McKibben v. Horton Vehicle Components, Inc.

#25000-r-JKM

2009 SD 47

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

KEVIN MCKIBBEN, Appellant,

v.

HORTON VEHICLE COMPONENTS,
INC. and AMERICAN HOME
ASSURANCE COMPANY, Appellees.

* * * *

APPEAL FROM THE CIRCUIT COURT
OF THE SIXTH JUDICIAL CIRCUIT
HUGHES COUNTY, SOUTH DAKOTA

* * * *

HONORABLE LORI S. WILBUR
Judge

* * * *

BRAM WEIDENAAR of
Hoy Trial Lawyers, Prof. LLC
Sioux Falls, South Dakota Attorneys for appellant.

PATRICIA A. MEYERS
STEPHEN C. HOFFMAN of
Costello, Porter, Hill, Heisterkamp,
Bushnell & Carpenter, LLP
Rapid City, South Dakota Attorneys for appellees.

* * * *

CONSIDERED ON BRIEFS
ON FEBRUARY 17, 2009

OPINION FILED 06/17/09
#25000

MEIERHENRY, Justice

[¶1.] Kevin McKibben sought vocational rehabilitation benefits after he was

injured at work. An administrative law judge for the Department of Labor (DOL)

determined that McKibben was entitled to vocational rehabilitation benefits from

employer Horton Vehicle (Horton). Horton and Horton’s insurer, American Home

Assurance (AHA) Company, appealed the determination to circuit court. The circuit

court reversed the award of benefits, and McKibben appeals. We reverse the circuit

court and affirm the DOL.

BACKGROUND

[¶2.] McKibben worked at Horton’s Britton, South Dakota facility as an

intermediate machinist. On February 14, 2004, McKibben suffered a work-related

injury while lifting some parts from a basket. He notified his supervisor and

immediately sought medical attention. The physician on staff at the hospital in

Aberdeen, South Dakota, examined McKibben and determined that McKibben had

an inguinal hernia 1 in his lower abdomen. Surgery was scheduled for the next day

with Dr. Roger Werth, a general surgeon. Dr. Werth performed surgery and

repaired the herniated area of the abdominal wall with mesh.

[¶3.] After the surgery, McKibben continued to experience sharp, shooting

pain. McKibben testified that the pain increased with activity, such as walking,

1. “Inguinal hernias occur when soft tissue — usually part of the intestine —
protrudes through a weak point or tear in your lower abdominal wall. The
resulting bulge can be painful — especially when you cough, bend over or lift
a heavy object.” Mayoclinic.com, http://www.mayoclinic.com/health/inguinal-
hernia/DS00364 (last visited May 5, 2009).

-1-
#25000

and only decreased when he reclined. McKibben consulted with Dr. Werth

regarding the lingering pain. Dr. Werth kept McKibben on a light work schedule to

see if McKibben’s pain abated. McKibben’s pain level did not improve.

Consequently, Dr. Werth performed a second surgery on McKibben on June 7, 2004,

to explore the possibility of ilioinguinal nerve entrapment 2 occurring under the

mesh or around the original surgery site.

[¶4.] The second surgery still did not alleviate McKibben’s pain symptoms in

the groin area. Dr. Werth referred McKibben to Dr. Heloise Westbrook, a pain

specialist. Westbrook prescribed nerve block injections for the pain. The injections

initially provided relief; however, the pain returned within twenty-four hours after

the injection. McKibben refused additional injections because of the intensity of the

pain following the injections. Dr. Werth then referred McKibben to Dr. O’Leary, in

Minneapolis, Minnesota, for further treatment. Dr. O’Leary performed surgery to

explore the groin area and repair the nerve that appeared to be causing the pain.

This third surgery abated some of McKibben’s pain but did not alleviate the pain in

his upper groin.

[¶5.] In December of 2004, McKibben returned to work at Horton in a light

duty job as a basic machinist. In addition to the light duty job, Horton made

accommodations for McKibben’s pain. Horton allowed McKibben to take frequent

breaks and provided an area to recline during the breaks. McKibben would work

2. The ilioinguinal nerve provides sensory branches to the pubic area. Nerve
Entrapment Syndromes of the Lower Extremity, EMedicine,
http://emedicine.medscape.com/article/1234809-overview (last visited May 5,
2009). Nerve entrapment symptoms include pain in the lower abdomen,
groin, scrotom in males, and labia majora in females. Id.

