Orth v. Stoebner & Permann Construction, Inc.

#23731-rev&rem-GORS, Circuit Judge
2006 SD 99

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

DWAIN ORTH, Claimant and Appellant,

v.

STOEBNER & PERMANN CONSTRUCTION, INC. Employer and Appellee,

and

AMERICAN FAMILY MUTUAL INSURANCE CO., Insurer and Appellee.

* * * *
APPEAL FROM THE CIRCUIT COURT
OF THE FIRST JUDICIAL CIRCUIT
BON HOMME COUNTY, SOUTH DAKOTA
* * * *

HONORABLE GLEN W. ENG
Judge

* * * *

RONALD A. PARSONS, Jr. and
A. RUSSELL JANKLOW of
Johnson, Heidepriem, Miner, Marlow & Janklow
Sioux Falls, South Dakota

GLENN L. ROTH
Olivet, South Dakota Attorneys for appellant.

JEFFREY L. BRATKIEWICZ and
J. G. SHULTZ of
Woods, Fuller, Shultz & Smith
Sioux Falls, South Dakota Attorneys for appellees.

* * * *

ARGUED
FEBRUARY 15, 2006

OPINION FILED 11/15/06
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GORS, Circuit Judge

[¶1.] Dwain Orth appeals from a circuit court decision affirming the South

Dakota Department of Labor's determination that he was not entitled to workers'

compensation benefits. Reversed and remanded.

FACTS AND PROCEDURAL HISTORY

[¶2.] Dwain Orth (Dwain) was born in Scotland, South Dakota, on February

22, 1942. He graduated from Scotland High School in 1960. He lived and worked in

South Dakota his entire life. In 1962 Dwain married Rita. They had two children.

[¶3.] After graduating from high school Dwain held a variety of jobs. From

1972 through 1976 Dwain worked for Cargill Grain Elevator in Scotland, South

Dakota. On rare occasions the job required heavy lifting. Dwain did not sustain a

work-related injury while at Cargill, but he did at times seek chiropractic treatment

for both general maintenance adjustments and also for back pain.

[¶4.] From 1976 through 1988 Dwain drove a concrete truck, performed

carpentry work, and was responsible for general maintenance at Scotland Redi-Mix

in Scotland, South Dakota. In 1978 Dwain injured his ankle while working for

Scotland Redi-Mix. His injury was treated as compensable. Dwain made a full

recovery and returned to work. During the twelve years Dwain was employed by

Scotland Redi-Mix he would occasionally seek chiropractic treatment for general

maintenance adjustments and back pain.

[¶5.] From 1989 through 1994 Dwain performed general carpentry for Slaba

Construction in Tripp, South Dakota. While employed by Slaba Construction

Dwain continued occasional chiropractic treatment. In 1993 Dwain slipped on a

roof while carrying a bundle of shingles and injured his back. He sought treatment
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from Dr. Merkwan, a chiropractor in Tyndall, South Dakota. Dwain made a full

recovery and did not file any workers' compensation claim while employed by Slaba

Construction.

[¶6.] Dwain began working for Stoebner & Permann Construction, Inc. (S &

P Construction) in March of 1994. S & P Construction was founded in 1980 by

Keith Stoebner (Stoebner) and Steven Permann (Permann). The company was

involved in various types of construction and remodeling. Stoebner and Permann

were hands-on owners who worked side-by-side with their employees.

[¶7.] As an employee of S & P Construction Dwain was expected to perform

a variety of tasks from pouring concrete to hanging sheetrock to shingling roofs.

His work-related duties required bending, stooping, and heavy lifting.

[¶8.] When Dwain started working for S & P Construction in 1994 he was in

excellent physical condition and was able to perform all work-related tasks. Dwain

worked ten-hour days, five days per week. His employers described him as an

"exceptional worker" and a "very good employee" who "worked very hard."

[¶9.] Dwain worked for S & P Construction for several years without

incident. By the late 1990s, however, Dwain was approaching sixty years of age

and his back was starting to give him trouble. He found it increasingly more

difficult to perform heavy physical labor as an employee of S & P Construction.

[¶10.] Dwain asked his employers to be assigned light-duty tasks. S & P

Construction valued Dwain as an employee and assigned him to light-duty to keep

him on the job. S & P Construction was aware of Dwain's increasing back trouble,

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and the decision to relegate Dwain to light-duty tasks was based, in part, on this

knowledge. Around this time Dwain started taking pain medication for his back.

[¶11.] Later in the Spring of 2000 Dwain asked his employers to reduce his

work schedule from five days a week to four. His back condition had continued to

worsen, and Dwain believed that an extra day off would help him to recuperate and

allow him to continue working for S & P Construction. S & P Construction granted

his request. Dwain's employers understood that this request was made due to

Dwain's worsening back problems.

[¶12.] Neither the light-duty nor the shortened work-week alleviated Dwain's

back pain. On the evening of May 15, 2001, Dwain came home from work in intense

pain. Dwain's wife took him to the emergency room. He believed he had a kidney

stone. The emergency room personnel questioned Dwain to determine the source of

the pain. Dwain indicated that he had not strained his back. Tests revealed

degenerative changes in Dwain's spine. The emergency room doctors concluded this

was the most likely cause of his back pain. Dwain did not have a kidney stone.

[¶13.] Dwain was unable to work for several weeks after the emergency room

visit. On May 30, 2001, Dwain saw Dr. Stolz, a chiropractor in Scotland, South

Dakota. Dr. Stolz conducted a physical examination and reviewed Dwain's x-rays.

Dr. Stolz confirmed the existence of degenerative changes in Dwain's spine.

[¶14.] Dwain also sought treatment from Dr. Gail Benson of the Orthopedic

Institute in Sioux Falls. Dwain saw Dr. Benson on June 6, 2001. Dwain indicated

to Dr. Benson that his back pain began about twenty years earlier, but that it had

worsened over time. Dr. Benson recommended an MRI exam and a discography.

