Wellman v. SCHAD EXCAVATION, LLC

#25013-a-GAS

2009 SD 46

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

* * * *

LANCE WELLMAN, Claimant and Appellant,

v.

SCHAD EXCAVATION, LLC, Employer and Appellee,

and

GENERAL CASUALTY CO.
OF WISCONSIN Insurer and Appellee.

* * * *

APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
PENNINGTON COUNTY, SOUTH DAKOTA

* * * *

HONORABLE A. PETER FULLER
Judge

* * * *

FRANK DRISCOLL of
Driscoll Law Office, P.C.
Rapid City, South Dakota Attorneys for appellant.

MICHAEL S. McKNIGHT
CHARLES A. LARSON of
Boyce, Greenfield, Pashby & Welk, LLP
Sioux Falls, South Dakota Attorneys for appellees.

* * * *

CONSIDERED ON BRIEFS
ON APRIL 27, 2009

OPINION FILED 06/17/09
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SEVERSON, Justice.

[¶1.] Lance Wellman appeals the denial of temporary partial disability

benefits. We affirm.

FACTS

[¶2.] Wellman suffered a compensable injury when he fractured his left

fibula while working for Schad Excavation, LLC (Employer) on May 3, 2005. At the

time, he was earning $15 per hour. Wellman received medical treatment from Dr.

Stewart Fromm and was off work until May 23, 2005. Wellman’s benefit rate was

$400 per week, and he received temporary total disability (TTD) benefits from May

4, 2005 through May 31, 2005.

[¶3.] On May 23, 2005, Dr. Fromm released Wellman to return to work,

with restrictions. Wellman returned on June 1, 2005, at the same hourly pay rate.

Cody Schad, Wellman’s supervisor, terminated Wellman’s employment with

Employer on June 20, 2005, due to attendance issues. Wellman testified that he left

work early on several occasions between June 1 and June 20, 2005, because there

was insufficient work, but always received permission from either Schad or the

supervisor at the job site. Schad testified that Wellman never received his

permission to leave work early, except on two occasions when Wellman’s leg was

bothering him. He further insisted there was full-time work available for Wellman,

but Wellman chose to leave early. After being terminated, Wellman did not seek

other employment or register with Job Services. He testified that he did not seek

other employment because he was unable to perform manual labor. He did,

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however, complete three excavation jobs using his own track hoe, but testified that

these jobs did not require manual labor.

[¶4.] On November 7, 2005, Wellman was examined by Dr. Cederberg, who

assessed Wellman at maximum medical improvement and having a permanent

partial impairment. General Casualty (Insurer) subsequently paid Wellman his

permanent partial disability (PPD) benefit. Wellman’s eligibility for temporary

partial disability (TPD) ended on that date.

[¶5.] Wellman brought a claim against Employer and Insurer for TPD

benefits. He acknowledged that all TTD and PPD benefits had been paid, but

maintained he was entitled to TPD from the time he returned to work for Employer

on June 1, 2005, until he received his impairment rating on November 7, 2005. His

claim amounted to approximately $7,500, plus prejudgment interest, and was based

upon the difference between the statutory floor of his compensation rate of $400 per

week and his actual earnings during that time.

[¶6.] A hearing was conducted on November 28, 2006, by the South Dakota

Department of Labor, Division of Labor and Management (Department). The

Department found Schad to be a credible witness, while rejecting much of

Wellman’s testimony. 1 The Department found that Wellman earned his pre-injury

wage per hour between June 1 and June 20, 2005. It further found that Wellman

1. With regard to Wellman’s absenteeism, the Department described it as
“chronic,” and specifically found: (1) Wellman either failed to show up or left
early without permission on nine of the possible fourteen workdays between
June 1 and June 20, 2005; (2) if Wellman had put forth the effort, he could
have earned his pre-injury wage; and (3) the evidence did not support
Wellman’s contention that work was not available.

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was “able to earn” an income between June 20, 2005 and November 7, 2005, but

chose not to even though suitable work was available. Therefore, the Department

ruled that Wellman was not entitled to TPD benefits.

[¶7.] Wellman appealed to the circuit court. The circuit court affirmed the

Department’s decision, concluding that Wellman refused suitable employment and

failed to meet his burden of proving either that his termination of employment or

inability to find subsequent employment was caused by the compensable injury.

Wellman appeals to this Court, raising two issues, which we restate as follows:

Whether Wellman was entitled to temporary partial disability
benefits even though he was terminated for cause and did not
seek other employment.