-2-
#25000

for about one hour to an hour and forty-five minutes, then take a ten to fifteen

minute break before resuming his work. He testified that after about an hour of

work, the pain became so severe it caused him to cry. When this occurred, he

informed his supervisor and went home. McKibben attempted to work three

twelve-hour shifts at Horton each week but was not able to work a shift of more

than three and one-half hours per day because of the pain.

[¶6.] At the request of Horton and AHA, McKibben underwent a Functional

Capacity Evaluation (FCE) early in February, 2005, and an examination by their

selected physician, Dr. Farnham. Based on his examination and the FCE, Farnham

determined that McKibben suffered 15% impairment to his whole person as a result

of his injury. Farnham also concluded that McKibben could return to work eight

hour shifts as a machinist with lifting restrictions of twenty-five pounds. The FCE

recommended a work-hardening program to strengthen McKibben’s core, knee, and

hip muscles. McKibben also underwent a brief psychological exam at the request of

Jim Miller, the workers’ compensation representative on his case. As

recommended, McKibben entered a work-hardening program. McKibben

participated in four sessions but missed several other sessions due to illness, lack of

child care, and pain. McKibben testified that he eventually discontinued the work-

hardening sessions because the sessions aggravated his pain.

[¶7.] McKibben continued to report for work at Horton but was unable to

work a full shift. Horton notified McKibben on April 15, 2005, that he would need a

doctor’s note each time he could not complete a full shift. McKibben did not seek a

doctor’s note. McKibben explained, at the hearing, that he did not see a doctor

-3-
#25000

because he was uncertain which doctor he was supposed to see. He also explained

that Dr Westbrook had already told him there was nothing else she could do to

reduce his pain. Horton fired McKibben for failing to provide a doctor’s note.

[¶8.] After his termination, McKibben sought employment in the

surrounding area. He found no work suitable to his status and applied for

vocational rehabilitation services through the Department of Human Services.

McKibben was approved for and began a course in computer assisted drafting over

the internet. He sought workers’ compensation vocational rehabilitation benefits to

pay for the course. See SDCL 62-4-5.1. Horton and AHA denied his request for

vocational rehabilitation benefits.

[¶9.] McKibben appealed the denial of benefits to the DOL. An

administrative law judge (ALJ) conducted a hearing and determined that McKibben

was entitled to twenty-seven weeks of vocational rehabilitation benefits in the

amount of $10,588.38, including interest, for the course work he had completed

prior to the hearing and to an additional seventy-seven weeks of prospective

benefits in the amount of $30,196.50, including interest. Horton and AHA appealed

the DOL’s decision to circuit court. The circuit court reversed the DOL’s decision

and determined that McKibben was not entitled to vocational rehabilitation

benefits. McKibben appeals. The issue on appeal is whether the circuit court erred

in reversing the DOL’s determination that McKibben was entitled to vocational

rehabilitation benefits.

-4-
#25000

STANDARD OF REVIEW

[¶10.] The standard of review of an administrative proceeding is set forth in

SDCL 1-26-36 as follows:

The court shall give great weight to the findings made and
inferences drawn by an agency on questions of fact. The court
may affirm the decision of the agency or remand the case for
further proceedings. The court may reverse or modify the
decision if substantial rights of the appellant have been
prejudiced because the administrative findings, inferences,
conclusions, or decisions are:

(1) In violation of constitutional or statutory
provisions;

(2) In excess of the statutory authority of the
agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Clearly erroneous in light of the entire evidence
in the record; or

(6) Arbitrary or capricious or characterized by
abuse of discretion or clearly unwarranted
exercise of discretion.

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. The circuit court may award
costs in the amount and manner specified in chapter 15-17.

SDCL 1-26-36. The statute applies to circuit court review of an agency decision as

well as to appeals to this Court from the circuit court’s review. Capital Motors, LLC

v. Schied, 2003 SD 33, ¶10, 660 NW2d 242, 245.