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[¶15.] On June 8, 2001, Dr. Stolz told Dwain he could return to work on the

condition that he limit himself to light-duty work and refrain from all heavy lifting.

Dwain did in fact return to work, but even with light-duty tasks his back pain was

unbearable. Ultimately, Dwain's back condition became so debilitating that on July

17, 2001, he was forced to quit his job with S & P Construction. Dwain told his

employers that his back pain had worsened to the point that he "couldn't do the

work anymore." Dwain explained that his back pain was caused by "degenerated

discs and wore [sic] out."

[¶16.] Dwain continued treatment for his back condition. On August 1, 2001,

Dr. Benson noted that Dwain's MRI and discography confirmed "extensive torn

degenerated disc [sic] throughout the lumbar spine." Dr. Benson indicated that

Dwain was not a surgical candidate due to the large number of injured discs. Dr.

Benson determined that Dwain should be considered disabled for social security

purposes because he could no longer do the physical labor required of a carpenter.

[¶17.] Dr. Walter Carlson, another of Dwain's doctors at the Orthopedic

Institute in Sioux Falls, agreed with Dr. Benson's evaluation, indicating in a clinical

note that there was no "surgical treatment that will give [Dwain] predictable

improvement in his condition." Dr. Carlson further noted that Dwain would not "be

able to carry out any type of employment that he is trained to do – be it standing or

sitting." Dr. Carlson agreed with Dr. Benson's conclusion that Dwain was totally

disabled and should be awarded social security disability benefits.

[¶18.] Dwain filed for and was awarded social security total and permanent

disability benefits.

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[¶19.] On March 5, 2002, Dr. Carlson wrote a letter to Russell Janklow,

Dwain's attorney. At the time of the hearing Dr. Carlson was a board-certified

orthopedic surgeon with over thirty years of experience in his field. He was one of

Dwain's treating physicians for over a year. He practiced medicine in the same

office as Dr. Benson, one of Dwain's treating physicians. In his letter Dr. Carlson

indicated that he was unable to determine the major contributing cause of Dwain's

back condition, but if he was asked to apportion it, he would conclude that fifty

percent of Dwain's condition came as a result of "work related issues" and fifty

percent came as a result of Dwain's "pre-existing degenerative changes."

[¶20.] On or about May 20, 2002, S & P Construction received a South

Dakota Employer's First Report of Injury form indicating that Dwain was claiming

a work-related injury and was seeking workers' compensation benefits. The date of

injury was indicated to be May 14, 2001. Stoebner completed the form. In the box

for "Body Part Injured" Stoebner entered code 18, which indicated a back injury.

Stoebner described the injury in the following manner: "employee said his back can

not [sic] take this kind of work."

[¶21.] On June 14, 2002, S & P Construction and their Insurer, American

Family Mutual Insurance Company filed their joint answer denying responsibility

for benefits.

[¶22.] On April 29, 2003, Dr. Richard Farnham conducted an independent

medical examination on Dwain. Dr. Farnham reviewed Dwain's medical records

and physically examined him. Dr. Farnham diagnosed Dwain with "mechanical low

back pain due to multi-level intervertebral disk degeneration and non-traumatic,

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congenital grade I-II spondylolisthesis of L5 on S1 with low back pain." Dr.

Farnham opined that Dwain's career in manual labor had no impact on his pre-

existing degenerative back condition. He indicated that none of Dwain's

employment duties—while employed at S & P Construction or elsewhere—worked

"to either temporarily exacerbate or permanently aggravate" his back condition. Dr.

Farnham's report concluded that Dwain's condition was not work-related but

instead was "a function of time and the aging process and past history of tobacco

use for 30 years."

[¶23.] A hearing on Dwain's application for workers' compensation benefits

was held before a Department of Labor (Department) hearing examiner on January

29, 2004, in Sioux Falls. Three issues were presented in the case: 1) whether

Dwain's injury was causally connected to his work activities at S & P Construction,

2) whether S & P Construction had actual knowledge or notice of Dwain's work-

related injury, and 3) whether Dwain was permanently and totally disabled under

South Dakota's odd-lot doctrine.

[¶24.] The hearing examiner ruled in favor of S & P Construction and its

Insurer, American Family Mutual Insurance Company, concluding that Dwain

failed to prove causation. The hearing examiner did not rule on issues two (notice)

or three (odd-lot).

[¶25.] Dwain appealed to the circuit court. The First Circuit Court affirmed

the hearing examiner's finding on causation. The circuit court also ruled on the

notice issue, which had not been addressed by the hearing examiner. The circuit

court filed supplemental findings of fact and conclusions of law and an order ruling

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that S & P Construction did not have actual knowledge or notice of the work-

relatedness of Dwain's back condition.

[¶26.] Dwain timely appealed to this Court. His back condition continues to

be debilitating. Due to the severity of his pain Dwain is unable to perform most

manual labor and physical tasks around the house. He wears a brace on his lower

back when driving. He is unable to take his fishing boat out unless someone is

there to help him load and unload the boat.

STANDARD OF REVIEW

[¶27.] The standard of review in a workers' compensation case is established

by SDCL 1-26-36 (Tischler v. United Parcel Service, 1996 SD 98, ¶23, 552 NW2d

597, 602) and SDCL 1-26-37 (Capital Motors v. Schied, 2003 SD 33, ¶10, 660 NW2d

242, 245). Under SDCL 1-26-36, the applicable standard of review "will vary

depending on whether the issue is one of fact or one of law." Tischler, 1996 SD 98,

¶23, 552 NW2d at 602. "When the issue is a question of fact, then the actions of the

agency are judged by the clearly erroneous standard; and when the issue is a

question of law, then the actions of the agency are fully reviewable [i.e., de novo]."

Id. "Mixed questions of fact and law are fully reviewable." Brown v. Douglas Sch.