STANDARD OF REVIEW

[¶8.] The standard of review in administrative appeals is governed by SDCL

1-26-36. An administrative agency’s conclusions of law are reviewed de novo, while

questions of fact are reviewed under the clearly erroneous standard. Clausen v. N.

Plains Recycling, 2003 SD 63, ¶7, 663 NW2d 685, 687 (citations omitted).

[¶9.] Whether Wellman was entitled to temporary partial
disability benefits even though he was terminated for
cause and did not seek other employment.

[¶10.] There is no dispute that Wellman suffered a compensable injury in the

course of his employment with Employer. In addition, there is no dispute Wellman

was paid TTD and PPD benefits. The only dispute is whether Wellman is due TPD

benefits under the facts of this case. Wellman contends that SDCL 62-4-5 does not

permit a denial of TPD benefits simply because he was terminated for cause.

Moreover, he submits that his lack of income between his termination and receipt of

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his impairment rate justifies a benefit award. Employer maintains that Wellman’s

loss of income stems from his misconduct, not his injury; therefore, it was

appropriate to deny TPD benefits to Wellman. Whether a claimant is entitled to

temporary partial disability benefits even though he was terminated for cause and

did not seek other employment is an issue of first impression in South Dakota.

[¶11.] “The purpose of workers’ compensation is to provide for employees who

have lost their ability to earn because of an employment-related accident, casualty,

or disease.” Dudley v. Huizenga, 2003 SD 84, ¶11, 667 NW2d 644, 648 (citations

omitted). TPD benefits in South Dakota are governed by SDCL 62-4-5

(compensation for partial disability), which provides:

If, after an injury has been sustained, the employee as a result
thereof becomes partially incapacitated from pursuing the
employee’s usual and customary line of employment, or if the
employee has been released by the employee’s physician from
temporary total disability and has not been given a rating to
which § 62-4-6 would apply, the employee shall receive
compensation, subject to the limitations as to maximum
amounts fixed in § 62-4-3, equal to one-half of the difference
between the average amount which the employee earned before
the accident, and the average amount which the employee is
earning or is able to earn in some suitable employment or
business after the accident. If the employee has not received a
bona fide job offer that the employee is physically capable of
performing, compensation shall be at the rate provided by § 62-
4-3. However, in no event may the total calculation be less than
the amount the claimant was receiving for temporary total
disability, unless the claimant refuses suitable employment.

By its very nature, this statute carries at least two logical implications: first, that

the claimant realized a loss of income or earning ability after suffering a

compensable injury; and second, the loss of income or earning ability was

attributable to the compensable injury.

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[¶12.] Wellman was hired by Employer at a pay rate of $15 per hour. In the

course of employment, Wellman suffered a compensable injury and was unable to

work. During this time, he received $400 per week for TTD. Three weeks later, Dr.

Fromm approved Wellman to return to work, but with restrictions. Employer

provided work for Wellman within his restrictions and continued to pay him $15 per

hour, the same rate of pay he was receiving prior to the injury. Thereafter,

Wellman was terminated for violating the employee absentee policy. In denying

TPD benefits, the Department reasoned: “From and after June 1, 2005 [the date

Wellman returned to work], Employer had suitable work available for Claimant, as

evidenced by the wages Claimant admits he earned. Claimant was able to earn his

preinjury wage per hour. If he put forth the effort, he could have earned his

preinjury wage.”

[¶13.] Professor Larson’s treatise on workers’ compensation provides: “If the

record shows no more than that the employee, having resumed regular employment

after the injury, was fired for misconduct, . . . with the impairment playing no part

in the discharge, it will not support a finding of compensable disability.” 4 A.

Larson, Workers’ Compensation Law § 84.04[1] (2007). Here, Wellman’s loss of

income was not due to his injury, but rather due to his misconduct–he failed to show

up to work or left work early without permission on several occasions during a short

period of time. See Beckman v. John Morrell & Co., 462 NW2d 505, 509-10 (SD

1990) (affirming the denial of claimant’s request for TTD benefits because the

claimant’s “strike participation, rather than a medical problem, precluded him from

being offered light duty or favored work”). Furthermore, Wellman’s return to work

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for Employer after the injury supports the determination that he maintained his

ability to earn an income, and would have maintained the same income had he

worked the requisite hours and not violated the attendance policy. However, the

analysis does not end there.

