Stuckey v. Sturgis Pizza RanchStuckey v. Sturgis Pizza Ranch
[¶ 1.] Michele Stuckey initiated this workers’ compensation proceeding to secure future benefits for a work-related injury. The Department of Labor did not award Stuckey a lump sum of future disability benefits, but it did award a partial lump sum to cover her attorney’s fees, costs, and litigation expenses. It also approved a life care plan for Stuckey’s future medical care. The circuit court reversed the Department’s denial of a lump sum award of future disability benefits but affirmed all other aspects of the Department’s decision. We affirm in part, reverse in part, and remand.
BACKGROUND
[¶ 2.] Stuckey was employed by the Pizza Ranch restaurant (Employer) in Sturgis, South Dakota. Stuckey suffered a work-related injury on October 8, 2003, when her left hand was crushed in a machine used to flatten pizza dough. She returned to work following the injury and worked until February 23, 2004. By that time, her condition had deteriorated significantly, and she was diagnosed with Reflex Sympathetic Dystrophy and Complex Regional Pain Syndrome. As a result of her injury, Stuckey is unable to care for herself, her family, and her residence. She
[¶ 3.] At the time of her injury, Stuck-ey was the primary wage-earner for her family and the sole caretaker of her thirteen-year-old daughter and disabled husband. Her gross weekly wage was $298.52, and her net weekly wage was approximately $250. Based on the date of her injury, Stuckey’s weekly workers’ compensation rate is now $249, which Employer has consistently paid. Stuckey receives an additional $97 per month from Social Security. Her current sources of income include her weekly workers’ compensation benefits, Medicare benefits, and Social Security benefits payable to her, her husband, and her daughter. Although her weekly workers’ compensation benefits are not taxed, they partially offset her Social Security benefits.
[¶ 4.] In March 2004, Stuckey retained an attorney to represent her concerning product liability and workers’ compensation matters. In August 2004, Stuckey’s attorney filed a petition for hearing with the Department. Stuckey alleged that she is unable to return to work due to her injury and requested “medical benefits and disability benefits as may be determined by the Department.” In November 2005, after she served her petition and a request for admissions, Employer agreed that Stuckey is permanently and totally disabled. In January 2006, the Department entered an order declaring Stuckey permanently and totally disabled and entitled to lifetime benefits under
[¶ 5.] The case continued to resolve several issues, including:
1. Whether Stuckey is entitled to a lump sum award of future disability benefits underSDCL 62-7-6 .
2. Whether Stuckey is entitled to a partial lump sum award of future disability benefits to cover her attorney’s fees, costs, and litigation expenses underSDCL 62-7-6 .
3. Whether the Department erred by approving a life care plan for Stuck-ey’s future medical care.
In January 2008, Stuckey filed a partial motion for directed decision requesting approval of a life care plan. In March 2008, the Department granted Stuckey’s motion but determined that genuine issues of material fact existed as to the reasonableness and medical necessity of two treatments in the life care plan. The Department addressed the remaining issues in April 2009. The Department did not award Stuckey a lump sum of future disability benefits, but it did award a partial lump sum to cover her attorney’s fees, costs, and litigation expenses. The circuit court reversed the Department’s denial of a lump sum award of future disability benefits but affirmed all other aspects of the Department’s decision. Employer appeals.
ANALYSIS AND DECISION
[¶ 6.] 1. Whether Stuckey is entitled to a lump sum award of future disability benefits under
[¶ 7.] Employer argues that the Department erred by awarding Stuckey a lump sum of future disability benefits under
Since compensation is a segment of a total income insurance system, it ordinarily does its share of the job only if it can be depended on to supply periodic income benefits replacing a portion of lost earnings. If a ... totally disabled worker gives up these reliable periodic payments in exchange for a large sum of cash immediately in hand, experience has shown that in many cases the lump sum is soon dissipated and the [worker] is right back where [she] would have been if [workers’] compensation had never existed.
Id.
