SEVERSON, Justice.
[¶ 1.] Michele Stuckey initiated this workers' compensation proceeding to secure future benefits for a work-related injury. The Department of Labor did not award Stuckey a lump sum of future disability benefits, but it did award a partial lump sum to cover her attorney's fees, costs, and litigation expenses. It also approved a life care plan for Stuckey's future medical care. The circuit court reversed the Department's denial of a lump sum award of future disability benefits but affirmed all other aspects of the Department's decision. We affirm in part, reverse in part, and remand.
[¶ 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, Stuckey was the primary wage-earner for her family and the sole caretaker of her thirteen-year-old daughter and disabled husband. Her gross weekly wage was $298.52, and her net weekly wage was approximately $250. Based on the date of her injury, Stuckey's weekly workers' compensation rate is now $249, which Employer has consistently paid. Stuckey receives an additional $97 per month from Social Security. Her current sources of income include her weekly workers' compensation benefits, Medicare benefits, and Social Security benefits payable to her, her husband, and her daughter. Although her weekly workers' compensation benefits are not taxed, they partially offset her Social Security benefits.
[¶ 4.] In March 2004, Stuckey retained an attorney to represent her concerning product liability and workers' compensation matters. In August 2004, Stuckey's attorney filed a petition for hearing with the Department. Stuckey alleged that she is unable to return to work due to her injury and requested "medical benefits and disability benefits as may be determined by the Department." In November 2005, after she served her petition and a request for admissions, Employer agreed that Stuckey is permanently and totally disabled. In January 2006, the Department entered an order declaring Stuckey permanently and totally disabled and entitled to lifetime benefits under SDCL 62-4-7.
[¶ 5.] The case continued to resolve several issues, including:
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.
[¶ 6.]
[¶ 7.] Employer argues that the Department erred by awarding Stuckey a lump sum of future disability benefits under SDCL 62-7-6.
Id. ¶ 8, 756 N.W.2d at 395 (quoting Enger v. F.M.C., 2000 S.D. 48, ¶ 11, 609 N.W.2d 132, 135). Lump sum awards "must be made in accordance with the goal of preserving future wage replacement benefits." Thomas, 511 N.W.2d at 581. Ultimately, "[t]he allowance of a lump sum award is the exception and not the general rule." Steinmetz, 2008 S.D. 87, ¶ 8, 756 N.W.2d at 395 (quoting Enger, 2000 S.D. 48, ¶ 11, 609 N.W.2d at 135).
[¶ 8.] But SDCL 62-7-6 does allow for a lump sum award of future disability benefits in certain circumstances. First, an injured employee must establish that a lump sum award is in her best interest. SDCL 62-7-6(1). Second, in the case of an injured employee who is permanently and totally disabled, a lump sum may be awarded if she establishes that she has an "exceptional financial need that arose as a result of reduced income due to the injury" or that a lump sum award is "necessary to pay attorney's fees, costs, and expenses." SDCL 62-7-6(2). The injured employee bears the ultimate burden of proving all facts essential to sustaining an award of compensation by a preponderance of the evidence. Darling v. W. River Masonry, Inc., 2010 S.D. 4, ¶ 11, 777 N.W.2d 363, 367 (citing Titus v. Sioux Valley Hosp., 2003 S.D. 22, ¶ 11, 658 N.W.2d 388, 390).
[¶ 9.] The issue whether a lump sum award is in Stuckey's immediate best interest has not been raised by the parties on appeal. We therefore turn to the question whether Stuckey established exceptional financial need. The circuit court, relying on Stuckey's unique circumstances and the reduction of her income following her injury, reversed the Department's conclusion that she failed to establish exceptional financial need:
[¶ 10.] The circuit court reviewed the Department's denial of a lump sum award of future disability benefits under the de novo standard of review. But to clarify, the determination whether to award a lump sum is a mixed question of law and fact and requires a compound inquiry. Steinmetz, 2008 S.D. 87, ¶ 6, 756 N.W.2d at 395; Enger, 2000 S.D. 48, ¶ 10, 609 N.W.2d at 134. See Stockwell v. Stockwell, 2010 S.D. 79, ¶ 15, 790 N.W.2d 52, 58. We are asked to review not only the Department's factual findings concerning exceptional financial need but also the Department's application of that legal standard to the facts.