[¶11.] The Supreme Court reviews the agency decision “de novo: unaided by

any presumption that the trial court is correct.” Id. Thus, a trial or appellate court

-5-
#25000

must give great weight to an agency’s findings and may only reverse if the findings

are found to be “clearly erroneous in light of the entire evidence in the record.”

SDCL 1-26-36 (5). An error of law, however, is fully reviewable. SDCL 1-26-36 (4);

Lends His Horse v. Myrl & Roy’s Paving, Inc., 2000 SD 146, ¶9, 619 NW2d 516, 519

(citing Permann v. Dep’t of Labor, Unemployment Ins. Div., 411 NW2d 113 (SD

1987)). For an agency finding of fact to be clearly erroneous, a court must be

definitely and firmly convinced, after reviewing all the evidence, that the agency

made a mistake. Mettler v. Sibco, Inc., 2001 SD 64, ¶7, 628 NW2d 722, 723-24

(citation omitted). We consider deposition testimony and documentary evidence de

novo. Truck Ins. Exchange v. CNA, 2001 SD 46, ¶6, 624 NW2d 705, 708 (citing

Wagaman v. Sioux Falls Const., 1998 SD 27, ¶12, 576 NW2d 237, 240). However,

we defer to the agency on the credibility of a witness who testified live because the

agency “is in a better position than the circuit court to evaluate the persuasiveness

of [witness] testimony.” Lends His Horse, 2000 SD 146, ¶15, 619 NW2d at 520

(citing Matter of J.M.V.D., 285 NW2d 853, 855 (SD 1979)). Further, “[d]ue to the

deference given the Department, ‘[w]e do not substitute our judgment for that of

[the] Department on the weight of the evidence.’” Id. ¶9 (quoting Shepherd v.

Moorman Mfg., 467 NW2d 916, 919 (SD 1991)).

ANALYSIS

[¶12.] South Dakota workers’ compensation law allows for rehabilitation

benefits when the injured employee “is unable to return to the employee’s usual and

customary line of employment.” SDCL 62-4-5.1. Benefits are provided as follows:

If an employee suffers disablement as defined by subdivision 62-
8-1(3) or an injury and is unable to return to the employee’s

-6-
#25000

usual and customary line of employment, the employee shall
receive compensation at the rate provided by § 62-4-3 up to sixty
days from the finding of an ascertainable loss if the employee is
actively preparing to engage in a program of rehabilitation as
shown by a certificate of enrollment. Moreover, once such
employee is engaged in a program of rehabilitation which is
reasonably necessary to restore the employee to suitable,
substantial, and gainful employment, the employee shall receive
compensation at the rate provided by § 62-4-3 during the entire
period that the employee is engaged in such program. Evidence
of suitable, substantial, and gainful employment, as defined by §
62-4-55, shall only be considered to determine the necessity for a
claimant to engage in a program of rehabilitation.

SDCL 62-4-5.1. In order to qualify for rehabilitation benefits, the claimant must

meet a five-part test that includes proof that he is “unable to return to his usual and

customary line of employment.” Sutherland v. Queen of Peace Hosp., 1998 SD 26,

¶13, 576 NW2d 21, 25 (emphasis added) (citations omitted).3 A claimant’s burden

of proof is by a preponderance of the evidence. Progressive Halcyon Ins. Co. v.

3. The five part test includes the following:
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 his employer requesting the
benefits; and

5. The employee must actually pursue the reasonable program of
rehabilitation.
Sutherland, 1998 SD 26, ¶13, 576 NW2d at 25 (citations omitted).

-7-
#25000

Philippi, 2008 SD 69, ¶16, 754 NW2d 646, 652-53 (quoting Fair v. Nash Finch Co.,

2007 SD 16, ¶9, 728 NW2d 623, 628).

[¶13.] The evidence presented at the hearing before the ALJ consisted of live

testimony from McKibben, Tom Audet, McKibben’s rehabilitation counselor, and

Denise Wieker, Horton’s human resources manager. Jim Miller, the workers’

compensation representative on McKibben’s case, appeared by deposition. The

medical reports of Dr. Westbrook, Dr. Werth, Dr. O’Leary, and Dr. Farnham were

stipulated into the record.