¶ 8,
[¶ 8.] But
[¶ 9.] The issue whether a lump sum award is in Stuckey’s immediate best interest has not been raised by the parties on appeal. We therefore turn to the question whether Stuckey established exceptional financial need. The circuit court, relying on Stuckey’s unique circumstances and the reduction of her income following her injury, reversed the Department’s conclusion that she failed to establish exceptional financial need:
There is no dispute that [Stuckey] has suffered a profound disability. Before the injury, [Stuckey] was the sole breadwinner for her family. As the result of her injury, [Stuckey] has lost the capacity to provide necessities for herself, her teenage daughter, and her husband who also suffers a disability.... As a result of her injury, [Stuckey’s] income has been reduced. At the time of her injury, [Stuckey] was making $298.52 per week or $1,293.59 per month.... [Stuckey’s] weekly workers’ compensation amount is $249, which is $1,079 per month.... The report of Doris Eizem-ber reveals that [Stuckey] receives an additional $97 per month from Social Security. With that amount, [Stuckey’s] monthly income is $1,176. This means [Stuckey’s] post-injury income is $117.59 less per month than prior to her injury and $1,411.08 less per year. In its April 6, 2009, Decision, the Department found that [Stuckey’s] income did not substantially decrease. Likewise, [Employer] argues [Stuckey’s] income “really did not even decrease.” However, [Stuck-ey’s] decrease in monthly income as a result of her injury is nearly 10%. While this percent decrease may not be substantial to a person who was making $5,000 a month prior to injury, that is not the case for a person in the position of [Stuckey].
[¶ 10.] The circuit court reviewed the Department’s denial of a lump sum award of future disability benefits under the de novo standard of review. But to clarify, the determination whether to award a lump sum is a mixed question of law and fact and requires a compound inquiry.
Steinmetz,
[¶ 11.] Different standards of review apply to these two inquiries. The Department’s findings of fact are, of course, reviewed under the clearly erroneous standard.
See
If application of the rule of law to the facts requires an inquiry that is ‘essentially factual’ — one that is founded ‘on the application of the fact-finding tribunal’s experience with the mainsprings of human conduct’ — the concerns of judicial administration will favor the [Department], and the [Department’s] determination should be classified as one of fact reviewable under the clearly erroneous standard. If, on the other hand, the question requires us to consider legal concepts in the mix of fact and law and to exercise judgment about the values that animate legal principles, then the concerns of judicial administration will favor the appellate court, and the question should be classified as one of law and reviewed de novo.
Darling,
[¶ 12.] The circuit court made additional findings of fact concerning exceptional financial need.
See
[¶ 13.] 2. Whether Stuckey is entitled to a partial lump sum award of future disability benefits to cover her attorney’s fees, costs, and litigation expenses under
[¶ 14.] Employer argues that the Department erred by awarding Stuckey a partial lump sum of future disability benefits to cover her attorney’s fees, costs, and litigation expenses.
Except as otherwise provided, fees for legal services under this title shall be subject to approval of the [Department.
AttorneyPs] fees may not exceed the percentage of the amount of compensation benefits secured as a result of the attorney’s involvement as follows:
1) Twenty-five percent of the disputed amount arrived at by settlement of the parties;
2) Thirty percent of the disputed amount awarded by the Department ... after hearing or through appeal to circuit court;
3) Thirty-five percent of the disputed amount awarded if an appeal is successful to the Supreme Court.
AttorneyPs] fees and costs may be paid in a lump sum on the present value of the settlement or adjudicated amount.
And
[¶ 15.] The question whether Stuckey is entitled to a partial lump sum award to cover her attorney’s fees, costs, and litigation expenses is also a mixed question of law and fact that requires a compound inquiry.
See Enger,
2000 S.D.
[¶ 16.] Employer argues that the Department erred by awarding Stuckey a partial lump sum because her attorney did not “secure” “disputed” disability benefits as required by
[¶ 17.] 3. Whether the Department erred by approving a life care plan for Stuckey’s future medical care.