[¶ 11.] Different standards of review apply to these two inquiries. The Department's findings of fact are, of course, reviewed under the clearly erroneous standard. See SDCL 1-26-36(5). But the standard of review for the second inquiry—the application of law to fact—depends on the nature of the inquiry:
Darling, 2010 S.D. 4, ¶ 10, 777 N.W.2d at 366 (quoting McNeil v. Superior Siding, Inc., 2009 S.D. 68, ¶ 6, 771 N.W.2d 345, 347-48 (quoting Permann v. S.D. Dep't of Labor, 411 N.W.2d 113, 119 (S.D. 1987) (quoting United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.1984)))). In reviewing the application of the exceptional financial need standard to the facts, the concerns of judicial administration favor the appellate court. After all, the determination whether to award a lump sum of future disability benefits requires this Court to balance the public policy concerns underlying South Dakota's workers' compensation
[¶ 12.] The circuit court made additional findings of fact concerning exceptional financial need. See SDCL 1-26-36 ("A court shall enter its own findings of fact and conclusions of law or may affirm the findings and conclusions entered by the agency as part of its judgment."). In making those additional findings, the circuit court failed to recognize that while Stuckey's weekly wages were taxed, her weekly workers' compensation benefits are not. Before her injury, Stuckey's net weekly wages averaged approximately $250. Currently, her weekly workers' compensation benefits are approximately $249. Thus, Stuckey's income remained virtually the same, and Stuckey has not established that her present financial circumstances have arisen as a result of her work-related injury. See Steinmetz, 2008 S.D. 87, ¶ 10, 756 N.W.2d at 396. Additionally, "[r]educed income alone is not sufficient to show `exceptional financial need.'" Id. ¶ 12 n. 3, 756 N.W.2d at 397 n. 3. On these facts, the Department did not err by concluding that Stuckey failed to establish exceptional financial need that arose as a result of reduced income due to her injury. Therefore, we reverse the circuit court on this issue.
[¶ 13.]
[¶ 14.] Employer argues that the Department erred by awarding Stuckey a partial lump sum of future disability benefits to cover her attorney's fees, costs, and litigation expenses. SDCL 62-7-36 contemplates that an attorney representing an injured employee is entitled to attorney's fees representing a percentage of the compensation he obtains for his client:
And SDCL 62-7-6 authorizes a lump sum award to cover attorney's fees when necessary and in the injured employee's best interest. The purpose of a partial lump sum for attorney's fees is to ensure that injured employees will be able "to employ competent legal representation to secure all compensation to which they are legally entitled." Enger, 2000 S.D. 48, ¶ 29, 609 N.W.2d at 138. After all, "[i]f attorneys [were] denied fees for work prosecuted on behalf of an injured worker, there would be a chilling effect upon the ability of an injured party to obtain adequate representation." Stanton v. Hills Materials Co., 1996 S.D. 109, ¶ 20, 553 N.W.2d 793, 797 (Gilbertson, J., concurring).
[¶ 15.] The question whether Stuckey is entitled to a partial lump sum award to cover her attorney's fees, costs, and litigation expenses is also a mixed question of law and fact that requires a compound inquiry. See Enger, 2000 S.D.
[¶ 16.] Employer argues that the Department erred by awarding Stuckey a partial lump sum because her attorney did not "secure" "disputed" disability benefits as required by SDCL 62-7-36. The Department made several findings concerning the involvement of Stuckey's attorney in this case. The Department found that her attorney collected medical proof of disability, deposed doctors, and retained an expert to prepare a plan for her future medical care. The Department also found that her attorney's "involvement in this matter [was] extensive and thorough" and that "[d]ue to [his] involvement, [Stuckey] received a determination that she is permanently and totally disabled." As to the argument that Stuckey's benefits were not disputed, the Department found that her attorney "repeatedly asked [Employer] to admit that [she] was disabled" and that Employer did not agree that Stuckey was disabled until November 2005. Given her attorney's work on this case, the Department concluded that "[a]n award of attorney's fees, as permitted by the statute, of thirty-percent . . . is reasonable and justified." The Department's findings of fact concerning attorney's fees are not clearly erroneous. On these facts, the Department did not abuse its discretion by awarding Stuckey a partial lump sum of thirty percent to cover her attorney's fees, costs, and litigation expenses.
[¶ 17.]
[¶ 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:
[¶ 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:
Employer, relying on SDCL 15-6-56(a),
[¶ 21.] Employer further argues that it was error for an administrative law judge who did not hear the case to rule on Stuckey's motion. In August 2007, an evidentiary hearing was held in this case before Administrative Law Judge Elizabeth Fullenkamp. Stuckey thereafter filed her motion. In March 2008, James Marsh, the Director of the Department's Division of Labor and Management, entered a decision on Stuckey's motion. To support its argument, Employer cites SDCL 15-6-63:
See Quist v. Leapley, 486 N.W.2d 265 (S.D.1992); Hinman v. Hinman, 443 N.W.2d 660 (S.D.1989). By contrast, ARSD 47:03:01:08 provides that "the [D]ivision," and not a particular administrative law judge, "shall grant the summary judgment[.]" It is also important that no doctors testified at the hearing and their deposition testimony was available for Director Marsh's review. For these reasons, it was not error for Director Marsh, an employee of the Division, to rule on Stuckey's motion.
