¶37.] Resolving this issue requires a review of the statutes governing administrative appeals. “[A]ny party in a contested case” may appeal “a final decision, ruling, or action of an agency” to circuit court.
[¶38.] Lagler contends her statement of additional issues should be considered a notice of review under Maack. In that case, a school district denied a former employee’s request for reinstatement. Maack, 463 N.W.2d at 843. The employee attempted to appeal by filing a document titled “request for conciliation.” Id. at 843-44. The Department treated the document as a notice of appeal, and the case proceeded without objection from the school district. Id. After the Department held in favor of the employee, the school district appealed to the circuit court. Id. On appeal, the school district argued that the form titled “request for conciliation” was not a notice of appeal, and the court agreed. Id. Stating that “[n]otices of appeal should be liberally construed in favor of their sufficiency[,]” this Court reversed: “[U]nder the unique facts of this case, the text of the request filed by Maack was intended to be a notice of appeal, was treated as a notice of appeal by all parties involved, and constituted a notice of appeal . . . .” Id.
[¶39.] Lagler’s reliance on Maack is misplaced. In contrast to the request for conciliation at issue in Maack, there is no ambiguity as to what Lagler intended when she filed her statement of additional issues. Lagler filed a document titled “Claimant’s additional statement of issues on appeal.” (Emphasis added.) Unlike a “request for conciliation,” a “statement of issues on appeal” is the exact name of a document specifically identified in
[¶40.] As Menard and Zurich correctly point out, this Court has previously taken a strict view of a party‘s failure to file a notice of review. In Brown, a school-district employee appealed the Department‘s denial of PTD compensation. 2002 S.D. 92, ¶ 8, 650 N.W.2d at 267. Seeking review of “the Department‘s denial of a willful misconduct defense and award of benefits for an impairment rating[,]” the school district filed a statement of additional issues. Id. ¶ 31, 650 N.W.2d at 272. However, the school district did not attempt to file a notice of review until more than 20 days after the appellant filed her notice of appeal. Id. Rejecting the notice of review as untimely, the court concluded it “was without jurisdiction to hear the issues the [s]chool sought to have reviewed.” Id. On appeal, this Court agreed that even though the school board timely filed its statement of additional issues, the failure to file a notice of review within 20 days of the notice of appeal was fatal to reviewing the issues raised in that statement. Id. ¶ 32, 650 N.W.2d at 272-73.
[¶41.] However, cases like Brown conflate concepts of jurisdiction and issue waiver by suggesting that a court obtains jurisdiction to review issues. Id. ¶ 31, 650 N.W.2d at 272; see also, e.g., Whitesell v. Rapid Soft Water & Spas, Inc., 2014 S.D. 41, ¶ 10, 850 N.W.2d 840, 842 (“Such failure to file a notice of review precludes appellate review of that issue.” (emphasis added)); Schuck v. John Morrell & Co., 529 N.W.2d 894, 897 (S.D. 1995) (“An issue is not properly preserved for appeal when a party fails to file a notice of review . . . .” (emphasis added)). As
[¶42.] Once the circuit court‘s jurisdiction to review a particular decision, ruling, or action has been established—either through the filing of a notice of appeal or a notice of review—the question then becomes one of issue waiver. As indicated above, the appellant must file a statement of the issues to be presented on appeal, and the appellee may file such a statement as well.
[¶43.] In light of the foregoing, Lagler‘s failure to file a notice of review did not deprive the circuit court of jurisdiction to review the Department‘s denial of Lagler‘s request for attorney‘s fees. The Department denied her request in its April 29,
b. Merits of decision to deny attorney‘s fees
[¶45.] Turning to the merits of the attorney‘s-fees issue, Menard and Zurich next contend the circuit court erroneously set aside the Department‘s finding that Zurich‘s denial of workers’ compensation was not vexatious. Lagler asked the Department to award her attorney‘s fees under
[i]n all actions or proceedings . . . commenced against any . . . insurance company, . . . on any policy or certificate of any type or kind of insurance, if it appears from the evidence that such company or exchange has refused to pay the full amount of such loss, and that such refusal is vexatious or without reasonable cause[.]