[¶ 18.] In May 2006, Linda Graham prepared a health care cost evaluation, outlining Stuckey’s physical limitations and detailing the estimated costs of the medical services Stuckey will need for the remainder of her life. In April 2007, Graham prepared an updated evaluation or life care plan, providing that the Sandstone Villa Care Community in Spearfish, South Dakota, is an appropriate place for Stuckey to live and receive medical attention. It also shows the estimated costs of living at Sandstone, medications, treatments, psychological support, and other therapies for the remainder of Stuckey’s life. The total estimated cost of the life care plan is $2,883,960. The Department approved the course of treatment set forth in Stuckey’s life care plan, and the circuit court affirmed.
[¶ 19.] In January 2008, Stuckey filed a partial motion for directed decision on the life care plan issue. The Department treated Stuckey’s motion as a motion for summary judgment and granted it. Employer challenges the Department’s approval of the life care plan on three procedural grounds: 3 (1) that summary judgment is a pretrial motion that was improperly utilized in a post-trial situation; (2) that it was error for an administrative law judge who did not hear the case to rule on Stuckey’s motion; and, (3) that summary judgment was improperly granted because genuine issues of material fact existed. We address each of these procedural arguments in turn.
[¶ 20.] Employer argues that the Department improperly treated Stuckey’s motion as a motion for summary judgment. In so doing, the Department relied on ARSD 47:03:01:08, which provides:
A claimant or an employer or its insurer may, anytime after expiration of 30 days from the filing of a petition, move with supporting affidavits for a summary judgment. The [Division shall grant the summary judgment immediately if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Employer, relying on
[¶ 21.] Employer further argues that it was error for an administrative law judge who did not hear the case to rule on Stuckey’s motion. In August 2007, an evi-dentiary hearing was held in this case before Administrative Law Judge Elizabeth Fullenkamp. Stuckey thereafter filed her motion. In March 2008, James Marsh, the Director of the Department’s Division of Labor and Management, entered a decision on Stuckey’s motion. To support its argument, Employer cites
If by reason of death, sickness, or other disability or separation from office, a judge before whom an action has been tried is unable to perform the duties to be by him performed after a verdict is returned or findings of fact and conclusions of law are filed, then any other judge regularly sitting in or assigned to the court in which the action was tried may perform those duties; but if such other judge is satisfied that he cannot perform those duties because he did not preside at the trial or for any other reason, he may, in his discretion, grant a new trial.
See Quist v. Leapley,
[¶ 22.] Employer finally argues that the Department erred by granting Stuckey’s summary judgment motion on the life care plan issue when it found that genuine issues of material fact existed on two issues. The Department granted Stuckey’s motion “with the exception that genuine issues of material fact exist[ed] as to the appropriateness of a hot tub and treadmill.” There was no dispute that a treadmill and hydrotherapy were reasonable and necessary medical treatments for Stuckey. Rather, the dispute was whether a hot tub and an enclosure should be placed in Stuckey’s home. The fact that a dispute existed as to this issue did not prohibit the Department from granting Stuckey’s summary judgment motion on the remaining issues concerning the life care plan.
Substantive Issue
[¶ 23.]
The employer shall provide necessary first aid, medical, surgical, and hospital services, or other suitable and proper care including medical and surgical supplies, apparatus, artificial members, and body aids during the disability or treatment of an employee within the provisions of this title.... The employee shall have the initial selection to secure the employee’s own physician, surgeon, or hospital services at the employer’s expense!.]
[¶ 24.] The parties, the Department, and the circuit court confused the record in this case by using the term “life care plan.” This term is borrowed from tort law. Life care plans are used primarily in personal injury cases where a jury must render a verdict forecasting future costs of medical expenses.
See Hebert v. Shelton,
[¶ 25.] In its memorandum decision, the circuit court repeatedly referred to the Department’s decision to “award” the life care plan. Employer thus argues that Stuckey’s life care plan is effectively a lump sum award of future medical expenses and is not authorized by South Dakota’s workers’ compensation law. Employer also contends that a lump sum award of future medical expenses presents the risk that those resources will be quickly exhausted, leaving Stuckey in precisely the same position she would be in if workers’ compensation did not exist.