[¶ 22.] Employer finally argues that the Department erred by granting Stuckey's summary judgment motion on the life care plan issue when it found that genuine issues of material fact existed on two issues. The Department granted Stuckey's motion "with the exception that genuine issues of material fact exist[ed] as to the appropriateness of a hot tub and treadmill." There was no dispute that a treadmill and hydrotherapy were reasonable and necessary medical treatments for Stuckey. Rather, the dispute was whether a hot tub and an enclosure should be placed in Stuckey's home. The fact that a dispute existed as to this issue did not prohibit the Department from granting Stuckey's summary judgment motion on the remaining issues concerning the life care plan.
[¶ 23.] SDCL 62-4-1 governs an employer's obligation to pay an injured employee's medical expenses for treatment of a work-related injury. This statute provides in part:
SDCL 62-4-1. In interpreting this statute, we have stated that "[i]t is in the doctor's province to determine what is necessary
[¶ 24.] The parties, the Department, and the circuit court confused the record in this case by using the term "life care plan." This term is borrowed from tort law. Life care plans are used primarily in personal injury cases where a jury must render a verdict forecasting future costs of medical expenses. See Hebert v. Shelton, 11 So.3d 1197, 1206 (La.Ct.App.2009) ("Our research reveals that the overwhelming majority of cases involving life care plans are not workers' compensation cases; rather, the life care plan is most often used to show an element of damages for future care costs in a tort suit."). Personal injury cases and workers' compensation proceedings differ significantly. After all, unlike an injured employee, injured parties in a tort suit do not have the statutory right to the continuous payment of medical expenses. See SDCL 62-4-1. The term "life care plan" is not used in South Dakota's workers' compensation statutes. Consequently, the use of the term "life care plan" in workers' compensation proceedings only adds confusion.
[¶ 25.] In its memorandum decision, the circuit court repeatedly referred to the Department's decision to "award" the life care plan. Employer thus argues that Stuckey's life care plan is effectively a lump sum award of future medical expenses and is not authorized by South Dakota's workers' compensation law. Employer also contends that a lump sum award of future medical expenses presents the risk that those resources will be quickly exhausted, leaving Stuckey in precisely the same position she would be in if workers' compensation did not exist. See, e.g., Steinmetz, 2008 S.D. 87, ¶ 8, 756 N.W.2d at 395 (quoting Enger, 2000 S.D. 48, ¶ 11, 609 N.W.2d at 135). But a review of the record reveals that the Department only considered whether the course of treatment set forth in the life care plan was reasonable and medically necessary. The Department approved the course of treatment as reasonable and medically necessary but did not "award" a lump sum for the future medical expenses associated with it.
[¶ 26.] Courts in other jurisdictions have similarly referred to "awards" of future medical expenses, but they are not "awards" at all. Those courts recognize that injured employees have a statutory right to the continuous payment of the medical expenses related to their work-related injuries, but they are not entitled to a lump sum payment of their future medical expenses. See Larson's Workers' Compensation Law § 94.01[5], 9-11 (2006) (citing Polavarapu v. Gen. Motors Corp., 897 S.W.2d 63, 66 (Mo.Ct.App.1995); Reed v. S. Baptist Hosp., 541 So.2d 233, 235 (La.Ct.App.1989) (An injured employee "is not entitled to an award for future medical expenses, but the right to claim such medical expenses is always reserved to [him]."); Andersen v. Eagle Asbestos Co., 355 So.2d 1082, 1083 (La.Ct.App.1978) ("The settled rule is that a workmen's compensation claimant is not entitled to an award for future medical expenses, but the right to claim such expenses is always reserved to him, even though defendant's liability for them arises only when they are incurred.")). See also SDCL 62-4-1. We find no case law awarding an injured employee
[¶ 27.] There is little dispute in this case, if any, that some course of future treatment is reasonable and medically necessary. On that issue, the experts agreed. The Department thus approved the course of treatment set forth in the life care plan as reasonable and medically necessary but did not "award" a lump sum for the future medical expenses associated with it. In South Dakota, as in other jurisdictions, injured employees have a statutory right to the payment of the ongoing medical expenses related to their work-related injuries, but they are not entitled to a lump sum payment of those expenses. See Larson's Workers' Compensation Law § 94.01[5], 9-11. An injured employee's medical expenses are to be paid as they are incurred. See id. When Stuckey incurs medical expenses in the future, Employer may reimburse her or challenge the expenses as not necessary or suitable and proper under SDCL 62-7-33.
[¶ 28.] Affirmed in part, reversed in part, and remanded.
[¶ 29.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER, and MEIERHENRY, Justices, concur.