Dist., 2002 SD 92, ¶9, 650 NW2d 264, 268.

[¶28.] When findings of fact are made based on live testimony, the clearly

erroneous standard applies. See Brown, 2002 SD 92, ¶9, 650 NW2d at 267-68.

Deference and great weight are given to the hearing examiner on fact questions. Id.

at 267. "When factual determinations are made on the basis of documentary

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evidence, however, we review the matter de novo, unhampered by the clearly

erroneous rule." Id. at 268.

[¶29.] "'The standard of review in an appeal to the Supreme Court from a

trial court's appellate review of an administrative decision is de novo: unaided by

any presumption that the trial court is correct.'" Capital Motors, 2003 SD 33, ¶10,

660 NW2d at 245 (quoting Brown, 2002 SD 92, ¶17, 650 NW2d at 269). While the

hearing examiner's resolution of fact questions is given great weight, the circuit

court will receive no such deference.

[¶30.] In the present case only one issue, causation, is technically subject to

review. The hearing examiner did not rule on notice and neither the hearing

examiner nor the circuit court ruled on the odd-lot issue.

ANALYSIS AND DECISION

ISSUE ONE

[¶31.] Was Dwain's back disability causally connected to his work at
S & P Construction?

[¶32.] SDCL 62-1-1(7) sets forth the standard an employee must meet to

prevail in a workers' compensation case. To be awarded benefits, an employee must

first establish that he has suffered an "injury arising out of and in the course of the

employment[.]" Id. See also Horn v. Dakota Pork, 2006 SD 5, ¶14, 709 NW2d 38,

41 ("Our law requires a claimant to establish that his injury arose out of his

employment by showing a causal connection between his employment and the

injury sustained."). "'This causation requirement does not mean that the employee

must prove that [his] employment was the proximate, direct, or sole cause of [his]

injury; rather the employee must show that [his] employment was a 'contributing

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factor' to [his] injury.'" Brown, 2002 SD 92, ¶19, 650 NW2d at 270 (quoting Arends

v. Dacotah Cement, 2002 SD 57, ¶13, 645 NW2d 583, 587-88) (emphasis in original).

[¶33.] If the injured claimant suffers from "a preexisting disease or condition"

unrelated to the injury, and the injury combines with the preexisting condition "to

cause or prolong disability, impairment, or need for treatment," the injury is

compensable only if the claimant can prove that his "employment or employment

related injury is and remains a major contributing cause of the disability,

impairment, or need for treatment[.]" SDCL 62-1-1(7)(b). In short, in a case

involving a preexisting disease or condition, a workers' compensation claimant must

satisfy two tests of causation in order to prevail on his claim: 1) causation of the

injury (contributing factor test), and 2) causation of the disability (major

contributing cause test). See Brown, 2002 SD 92, ¶19, 650 NW2d at 270.

[¶34.] With respect to proving causation of a disability, this Court has stated

that:

[T]he testimony of professionals is crucial in establishing
this causal relationship because the field is one in which
laymen ordinarily are unqualified to express an opinion.
Unless its nature and effect are plainly apparent, an
injury is a subjective condition requiring an expert
opinion to establish a causal relationship between the
incident and the injury or disability.

Westergren v. Baptist Hospital of Winner, 1996 SD 69, ¶31, 549 NW2d 390, 398

(quoting Day v. John Morrell & Co., 490 NW2d 720, 724 (SD 1992)). A medical

expert's finding of causation cannot be based upon mere possibility or speculation.

Deuschle v. Bak Const. Co., 443 NW2d 5, 6 (SD 1989). See also Rawls v. Coleman-

Frizzell, Inc., 2002 SD 130, ¶21, 653 NW2d 247, 252-53 (quoting Day, 490 NW2d at

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724) ("'Medical testimony to the effect that it is possible that a given injury caused a

subsequent disability is insufficient, standing alone, to establish the causal relation

under [workers'] compensation statutes.'"). Instead, "[c]ausation must be

established to a reasonable medical probability[.]" Truck Ins. Exchange v. CNA,

2001 SD 46, ¶19, 624 NW2d 705, 709.

[¶35.] The claimant has the burden of proving the facts necessary to sustain

an award of compensation. King v. Johnson Bros. Construction Company, 83 SD

69, 73, 155 NW2d 183, 185 (1967). The claimant must prove the essential facts by a

preponderance of the evidence. Caldwell v. John Morrell & Co., 489 NW2d 353, 358

(SD 1992).

[¶36.] The issue in this case does not concern whether or not Dwain's injury

arose out of and in the course of his employment with S & P Construction (i.e.,

causation of the injury). Instead, the issue deals solely with the causation of

Dwain's disability, and resolution of this issue turns on the medical evidence.

Dwain's expert, Dr. Walter Carlson, offered the following opinion:

We recently reviewed all the records of Mr. Orth. After
reviewing this history and all other data's [sic] available
to us, it is not possible for me to determine which of the
patient's work related activities or the patient's pre-
existing degenerative changes are the major contributing
cause of his disability impairment and the need for
medical treatment. If we are asked in the future to
apportion this, we would give it a 50% to the pre-existing
degenerative problems and 50% to the work related
issues.

S & P Construction's expert, Dr. Richard Farnham, opined that Dwain's condition

was not work-related but instead was "a function of time and the aging process and

past history of tobacco use for 30 years." The hearing examiner concluded that Dr.

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Carlson's letter failed "to establish that [Dwain's] employment or employment

related injury is and remains a major contributing cause of the disability,

impairment, or need for treatment in combination with his preexisting condition."

The hearing examiner accepted Dr. Farnham's opinion. Dwain's claim was

consequently denied for failure to prove causation of the disability.

[¶37.] The circuit court affirmed the hearing examiner on this issue. The

circuit court found that, although Dr. Carlson was an expert qualified to render an

opinion in the matter, his letter dated March 5, 2002, was insufficient to prove

causation of Dwain's disability. The circuit court found Dr. Carlson's letter

contained "only a vague reference to [Dwain's] records and data that were reviewed

and provided no foundation as to the reasonable degree of certainty that Dr.