[¶46.] In this case, the Department found that Zurich had reasonable cause to deny coverage of Lagler‘s claim. The Department based its finding on the September 15, 2008 conversation noted in Lemieux‘s claim notes. That note states:
angie roberts, dr. watts nurse called me. we discussed the etiology of this. can be due to heels, ie [sic] pump bump but really ti‘s [sic] more of an idiopathic condition. not related to ankle injury. is she then disabled due to hte [sic] haglund‘s? yes, not due to the original injury.
In regard to Lemieux‘s note, the Department said:
We do not know with whom Lemieux spoke during that conversation. It was not Dr. Watt‘s [sic] Physician Assistant, Angela Majeres, who probably knew more about Lagler‘s case than anyone else in the office other than Dr. Watts. It is more likely than not that it was with a nurse in the office because the claim entry indicates that it was a nurse. Despite the fact that the name of the individual indicated by Lemieux‘s entry is incorrect, does not lead to the inevitable fact that notation of the rest of the conversation was false or fabricated.
Indeed, the Department believes that the substance of the conversation was much as described in Lemieux‘s claims entry. She knew nothing about the condition prior to the phone conversation. In addition, some of the details in the claims entry are correct in a general sense, despite the facts that some of the particulars did not apply in Lagler‘s case. For example, the bursitis is sometimes
caused by heels or pumps and the cause is sometimes idiopathic. ·
While the nurse may have been speaking in general terms rather than the specifics of Lagler‘s case, the Department finds that this conversation was a legitimate basis for Lemieux‘s denial. Therefore, the Insurer‘s denial of Lagler‘s second surgery was neither vexatious nor with[out] reasonable cause.
On appeal, the circuit court concluded that the Department‘s reasonable-cause finding regarding Zurich‘s denial of coverage was clearly erroneous.
[¶47.] A complete review of the record supports the circuit court‘s conclusion. First, the veracity of Lemieux‘s note is dubious at best. Lemieux did not testify in person before the Department; rather, her testimony was presented as a deposition. Even though a favorable medical opinion could have absolved Zurich of responsibility for Lagler‘s second surgery, Lemieux failed to accurately identify the source of her information. There is no “Angie Roberts” in Dr. Watts‘s office, and the only person named “Angie” that would have any knowledge of Lagler‘s case is Angela Majeres, who is a P.A., not a nurse. Not only did P.A. Majeres testify that she never spoke to Lemieux, Lagler‘s medical records do not indicate that anyone from Dr. Watts‘s office discussed her condition with Lemieux. Moreover, Lemieux‘s claim that somebody from Dr. Watts‘s office told her that Lagler‘s symptoms were unrelated to the April 2007 injury requires believing that this unidentified nurse would directly contradict Dr. Watts‘s explicit medical opinion. In a note dated July 30, 2008, Dr. Watts opined that Lagler‘s symptoms were “sustained from a work comp related injury.” And then on August 6, Dr. Watts indicated in another note that Lagler described her “pain in her heel area to be present since her initial injury at work back in . . . April 2007.”
[¶48.] Even if it is assumed that an unidentified nurse called Lemieux on September 15, 2008; that the nurse gave a medical opinion contradicting Dr. Watts‘s; and that against office policy, the nurse failed to note the conversation in Lagler‘s file; such would be insufficient to establish that Lemieux fulfilled her duty to conduct a good-faith investigation. Relying on the opinion of even a physician is not per se reasonable. See Mordhorst v. Dakota Truck Underwriters & Risk Admin. Servs., 2016 S.D. 70, ¶¶ 12-14, 886 N.W.2d 322, 325-26 (discussing reasonableness in context of tort action alleging bad-faith denial of benefits). And regardless of what the unidentified nurse said, Lemieux necessarily knew that Dr. Watts submitted a request to Zurich to pay for the second surgery, which should have strongly suggested to Lemieux that Dr. Watts considered Lagler‘s symptoms to be related to the workers‘-compensation claim. At the very least, then, Lemieux should have investigated further. Yet, Lemieux did not obtain an independent medical examination of Lagler. Nor did Lemieux obtain an independent review of Lagler‘s medical records prior to denying coverage. So despite the medical opinion of Lagler‘s treating physician, Dr. Watts, and without a contrary opinion from any other physician, Lemieux—who does not have medical training—decided to deny coverage for Lagler‘s second surgery and to terminate all workers’ compensation.