See, e.g., Steinmetz,
[¶ 26.] Courts in other jurisdictions have similarly referred to “awards” of future medical expenses, but they are not “awards” at all. Those courts recognize that injured employees have a statutory right to the continuous payment of the medical expenses related to their work-related injuries, but they are not entitled to a lump sum payment of their future medical expenses.
See
Larson’s Workers’ Compensation Law § 94.01[5], 9-11 (2006) (citing
Polavarapu v. Gen. Motors Corp.,
[¶27.] There is little dispute in this case, if any, that some course of future treatment is reasonable and medically necessary. On that issue, the experts agreed. The Department thus approved the course of treatment set forth in the life care plan as reasonable and medically necessary but did not “award” a lump sum for the future medical expenses associated with it. In South Dakota, as in other jurisdictions, injured employees have a statutory right to the payment of the ongoing medical expenses related to their work-related injuries, but they are not entitled to a lump sum payment of those expenses.
See
Larson’s Workers’ Compensation Law § 94.01[5], 9-11. An injured employee’s medical expenses are to be paid as they are incurred.
See id.
When Stuckey incurs medical expenses in the future, Employer may reimburse her or challenge the expenses as not necessary or suitable and proper under
[II28.] Affirmed in part, reversed in part, and remanded.
Notes
.
An employer or employee who desires to have any unpaid compensation paid in a lump sum may petition the Department of Labor asking that the compensation be paid in that manner. If, upon proper notice to interested parties and proper showing before the [Department, it appears in the best interests of the employee that the compensation be paid in a lump sum, the [Secretary of [LJabor may order the commutation of the compensation to an equivalent lump-sum amount. That amount shall equal the total sum of the probable future paymentscapitalized at their present value on the basis of interest calculated at a rate per year set by the [DJepartment with annual rests in accordance with rules promulgated pursuant to chapter 1-26. If there is an admission or adjudication of permanent total disability, the [Secretary may order payment of all or part of the unpaid compensation in a lump sum under the following circumstances:
(1) If the employee has exceptional financial need that arose as a result of reduced income due to the injury; or
(2) If necessary to pay the attorney's fees, costs and expenses approved by the [D]e-partment under§ 62-7-36 .
If a partial lump sum payment is made, the amount of the weekly benefit shall be reduced by the same percentage that the partial lump sum bears to the total lump sum computation. The remaining weekly benefit is subject to the cost of living allowance provided by§ 62-4-7 . Any compensation due to beneficiaries under §§ 62-4-12 to 62-4-22, inclusive, may not be paid in a lump sum, except for the remarriage lump sum provided in § 62-4-12.
. The Department found that Stuckey “is unable to pay her attorney’s fees and expenses without a partial lump sum award” and that "a partial lump sum award for attorney’s fees will eliminate the offset for [Stuckey’s] [Social [S]ecurity benefits.” The Department therefore concluded that a partial lump sum award was necessary and in Stuckey’s best interest. On appeal, Employer has not argued that these findings and conclusions were error.
. Stuckey argues that these procedural arguments should be deemed waived because Employer did not present these arguments or provide authority for them in the proceedings before the Department. It is true that "[a]n issue not raised at the [Department] level cannot be raised for the first time on appeal.”
Action Mech., Inc. v. Deadwood Historic Pres. Comm’n,
.
A party seeking to recover upon a claim, counterclaim, or cross-claim or to obtain a declaratory judgment may, at any time after the expiration of thirty days from the commencement of the action or after service of a motion for summary judgment by the adverse party, move with or without supporting affidavits for a summary judgment in his favor upon all or any part thereof.
.
(1) If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue.
(2) Motions for judgment as a matter of law may be made at any time before submission of the case to the jury. Such a motion shall specify the judgment sought and the law and the facts on which the moving party is entitled to the judgment.
.
Any payment, including medical payments under§ 62-4-1 , ... made or to be made under this title may be reviewed by the Department of Labor pursuant to § 62-7-12 at the written request of the employer or of the employee and on such review payments may be ended, diminished, increased, or awarded subject to the maximum or minimum amounts provided for in this title, if the [Department finds that a change in the condition of the employee warrants such action. Any case in which there has been a determination of permanent total disability may be reviewed by the [Department not less than every five years.