Carlson's opinions were based on."

[¶38.] All of the medical evidence in this case was presented by way of

reports, medical records and letters stipulated into evidence. There was no live

testimony on the causation issue. Consequently, although "'[i]ssues of causation in

worker's compensation cases are factual issues'" ordinarily subject to clearly

erroneous review (Therkildsen v. Fisher Beverage, 1996 SD 39, ¶8, 545 NW2d 834,

836 (quoting Lawler v. Windmill Restaurant, 435 NW2d 708, 709 (SD 1989)), in this

case the hearing examiner's and circuit court's findings are reviewed de novo.

Brown, 2002 SD 92, ¶9, 650 NW2d at 267-68.

[¶39.] Dwain's case is similar to Horn, 2006 SD 5, 709 NW2d 38. In Horn, a

workers' compensation claimant suffered two work-related back injuries: one in

1997 while employed by Dakota Pork, and another in 2000 while employed by

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Riverside Manufacturing. The issue in Horn was whether either injury was a major

contributing cause of his back condition. The employers' expert medical testimony

was provided by Dr. Richard Farnham (the same doctor who testified on behalf of

the employer in this case), who diagnosed the claimant with "mechanical low back

pain due to degenerative changes of the lumbosacral spine compatible with age

rather than trauma." Id. ¶8. To prove causation, the claimant relied on the opinion

of Dr. Gail Benson (the same doctor who treated Dwain in this case), who diagnosed

Horn with "ankylosing spondylitis and chronic low back pain." Id. ¶9. "Dr. Benson

attributed the former to a pre-existing genetic condition unrelated to Horn's work

and the latter to long term spinal changes from repetitive lifting and bending over

his lifetime." Id. ¶17. Horn pointed to the following testimony from Dr. Benson to

support the compensability of his condition:

Q: The second disorder, the degenerative disc problem, is
that problem, how did that come about from a pathologic
standpoint, is that something that was contributed to over
the years by his bending, lifting and stooping work
activities?

A: That's very likely and probable but how to pin that
down to a certain event is very difficult. You can look at
x-rays as you go along and see if it's been preexisting.
That's the only other way I know.

* * *

Q: And just so that I keep that straight, this man worked
at one place from 1990 to 1997, seven years, and I can
represent to you that he worked, this was at Dakota Pork
where he did a significant amount of twisting, bending
and stooping, although the lifting that he did wasn't all
that heavy but it was continuous. Then after that he
worked for a three-year period from about 1997 or 1998,
about a two year period, from 1997 to '98 where he was
doing a welding job that I don't believe there was a lot of

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heavy lifting there either but there was a lot of lifting,
bending and stooping. Are you going to be able to tell us
which one of those two positions, the first seven years at
Dakota Pork or the last two years at Riverside
Manufacturing, which one of those two working positions
or the work activities, would you be able to tell us which
one of those places the work activities were a major
contributing cause of the progression of the degenerative
disc disease, Doctor?

* * *

A: I cannot be specific on that issue.

Q: Would it be your opinion that both of those previous
employments then contributed on an equal basis to the
progression of the disease, Doctor?

* * *

A: I believe all of these repetitive jobs are contributory,
but I would place that over a lifetime rather than just
over a ten-year period.

Q: . . . the part that I'm struggling with, Doctor, is this
gentleman was able to work and then at some point got
into a situation where he was no longer able to continue
to work, and I guess the question we have for you is
whether the cumulative work activities over the last ten
years, were those activities, it doesn't have to be 'the'
major contributing factor but simply "a" major
contributing factor in his resultant disability and the
reason he's not working today?

A: Oh, I believe it is a contributing factor.

Q: And I know this gets a little difficult and I know it's
not an exact science, but is it fair for me to state that
you're not able to quantify from a percentage standpoint if
we were trying to apportion it how much of this problem
is related to his first seven years at Dakota Pork and the
following two, two and a half years at Riverside
Manufacturing? Are you able to apportion that for us,
Doctor?

A: I don't believe so.

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Id. at 42-43. This Court found Dr. Benson's opinion insufficient to establish

causation because he was "unable to state that Horn's degenerative disc or his

employment was a major contributing cause of his current disability." Id. ¶18.

[¶40.] Dwain's condition is similar to the condition of the claimant in Horn.

Both worked in physically demanding professions for long periods of their lives.

Both suffered from degenerative changes in their spines. Both were evaluated by

Dr. Farnham, who concluded that both Dwain's and Horn's back problems were not

related to their employment but rather were a result of their age. Both were

treated by Dr. Benson at the Orthopedic Institute in Sioux Falls.

[¶41.] Contrast Dr. Benson's opinion in Horn with Dr. Carlson's opinion in

this case. Dr. Benson's opinion was equivocal; his testimony clearly did not indicate

that Horn's employment was a major contributing cause of his disability. Dr.

Carlson, however—who practices medicine with Dr. Benson at the Orthopedic

Institute in Sioux Falls—stated that he was unable to determine whether Dwain's

work-related activities or his pre-existing degenerative changes were the major

contributing cause of Dwain's impairment. However, he went on to state that if he

were asked to apportion it, he would determine the pre-existing condition to be fifty

percent responsible and Dwain's work-related activities to be fifty percent

responsible for his condition.

[¶42.] A claimant does not need "to prove that the work injury was 'the' major

contributing cause, only that it was 'a' major contributing cause, pursuant to SDCL

62-1-1(7)." Brown, 2002 SD 92, ¶23, 650 NW2d at 271 (describing the legislative

history of SDCL 62-1-1(7)). Dr. Carlson's opinion clearly indicated that Dwain's

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work-related activities were fifty percent responsible for his impairment. No other

cause could exceed this; no other cause could be greater than fifty percent

responsible for Dwain's condition. A cause which cannot be exceeded is a major

contributing cause. Dr. Carlson's opinion therefore established to a reasonable

degree of medical probability that Dwain's work-related activities were a major

contributing cause of his current back impairment.