[¶49.] The foregoing is sufficient to create “a definite and firm conviction” that the Department made a mistake. Moulton v. Moulton, 2017 S.D. 73, ¶ 6, 904 N.W.2d 68, 71 (quoting Aguilar v. Aguilar, 2016 S.D. 20, ¶ 9, 877 N.W.2d 333, 336). Even if Lemieux acted with “some diligence,” her conduct fell far short of a good-faith investigation
3. Whether the circuit court erred by reversing the Department‘s decision to award compensation to Lagler in a lump sum.
[¶51.] Next, Lagler argues she is entitled to receive workers’ compensation in a lump sum. Generally, awarding workers’ compensation in a lump sum is disfavored. Stuckey v. Sturgis Pizza Ranch, 2011 S.D. 1, ¶ 7, 793 N.W.2d 378, 382. But as an exception,
[¶52.] The first question, then, is whether a lump-sum payment is in Lagler‘s best interest. This Court has previously identified several factors that weigh on the question of best interests:
- Age, education, mental and physical condition, and actual life expectancy.
- Family circumstances, living arrangements, and responsibilities to dependents.
- Financial condition, including all sources of income, debts and living expenses.
- Reasonableness of plan for investing the lump sum proceeds and ability to manage invested funds or arrangement for management by others.
Steinmetz v. State, DOC Star Academy, 2008 S.D. 87, ¶ 11, 756 N.W.2d 392, 396-97 (quoting Enger v. FMC, 2000 S.D. 48, ¶ 13, 609 N.W.2d 132, 135). Lagler is 58 years old, is in relatively good health, has a life expectancy of 83, and still has several years before she could begin receiving Social Security retirement benefits at age 62. She has a high-school diploma, and she attended cosmetology school. She does not have any dependents to support, and because she is living in a home owned by her daughter, Lagler is no longer in danger of losing her home. Due in part to the circumstances of this case, Lagler has several debts, including creditor judgments totaling several thousand dollars, loans from family members totaling at least $10,000, and unpaid medical bills totaling $40,160. Lagler‘s most current financial data at the time of the third hearing before the Department indicated that her annual income was approximately $21,000.9 She contends that she has an investment plan that will “sustain her for several years.”
[¶53.] While the Department granted Lagler‘s request for a lump-sum award,
[¶54.] The circuit court did not err by reversing the Department‘s decision to award Lagler a lump-sum payment. None of the factors listed above, see supra ¶ 52, supports a lump-sum award. Considering Lagler‘s health and life expectancy, her PTD compensation will need to serve as a substitute for wages for decades to come, but because of the problems highlighted by the court, her proposed investment plan does not guarantee the same longevity. Lagler does not have any dependents, and she now has stable housing. Moreover, the amount Lagler will receive in past-due TTD payments will cover her existing debts and other immediate needs. And because Lagler is entitled to recover her attorney‘s fees, she will not have those to worry about either. Thus, as the circuit court concluded, “[c]onsidering the payment of TTD to cover [Lagler‘s] debts and purchase a home, the shortcomings of the investment plan, and the unknown effect on her social security disability, a lump-sum payment of PTD benefits is not in [Lagler‘s] best interests.”