[¶14.] Based on the evidence, the ALJ found McKibben had met his burden

of proof and had satisfied the statutory requisites for rehabilitation benefits. The

ALJ found that McKibben’s injury –“inguinal hernia and subsequent nerve damage”

occurred “in the scope and course of his employment” and “was treated as

compensable.” It was not disputed that McKibben suffered 15% impairment to his

whole person as a result of his injury and that he was physically restricted to lifting

no more than 25 pounds. Horton provided him a light duty job with frequent breaks

in an attempt to accommodate his restrictions and pain. Even so, the ALJ found

that McKibben was unable to work a full shift because of the pain he experienced.

The ALJ found that McKibben’s “testimony regarding his pain was credible.” The

ALJ found that McKibben had proved that the severity of his pain, even with the

job accommodations, prevented him from returning to his usual and customary line

of employment as a machinist.

[¶15.] On appeal, we review the entire record to determine whether the ALJ’s

“findings, inferences, conclusions, or decisions are . . . [c]learly erroneous[.]” SDCL

-8-
#25000

1-26-36(5). The ALJ found McKibben’s testimony concerning his debilitating pain

to be credible. Additionally, the ALJ determined that “the medical records provided

objective evidence of Claimant’s pain.” McKibben’s treating physicians

acknowledged that medical treatment may not alleviate McKibben’s pain. Before

Dr. O’Leary performed the third and final surgery, Dr. Westbrook indicated that the

pain may return. Dr. Westbrook wrote in her report:

If this is a nerve that is entangled in the scar tissue it is
plausible the scar tissue could be removed, however, regrowth of
the scar tissue could re-create pain that is more severe.
Additionally, if the nerve is actually near the mesh I am
uncertain if additional surgery would be of benefit.

Dr. O’Leary also reported that surgically resecting the ilioinguinal nerve may not

resolve the pain. Dr. O’Leary described McKibben’s condition as follows:

The pain is fairly classic going down into the medial thigh and
into the region of the inner scrotum. The patient has had a re-
exploration about a month ago. At that time it was felt the
internal ring was somewhat tight and that was loosened up. No
specific nerves were actually removed at that time. The patient
continued to have pain postoperatively and was sent down for
further evaluation. He does appear to have trigger points along
the area of the nerve and over the wound medially with tapping.
I have recommended that we go ahead and explore the groin and
then resect the ilioinguinal nerve. He understands that this
may not resolve his pain problem, that pain may recur, that he
will have a numb area, and that there is a chance of infection,
bleeding, etc. He is very desperate to get his pain under control.

Several months after the final surgery, Dr. Westbrook acknowledged McKibben still

had pain and may need to consider retraining. She wrote, “[i]t is possible the [pain]

could stem from right inguinal nerve entrapment syndrome, however, the patient’s

pain did not improve after having a right inguinal nerve block[,]” and “[i]f the

-9-
#25000

patient’s pain does not improve despite therapy consideration of a reduced work

load or re-training to a job with minimal or no bending may be warranted.”

[¶16.] Horton and AHA argue that the FCE and the opinion of their expert,

Dr. Farnham, outweigh the other evidence and should control. Farnham’s report

indicated that McKibben had an average pain level of six on a scale from zero to ten

(with ten being excruciating and tortuous pain). While he did not discount the

subjective pain McKibben felt, Dr. Farnham relied on the FCE that McKibben was

physically capable of working an eight-hour shift. Dr. Farnham suggested that a

disorder that coverts psychological symptoms to physical symptoms may explain

McKibben’s pain. Dr. Farnham’s report also discussed the “brief psychological

evaluation” of McKibben. The psychological evaluation reported that “[i]ndividuals

who score as [McKibben] did sometimes are found to be suffering from a [disorder

that converts psychological symptoms to physical symptoms]. . . . It should be

noted, however, that the [psychological evaluation], in and of itself, is not sufficient

to rule out organic pathology.”