[¶43.] Dr. Carlson's letter stated that there were two major contributing

causes of Dwain's back impairment—his pre-existing degenerative condition and his

work-related activities—and these two major contributing causes were equally

responsible for Dwain's condition. Consequently, according to Dr. Carlson, Dwain's

work-related activity at S & P Construction was a major contributing cause of his

disability. This is the plain meaning of his opinion expressed in the letter dated

March 5, 2002. Any other interpretation of his opinion would place hyper-technical

restrictions on workers' compensation claimants seeking to recover for injuries

sustained in the course of their employment, and would ignore the principle that

workers' compensation statutes are to be "'liberally construed in favor of injured

employees.'" Vaughn v. John Morrell & Co., 2000 SD 31, ¶33, 606 NW2d 919, 925

(quoting Welch v. Automotive Co., 528 NW2d 406, 409 (SD 1995)).

[¶44.] This Court has indicated that "[t]here are no 'magic words' needed to

express an expert's degree of medical certainty, and the test is only whether the

expert's words demonstrate that he or she was expressing an expert medical

opinion." Stormo v. Strong, 469 NW2d 816, 824 (SD 1991). Dr. Carlson's letter was

clear and unequivocal. His opinion was stated in no uncertain terms: fifty percent

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of Dwain's impairment could be blamed on his preexisting degenerative condition,

and fifty percent could be blamed on his work-related activities. The opinion was

expressed to a satisfactory degree of medical probability.

[¶45.] Dr. Carlson was a board-certified orthopedic surgeon with thirty years

of experience in the field. He graduated from the University of Minnesota Medical

School and the Mayo Graduate School of Medicine. He completed advanced training

in adult spine surgery at the Institute for Low Back Care in Minneapolis. He, along

with his associate, Dr. Benson, was one of Dwain's treating physicians at the

Orthopedic Institute for more than one year. He had personally examined Dwain

on several occasions. Before rendering his opinion, he reviewed Dwain's history

"and all other data" available to him.

[¶46.] "This Court has approved an award of 'compensation to claimants,

even though they cannot prove any specific trauma, if they prove a history of injury

to the body that occurs in the normal course of employment.'" Horn, 2006 SD 5,

¶16, 709 NW2d at 42. See also St. Luke's Midland Regional v. Kennedy, 2002 SD

137, ¶13, 653 NW2d 880, 884-85 ("A pre-existing medical condition or infirmity does

not disqualify a claim under the 'arising out of employment' requirement if the

employment aggravated, accelerated, or combined with the condition or infirmity to

produce the disability for which compensation is sought."). Furthermore, this Court

stated in Schuck v. John Morrell & Co., 529 NW2d 894, 899 (SD 1995)(quoting

Caldwell, 489 NW2d at 358):

[A]n employee does not have to have an accident or
experience any trauma to his person before a medical
condition will qualify as a compensable injury. It is
sufficient that the disability was brought on by strain or

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overexertion incident to the employment, though the
exertion or strain need not be unusual or other than that
occurring in the normal course of employment.

[¶47.] Dwain's current impairment, although it cannot be traced to a single

instance of trauma, is nonetheless compensable under South Dakota law. When

Dwain started working for S & P Construction, he was an "exceptional worker" who

could perform any work-related task. After five years of laboring as an employee of

S & P Construction, his back had become so painful that he was forced to quit

working. His employment-related activities at S & P Construction clearly

"aggravated, accelerated, or combined with" his preexisting condition to produce his

ultimate disability.

[¶48.] Under South Dakota law, insofar as a workers' compensation

claimant's "pre-existing condition is concerned[,] we must take the employee as we

find him." Kennedy, 2002 SD 137, ¶13, 653 NW2d at 884. "If a compensable event

contributed to the final disability, recovery may not be denied because of the pre-

existing condition, even though such condition was the immediate cause of the

disability." Id. (quoting Elmstrand v. G & G Rug & Furniture Company, 77 SD 152,

155, 87 NW2d 606, 608 (1958)). Dwain's age and degenerative spinal condition may

have made him more susceptible to a work-related injury while working for S & P

Construction, but this does not alter the compensability of his claim.

[¶49.] Dwain met his burden of proving by a preponderance of the evidence

that his work-related activities at S & P Construction were a major contributing

cause of his disability.

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ISSUE TWO

[¶50.] Did S & P Construction have actual knowledge of Dwain's
work-related injury?

[¶51.] Pursuant to SDCL 62-7-10, an employee who seeks workers'

compensation benefits for an injury must provide the employer with written notice

of the injury within three days of its occurrence. Mudlin v. Hills Materials Co.,

2005 SD 64, ¶21, 698 NW2d 67, 74. "However, when an employer [has] 'actual

knowledge' of the injury, the failure to provide notice does not bar the claim." Id.

Under South Dakota law, a workers' compensation claimant bears the burden of

establishing that the claimant either provided written notice of the injury or that

the employer had actual knowledge of the injury. Id. Notification of an injury,

either written or by way of actual knowledge, is "a condition precedent to

compensation." Westergren, 1996 SD 69, ¶17, 549 NW2d at 395.

[¶52.] "The purpose of the written notice requirement is to give the employer

the opportunity to investigate the injury while the facts are accessible." Id. ¶18.

"The notice requirement protects the employer by assuring he is alerted to the

possibility of a claim so that a prompt investigation can be performed." Id.