4. Whether the circuit court erred by declining to award additional costs to Lagler.
[¶56.] Finally, Lagler claims the circuit court erred in denying her request to tax additional disbursements under
[¶57.] Even if Lagler had presented argument and authority on this issue, the record supports the circuit court‘s denial of Lagler‘s request. Of the $7,443 that Lagler requested after the second appeal, $6,620 was incurred prior to the trial before the Department. In those initial proceedings, Lagler already requested the Department tax those costs as disbursements against Menard and Zurich. The Department denied Lagler‘s request. It is undisputed that
[¶58.] The remaining $823 of Lagler‘s request relates to costs incurred during appellate and remand proceedings. The taxation of disbursements under
Conclusion
[¶59.] The circuit court did not err by affirming the Department‘s decision to award Lagler permanent-total-disability compensation. Nor did the court err by reversing the Department‘s decision to deny Lagler‘s request for attorney‘s fees. The court correctly determined that Lagler was not entitled to a lump-sum award. Finally, the court did not err by denying Lagler‘s request for taxation of expenditures.
[¶60.] We affirm.
[¶61.] ZINTER and JENSEN, Justices, concur.
[¶62.] SEVERSON, Retired Justice, and KERN, Justice, concur in part and concur in result in part.
SEVERSON, Retired Justice (concurring in part and concurring in result in part).
[¶63.] Although I agree that, in this case, Lagler‘s “community” is Winner rather than Sioux Falls, I do not believe this Court should broadly state that “the availability of regular, suitable work in Sioux Falls is not relevant to the question whether Lagler is permanently, totally disabled.” Majority Opinion ¶ 27. Indeed, the word community is defined as “the area within sixty road miles of the employee‘s residence,” and Lagler lives in Winner, which is not within 60 miles of Sioux Falls. See
[¶64.] Further, although I agree that there are limits to an employee‘s right to relocate and receive workers’ compensation,
[¶65.] Therefore, the proper inquiry is whether Lagler‘s “change of community was done in good faith, and not for improper motives[.]” Reede, 2000 S.D. 157, ¶ 20, 620 N.W.2d at 376. Indeed, the record reveals that the Department examined Lagler‘s motive and whether the move was done in good faith. It concluded that Lagler‘s move to Winner “was done in good faith and not to withdraw from the Sioux Falls job market or to collect workers’ compensation benefits.” The Department found: (1) Lagler‘s “move provided her with a place to live and the emotional support she needed at the time from her family“; (2) Lagler was not required to enter bankruptcy before choosing to move; (3) Lagler was not required to sacrifice her safety and comfort; and (4) Lagler was not required to explore all options that would allow her to stay in Sioux Falls before she chose to move to Winner. Because the Department examined whether Lagler‘s move to Winner was done in good faith and not for improper motives, and Menard has not established that the Department‘s findings are clearly erroneous, I would affirm the Department‘s conclusion that Lagler‘s “community” is Winner.
[¶66.] Nevertheless, Menard also claims that the Department erred when it concluded that Lagler is obviously unemployable in her community. On this claim, the Majority Opinion declares that ”
[¶67.] Thus, to address Menard‘s claims, the inquiry on appeal is whether the Department erred when it held that Lagler is obviously unemployable. This Court has said that a “claimant has two avenues to make the required prima facie showing for inclusion in the odd-lot category[.]” Fair v. Nash Finch Co., 2007 S.D. 16, ¶ 19, 728 N.W.2d 623, 632. First, a claimant may show “obvious unemployability” by: “(1) showing that his ‘physical condition, coupled with his education, training and age make it obvious that he is in the odd-lot total disability category,’ or (2) persuading the trier of fact that he is in fact in the kind of continuous, severe and debilitating pain which he claims.” Id. (quoting Kassube, 2005 S.D. 102, ¶ 34, 705 N.W.2d at 468). Here, Lagler showed obvious unemployability under the first avenue.
[¶69.] Because Menard has not established that the Department erred when it held that Lagler showed that her physical condition, coupled with her education, training, and age, made it obvious that she is unemployable in Winner, we need not examine whether Lagler engaged in a reasonable, good faith search for work in Winner. (See, e.g., Majority Opinion ¶ 30). We similarly need not examine Menard‘s claim that Lagler was required to produce expert testimony that she is unable to benefit from vocational rehabilitation or that the same is not feasible. (See, e.g., Majority Opinion ¶ 31). For these reasons, I concur in result only on issue one.