[¶17.] We have previously determined that “[w]hen presented with medical

expert testimony, [the] Department is ‘free to accept all of, part of, or none of, an

expert’s opinion.’” Wagaman, 1998 SD 27, ¶18, 576 NW2d at 241 (quoting Hanson

v. Penrod Constr. Co., 425 NW2d 396, 398 (SD 1988)). The Department gave more

weight to the opinion of Dr. Westbrook and to the other physicians who treated

McKibben than it gave to Dr. Farnham who examined McKibben on behalf of the

employer. See SDCL 62 -7-1. Likewise, the ALJ is free to consider whether to

accept all or part of the FCE, and determine how much weight to afford it in light of

-10-
#25000

all the evidence. The ALJ found McKibben credible when he testified his pain

prevented him from working as a basic machinist. Although Horton and AHA

argue on appeal that McKibben failed to show that the level of pain was caused by

the work injury, a fair reading of the evidence indicates otherwise. Indisputably,

the work-related hernia caused McKibben pain that was not alleviated by the

surgeries and treatment. The ALJ believed McKibben’s testimony that the severity

of the pain prevented him from working full-time as a basic machinist.

[¶18.] Reviewing courts must give great weight to the ALJ’s findings of fact.

SDCL 1-26-36. The circuit court’s judgment cannot be substituted for the judgment

of the Department regarding the weight of the testimony and evidence. See Gordon

v. St. Mary’s Healthcare Ctr., 2000 SD 130, ¶35, 617 NW2d 151, 160 (quoting

Loewen v. Hyman Freightways, Inc., 1997 SD 2, ¶11, 557 NW2d 764, 767). Even

considering the deposition and record evidence de novo, the ALJ’s findings of fact

are not clearly erroneous. See Truck Ins. Exchange, 2001 SD 46, ¶6, 624 NW2d at

708 (citing Wagaman, 1998 SD 27, ¶12, 576 NW2d at 240).

[¶19.] Horton and AHA argued to the ALJ that McKibben should not receive

benefits because McKibben’s lack of improvement was due to his failure to complete

physical therapy sessions. The ALJ, however, determined McKibben was unable to

return to his usual and customary line of employment. The ALJ further determined

there was insufficient medical evidence “to show that [McKibben]’s inability to

return to his usual and customary line of employment [was] due to an aggravation

of his condition caused by his alleged refusal to attend physical therapy.” Horton

and AHA advanced a somewhat different argument on appeal.

-11-
#25000

[¶20.] Instead, Horton and AHA argued to the circuit court and on appeal to

this Court, that “the record unequivocally shows McKibben lost his job not because

he was unable to do it, but because he repeatedly violated employer’s reasonable,

long-established policy requiring medical documentation of absences – a policy

McKibben could have easily obeyed, but inexplicably refused to do so.” The circuit

court accepted this argument and, with no analysis or citation to the evidence,

found that the ALJ’s findings regarding McKibben’s pain were clearly erroneous.

The ALJ found that McKibben testified credibly that he did not seek a doctor’s note

because Dr. Westbrook told him that there were no other treatment options for him.

The ALJ also found that “the requirement that [McKibben] obtain further medical

proof of his pain was unreasonable.”

[¶21.] In the recent case of Wellman v. Schad, we determined that “in order

to receive [temporary permanent disability], the claimant bears the burden of

proving loss of income or ability to earn an income attributable to the injury.” See

2009 SD 46, ¶17, --- NW2d ---. In Wellman, it was undisputed that the employee

was terminated due to his misconduct. Unlike Wellman, the ALJ here found that

McKibben’s work-related injury caused an inability to perform his duties. A

reviewing court “shall give great weight to the findings made and inferences drawn

by an agency on questions of fact.” SDCL 1-26-36.

[¶22.] Therefore, the circuit court’s reversal of the Department’s ruling was

error. We reverse the circuit court’s order determining that McKibben was not

entitled to rehabilitation benefits and reinstate the Department’s ruling.

-12-
#25000

[¶23.] GILBERTSON, Chief Justice, and KONENKAMP and ZINTER,

Justices, and SABERS, Retired Justice, concur.

-13-