[¶53.] "In determining actual knowledge, the employee must prove that the

employer had 'sufficient knowledge to indicate the possibility of a compensable

injury.'" Shykes v. Rapid City Hilton Inn, 2000 SD 123, ¶36, 616 NW2d 493, 501

(quoting Streyle v. Steiner Corp., 345 NW2d 865, 866 (SD 1984)). "The employee

must also prove that the employer had sufficient knowledge that the injury was

sustained as a result of [his] employment versus a pre-existing injury from a prior

employment." Id. (emphasis original). In other words, to satisfy the actual

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knowledge notice requirement, the employer: 1) must have sufficient knowledge of

the possibility of a compensable injury, and 2) must have sufficient knowledge that

the possible injury was related to employment with the employer.

[¶54.] Dwain did not give written notice. As a result, Dwain's workers'

compensation claim could proceed only if he proved that his employers had actual

knowledge of both his injury and its potential work-relatedness. Dwain's employers

were fully aware of his back condition. The only question was whether Dwain's

employers had actual knowledge that Dwain's back condition may have been related

to his employment at S & P Construction.

[¶55.] The hearing examiner did not address notice. Notice is the threshold

issue in a workers' compensation matter. The hearing examiner denied Dwain's

claim solely on the causation issue. The circuit court, however, concluded that

Dwain's employers did not have actual knowledge of the work-relatedness of

Dwain's injury sufficient to satisfy SDCL 62-7-10(1).

[¶56.] The circuit court's ruling on this issue was based entirely on

documentary evidence. Therefore, we review the ruling de novo. Moreover, this

Court has held that the question of whether or not an injured employee has

satisfied SDCL 62-7-10 is a mixed question of law and fact. Schuck, 529 NW2d at

897. Mixed questions of law and fact are also reviewed de novo. Id.

[¶57.] The circuit court's decision on notice was erroneous for two reasons.

First, the question of what knowledge Dwain's employers possessed about his injury

should have been addressed by the hearing examiner. In the absence of a finding by

the hearing examiner, there was nothing for the circuit court to review. The

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hearing examiner had the benefit of observing both Stoebner and Permann testify

live at the hearing. The hearing examiner was able to evaluate the credibility of the

witnesses in a way the circuit court could not.

[¶58.] Second, the circuit court's ruling on notice was not consistent with the

facts of the case and the testimony of Stoebner and Permann themselves. When

Dwain began work for S & P Construction, he was an "exceptional worker" who

could perform any work-related task. After several years of the bending, stooping

and heavy lifting required as an employee of S & P Construction, Dwain was forced

to ask for lighter duty work. 1 Ultimately, he could no longer do the work at all.

[¶59.] This Court has stated that, to satisfy the actual knowledge notice

requirement, "'[t]here must . . . be some knowledge of accompanying facts

1. The following testimony from Permann was elicited during the proceeding
before the hearing examiner:

Q: I guess the point I'm trying to make is in 1994 when
he went to work for you folks, from your personal
observation of him, he was having no problems doing any
of the work that you folks had him doing.

A: No.

Q: And then, three, four years into the job of doing this
medium to heavy labor, manual labor, he started having
more and more complaints about back problems; isn't that
a fair statement?

A: Yes.

Q: And he would make those complaints to you
personally, and you would actually accommodate him in
the type of work he was performing; isn't that fair?

A: Toward the end, yes.
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connecting the injury or illness with the employment, and indicating to a

reasonably conscientious manager that the case might involve a potential

compensation claim.'" Vaughn, 2000 SD 31, ¶33, 606 NW2d at 925 (emphasis

added) (quoting Larson's Workers' Compensation Laws §78.31(a)(2)). Dwain's

dramatic change in condition should have indicated to a "reasonably conscientious

manager" that the case "might involve a potential compensation claim."

[¶60.] The testimony from Stoebner and Permann did not support the circuit

court's decision on notice. Stoebner testified before the hearing examiner:

Q: But he was complaining more and more about his back
condition getting worse towards the end; isn't that true?

A: He was just saying that he wanted to do – you know,
slow down. And I don't know, he never really did
complain. He just said he was doctoring more for it.

Q: But you knew that one of the reasons that he wanted
to slow down is even though he wasn't complaining, it was
because it was hard work; you knew that?

A: Yeah. I suppose it was getting to the point that it was
getting harder for him if his back was bothering him.

Q: And in fact, you knew at that time that it wasn't a
leap of logic that the type of hard work that he was
performing day in and day out was playing a role in the
progression of his back problems; you knew that, isn't
that true?

A: Well, since he told us, yeah. I mean that it would be a
logical part of it since he was doctoring for it so that
would be a logical part that he had back trouble, yeah.

Q: Well it was also –

A: That's how I gathered my information from.

Q: And it was also logical because you were seeing him
day in and day out. You were actually working alongside

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of him and watching the kind of work he was performing
every day?

A: Uh-huh.

Q: Right?

A: Yeah, right.

Q: And it was hard work, wasn't it?

A: Well, from medium to hard work, yes.

Q: I'm going to talk to you about this notice issue, and I
guess I can just simply ask you. At the time that he left
your employment, which I understand it to be May of
2001, you knew the reason he was leaving the
employment was because of his back problems; you knew
that, Mr. Stoebner, isn't that true?

A: Because he was doctoring for them, yes.

Q: And you knew the doctor had told him that he should
not continue to do this type of work; you knew that as
well?

A: I never had any information telling me from the doctor
that he could not do this work. It was just from him
telling me.

Permann testified at the same hearing:

Q: And as the years went by, he started complaining
more and more about aches and pains in his back; isn't
that true?

A: Yes. As we all did.

Q: Yeah. And at your deposition, I think we talked about
that. You know, it's pretty obvious to you that the work
was taking a toll on Dwain. That wasn't something that
was a surprise to you at all, was it, Mr. Permann?

A: No.

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Q: And in fact, you've personally been in this industry for
years, and the heavy labor has taken a toll on you as well?

A: Yes.

Q: In the last couple of years that Dwain worked for you
folks, you would hear Dwain say: I've got to think about
doing something different or slowing down because my
back is giving me problems. Do you remember him
making statements like that?