[¶70.] On issue two, I also concur in result only. I agree that the circuit court had subject matter jurisdiction over the Department‘s decisions, rulings, and actions because of Menard‘s notice of appeal from the same. However, based on a reading of the statutes governing administrative appeals and this Court‘s past cases, an appellee‘s filing of a statement of additional issues under
[¶71.]
[¶72.] In regard to how an appeal may be taken by an appellant,
[¶73.] We have said that an appellant‘s failure to file a statement of issues is not a jurisdictional defect so long as the appellant has timely filed a notice of appeal. But we have never said that an appellee‘s filing of a statement of additional issues preserves the right to obtain review despite the appellee‘s failure to file a notice of
[¶74.] To conclude, as the Majority Opinion has, that an appellee need not comply with
[¶75.] More specifically, the record reveals that in June 2015, the Department issued findings of fact and conclusions of law denying Lagler‘s request for an award of attorney fees. Menard appealed the Department‘s decision to the circuit court. Lagler did not file a notice of review in response to Menard‘s appeal but submitted a statement of additional issues and asserted that the Department erred when it denied Lagler‘s request for an award of attorney fees. Lagler then briefed the issue to the circuit court. Menard responded to Lagler‘s argument in its reply brief. Menard did not allege that Lagler failed to file a notice of review and thus waived the right to obtain review. Instead, Menard fully briefed and argued against Lagler‘s claims.
[¶76.] In February 2016, the circuit court issued a memorandum decision addressing the issues raised by Menard and Lagler. On Lagler‘s attorney fee issue, the court held that Lagler “is entitled to have her attorneys’ fees paid by Employer/Insurer.” After addressing all issues, the circuit court affirmed the Department‘s decision in part, reversed in part, and remanded in part. Following remand, the Department issued a decision. In addition to addressing other matters on remand, the Department entered an order awarding Lagler attorney fees at “30% of the disputed amount ($66,327.32) plus costs and sales tax.” Lagler appealed the Department‘s June 2016 Order Following Remand as well as the Department‘s previous orders entered prior to the first appeal. In her statement of issues to the circuit court, Lagler asserted, among other issues, that “Department erred in its application of law and/or calculation of the amount of attorney fees and expenses awarded to Claimant pursuant to
[¶77.] In July 2016, Menard, for the first time, challenged the circuit court‘s jurisdiction to consider Lagler‘s attorney fee issue. Menard filed a motion to dismiss Lagler‘s appeal, claiming that because Lagler failed to file a notice of review in the previous appeal to the circuit court after the Department‘s June 2015 decision, Lagler failed to preserve the issue for the circuit court‘s review. See
[¶78.] In January 2017, the circuit court issued a memorandum decision. It noted that although Lagler did not file a notice of review in response to Menard‘s notice of appeal, Menard did not object in the previous
[¶79.] On appeal to this Court, Menard avers that Lagler‘s failure to file a notice of review is a jurisdictional defect, which issue Menard claims can be raised anytime. On the contrary, as stated above, the requirement to file a notice of review is not jurisdictional; it is procedural. As a procedural rule, waiver is not necessarily automatic. See, e.g., State v. Gard, 2007 S.D. 117, ¶¶ 15-16, 742 N.W.2d 257, 261 (waived issues may nonetheless be addressed); In re J.D.M.C., 2007 S.D. 97, ¶ 27, 739 N.W.2d 796, 805 (the “rule is procedural and we have discretion to ignore the rule when faced with a compelling case“); Nature‘s 10 Jewelers v. Gunderson, 2002 S.D. 80, ¶ 19, 648 N.W.2d 804, 808-09 (Konenkamp, J., dissenting); Sharp v. Sharp, 422 N.W.2d 443, 445-46 (S.D. 1988) (“We must, however, emphasize this is merely a rule of procedure and not a matter of jurisdiction.“). Therefore, although Lagler did not file a notice of review and that failure would ordinarily result in a waiver of the right to obtain review, no such waiver exists under the circumstances of this case.
[¶80.] Therefore, I agree in result that “the court did not err by reviewing the Department‘s denial of Lagler‘s request for attorney‘s fees.” Majority Opinion ¶ 43.
[¶81.] KERN, Justice, joins this special writing.