A: Yes.

Q: And when he would make those statements to you,
you took that that it was work-related, that it was the
work that was causing him problems, correct?

A: Yes.

Q: And you understood that because you were watching
him doing this heavy lifting, bending, and stooping day in
and day out, correct?

A: Yes.

* * *

Q: When Dwain left the employment of you and Mr.
Stoebner, you knew at that time and you personally
understood the reason he was leaving your employment
was because of back problems related to work; isn't that
true?

A: Yes.

[¶61.] When Dwain terminated his employment with S & P Construction, he

did so because his back condition had become so painful that he "couldn't do the

work anymore." Dwain told his employers that his back pain was caused by

"degenerated discs and wore [sic] out." A "reasonably conscientious manager" would

ask: worn out from what? If an employer is put on notice that an injury may be

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work related, the employer has actual knowledge sufficient to satisfy SDCL 62-7-

10(1). See id. See also Westergren, 1996 SD 69, ¶20-21, 549 NW2d at 396.

[¶62.] In the absence of a finding from the hearing examiner, this Court

would ordinarily be reluctant to rule on notice. However, in this case, the testimony

of Stoebner and Permann themselves is inconsistent with the circuit court's ruling

and resolves the notice question. Stoebner and Permann may not, in this appeal,

"'assert a better version of the facts than [their] prior testimony and 'cannot now

claim a material issue of fact which assumes a conclusion contrary to [their] own

testimony.''" Clausen v. Northern Plains Recycling, 2003 SD 63, ¶18, 663 NW2d

685, 690 (quoting Loewen v. Hyman Freightways, Inc., 1997 SD 2, ¶16, 557 NW2d

764, 768) (other citations omitted). Stoebner and Permann admitted that they both

had actual knowledge of Dwain's injury and its potential relatedness to his work at

S & P Construction.

[¶63.] Consequently, Dwain satisfied the notice threshold. Dwain proved

that his employers had actual knowledge of a potential injury and that the injury

may have been related to his work at S & P Construction. The circuit court's

determination to the contrary is reversed.

CONCLUSION

[¶64.] When Dwain started working for S & P Construction in 1994 he was in

excellent health and could perform any work-related task. His employers described

him as an "exceptional worker" and a "very good employee" who "worked very hard."

By the late 1990s, however, the bending, stooping and heavy lifting required of him

as an employee of S & P Construction had injured his back to the extent that he was

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forced to request lighter duty work and a shortened work-week. Eventually, his

back condition became so painful that he had no choice but to resign from S & P

Construction.

[¶65.] Dr. Carlson, one of Dwain's treating physicians, stated that there were

two major contributing causes for his back impairment. According to Dr. Carlson,

Dwain's pre-existing degenerative spinal condition and his work-related activities

were each fifty percent to blame for his ultimate disability. When a cause is

determined to be fifty percent responsible for a disability, no other cause can exceed

it. A cause that cannot be exceeded is a major contributing cause of a disability.

Therefore, Dwain's work-related activities were a major contributing cause of his

disability.

[¶66.] Dr. Carlson's opinion was stated to a sufficient degree of medical

probability. The hearing examiner and the circuit court are reversed on causation.

Dwain satisfied his burden of proving that injuries sustained in the course of his

employment with S & P Construction were a major contributing cause of his

ultimate disability.

[¶67.] Dwain also satisfied his burden of proving that his employers had

actual knowledge of his injury and its potential work-relatedness.

[¶68.] The matter is reversed and remanded to Department for a

determination on permanent and total disability under the odd-lot doctrine.

[¶69.] GILBERTSON, Chief Justice, and MEIERHENRY, Justice, concur.

[¶70.] ZINTER, Justice, concurs in part and dissents in part.

[¶71.] BASTIAN, Circuit Judge, dissents.

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[¶72.] GORS, Circuit Judge, sitting for SABERS, Justice, disqualified.

[¶73.] BASTIAN, Circuit Judge, sitting for KONENKAMP, Justice,

disqualified.

ZINTER, Justice (concurring in part and dissenting in part).

[¶74.] I join the opinion of the Court on the issue of causation. However, I

respectfully dissent on the issue of notice. In my view, the notice issue should be

remanded because there is conflicting evidence concerning Employer's actual

knowledge of the work-related nature of the disability. Moreover, although the

administrative agency tried this factual dispute concerning notice, it has not

resolved the conflicting evidence. Therefore, even though this Court identifies

evidence that employer may have admitted actual notice, the dispute was not

resolved below and we should not resolve this conflict involving live testimony. We

should remand for the entry of findings of fact and conclusions of law on the issue of

actual notice.

[¶75.] It bears repeating that in this type of appeal, we are reviewing the

findings of fact and conclusions of law of the administrative agency rather than the

findings and conclusions of the circuit court. Therefore, "'[t]he Supreme Court

[reviews] the administrative agency's decision. . . unaided by any presumption that

the circuit court's decision was correct.'" Kurtz v. SCI, 1998 SD 37, ¶10, 576 NW2d

878, 882 (quoting Zoss v. United Bldg. Ctrs., Inc., 1997 SD 93, ¶6, 566 NW2d 840,

843).

[¶76.] In this case the issue of notice was fully litigated at the administrative

hearing, but the hearing examiner expressly declined to decide the issue because

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she disposed of the case on the issue of causation. This Court, however, decides the

notice issue on appellate review by focusing solely on alleged concessions of the

employer. However, live testimony was taken on the notice issue and the only

findings adopted by the hearing examiner suggest that Employers did not have

actual notice. For example, in Findings 48-53 the hearing examiner found:

(1) that Employer received a report of first injury on May
20, 2002;
(2) that May 20, 2002, was the first time Employer
became aware that Claimant was claiming to have
sustained a work-related injury;
(3) that Mr. Stoebner was surprised when he received
Claimant's first report of injury;
(4) that Employer had posted a notice in the workplace
notifying employees that they were to promptly report
any injuries they received while working; and
(5) that neither Claimant nor any doctor ever informed
either Permann or Stoebner that Claimant had been
injured while working.

Ultimately, the hearing examiner did not adopt findings or conclusions resolving

the conflict between these findings and the testimony of the two employers relied

upon by this Court. That conflict remains unresolved by any fact finder.

[¶77.] Because the notice issue should be decided after a resolution of this

conflicting live testimony, I would remand the matter for dispositive findings and

conclusions. I would also remand because the findings that were adopted by the

hearing examiner suggest no actual notice, this Court decides the issue on other

testimony not even acknowledged by the hearing examiner, and the hearing

examiner has yet to actually decide the issue. Under these circumstances a remand

is required because, as we have often noted, "the fact finder. . . had the advantage of

hearing testimony of witnesses and could directly judge their credibility. As a

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reviewing court, neither the circuit court nor this [C]ourt should attempt to assume

such a role." Hendricksen v. Harris, 1999 SD 130, ¶7, 600 NW2d 180, 181.

BASTIAN, Circuit Judge (dissenting)

[¶78.] I respectfully dissent. The appellant's causation evidence is based

solely on a one-paragraph letter of Dr. Carlson set forth at ¶36. Dr. Carlson admits

"it is not possible for me to determine which of the patient's work-related activities

or the patient's pre-existing degenerative changes are the major contributing cause

of his disability impairment and the need for medical treatment." He nonetheless

concludes, "If we are asked in the future to apportion this, we would give it a 50% to

the pre-existing degenerative problems and 50% to the work related issues."

[¶79.] I find that Dr. Carlson's allusion to a future determination is too

indefinite and his reference to "the work related issues" is too nebulous to have

established causation to a reasonable medical probability. Enger v. FMC, 1997 SD

70, ¶18, 565 NW2d 79, 85 (when the medical evidence is not conclusive, the

claimant has not met the burden of showing causation by a preponderance of the

evidence. Causation must be established to a reasonable medical probability, not

just a possibility.) 2

[¶80.] More importantly, there is no affidavit, deposition or live testimony by

the doctor. The one-paragraph letter was signature-stamped.

[¶81.] This Court has "consistently required expert medical testimony in

establishing causation for workers' compensation purposes." Enger, supra,

2. Furthermore, Dr. Carlson's letter is addressed to the appellant's attorney but
the attorney's letter of inquiry is not part of the record. Thus, we have Dr.
Carlson's answer but are left to speculate as to the question posed.
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(emphasis supplied). In Hanten v. Palace Builders, Inc., 1997 SD 3, ¶10, 558 NW2d

76, 78, this Court held that "[e]xpert witness testimony must be used to establish

the causal connection between one's employment and subsequent injury where 'the

field is one in which laymen are not qualified to express an opinion.'" Day v. John

Morrell & Co., 490 NW2d 720, 724 (SD 1992); Howe v. Farmers Coop. Creamery, 81

SD 207, 212, 132 NW2d 844, 846 (1965)).

A [worker's] compensation award cannot be based on
possibilities or probabilities, but must be based on
sufficient evidence that the claimant incurred a disability
arising out of and in the course of his employment. As
noted above, where the relationship between the work
and the injury is not clear, medical expert testimony is
required to establish the causal connection.

Hanten, 1997 SD 3, ¶18, 558 NW2d at 78(internal citations and quotations

omitted).

[¶82.] This Court has frequently held that the "testimony of professionals is

crucial" in establishing the causal relationship. Rawls v. Coleman-Frizzell, Inc.,

2002 SD 130, ¶21, 653 NW2d 247, 252; Day, 490 NW2d at 724; Lawler v. Windmill

Restaurant, 435 NW2d 708, 710 (SD 1989); Wold v. Meilman Food Indus., Inc., 269

NW2d 112, 115 (SD 1978).

[¶83.] In Westergren v. Baptist Hospital, 1996 SD 69, ¶31, 549 NW2d 390,

368, this Court held:

By stating that "the testimony of professionals is crucial
in establishing this causal relationship" we acknowledged
the lack of medical training by lawyers, hearing
examiners, and courts to interpret these records. . . . By
not deposing these professionals or having them testify at
hearing, the parties are likewise limited in the
information that might otherwise be available to them.

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See also Deuschle v. Bak Constr. Co., 443 NW2d 5, 6 (SD 1989) (to establish the

causal relationship . . . a finding "must rest on the testimony of professionals" . .)

[¶84.] I find the majority's reliance on Stormo v. Strong, 469 NW2d 816 (SD

1991) to be unpersuasive. I agree there "are no 'magic words' needed to express an

expert's degree of medical certainty, and the test is only whether the expert's words

demonstrate that he or she was expressing an expert medical opinion." Stormo, 469

NW2d at 824 (citing Drexler v. All Amer. Life & Cas. Co., 72 Wis2d 420, 432, 241

NW2d 401, 408 (1976)). In Stormo and in Drexler, however, unlike this case, the

Court was able to evaluate the sworn testimony of the medical expert. Stormo, 469

NW2d at 824; Drexler, 72 Wis2d at 425, 241 NW2d at 403.

[¶85.] While the worker's compensation act is to be liberally construed in

favor of the claimant, this rule applies to the law and not to the evidence offered to

support the claim. Hanten, 1997 SD 3, ¶10, 558 NW2d at 78; Wold, 269 NW2d at

116; and Podio v. American Colloid, 83 SD 528, 534, 162 NW2d 385, 388 (1968)).

[¶86.] The appellant's evidence on causation, resting on an imprecise one-

paragraph letter that the doctor did not sign and may not have reviewed after

dictating, falls well short of any standard that this Court has previously established

in worker's compensation cases. There is no expert medical opinion in any reliable

form that establishes causation to a reasonable medical probability.

[¶87.] In addition, I join the dissent of Justice Zinter.

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