[¶14.] Professor Larson continues, “But if to this record there is added

evidence that the claimant has been hampered by the impairment in obtaining or

holding other employment, the question is not quite so one-sided.” Larson, supra, at

§ 84.04[1]. In some jurisdictions, compensation is denied based solely on the

termination for cause, while in others it is allowed upon evidence of a diminution in

earning power attributable to the work injury. See generally id. at § 84.04[1] nn1, 2

and accompanying text.

[¶15.] The North Dakota Supreme Court was presented with facts similar to

this case in Wendt v. ND Workers Compensation Bureau, 467 NW2d 720 (ND 1991).

The claimant suffered a work-related injury, but was allowed to return to work,

with restrictions. Id. at 721-22. Employer provided suitable work to the claimant.

However, the claimant was later terminated for excessive absenteeism. Id. at 722.

In response to his request for disability benefits, the Bureau found, in part, that

“[c]laimant was not terminated as a result of the work injury,” nor did his work

injury “prevent him from returning to his former position as a welder at Steiger

Tractor and performing all the duties required of that position.” Id. at 723-24. “The

sole reason the claimant is unable to return to work at Steiger Tractor is because he

was fired for cause.” Id. at 724. In affirming the Bureau, the North Dakota

Supreme Court rejected the harsh approach that “‘an employee who is discharged

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for just cause is not entitled to workers’ compensation benefits.’” Id. at 728 (quoting

Calvert v. Gen. Motors Corp., 327 NW2d 542, 546 (MichCtApp 1982)). Instead, it

adopted the approach set forth by the Minnesota Supreme Court:

“[A] justifiable discharge for misconduct suspends an injured
employee’s right to wage loss benefits; but the suspension of
entitlement to wage loss benefits will be lifted once it has
become demonstrable that the employee’s work-related
disability is the cause of the employee’s inability to find or hold
new employment. Such a determination should be made upon
consideration of the totality of the circumstances including the
usual work search ‘requirements.’”

Id. (quoting Marsolek v. George A. Hormel Co., 438 NW2d 922, 924 (Minn 1989)).

Several other jurisdictions also employ this approach. 2 Rather than denying

2. See, e.g., Ariz. Dep’t of Pub. Safety v. Indus. Comm’n, 861 P2d 603, 609 (Ariz
1993) (holding that a claimant who is receiving workers’ compensation
benefits does not automatically forfeit them if the claimant is terminated for
misconduct); Stewart v. CRS Rinker Materials Corp., 855 So2d 1173, 1177
(FlaDistCtApp 2003) (“Even though a claimant may be terminated from his
or her employment for insubordination, the claimant may still be entitled to
benefits if he or she satisfies the burden of demonstrating that the injury
contributed to the wage loss after the termination.”) (emphasis in original)
(citation omitted); Augusta Coca-Cola Bottling Co. v. Carter, 322 SE2d 365,
366 (GaCtApp 1984) (concluding that claimant would be entitled to receive
disability benefits for loss of earning capacity if he was unable to find other
employment because of his disability, even though he was discharged for
cause); E.F.P. Corp. v. Pendill, 413 NE2d 279, 281 (IndCtApp 1980) (holding
that where claimant suffered a compensable injury, but was fired for
unrelated reasons and was unable to employment elsewhere because of a
recurrence of his injury, disability benefits were due); Bernard v. Mead Publ’g
Paper Div., 765 A2d 576, 579 (Me 2001), (claimant’s termination for
misconduct did not disqualify him for compensation benefits based on his
work-related injury) superseded by statute on other grounds, 39-A
MeRevStatAnn §224, as recognized in Morissette v. Kimberly-Clark Corp.,
837 A2d 123 (Me 2003); Guico v. Excel Corp., 619 NW2d 470, 479 (Neb 2000)
(concluding that the fact that an employee has been terminated does not
destroy his right to receive compensation for the restriction placed on his
ability to perform work); Cunningham v. Atl. States Cast Iron Pipe Co., 901
A2d 956, 959-61 (NJSuperCtAppDiv 2006) (adopting the rule that if the
(continued . . .)
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benefits solely on the basis of termination for cause, we adopt this approach, finding

it more in tune with our statutory language and the purpose of workers’

compensation.

[¶16.] Under this approach, the claimant has the burden of proving that the

work-related disability hampered his ability to obtain or hold other employment

after being terminated. Wendt, 467 NW2d at 728 (claimant must demonstrate that

his work-related disability is the cause of his inability to find suitable employment);

see also Day v. John Morrell & Co., 490 NW2d 720, 724 (SD 1992) (“the claimant

has the burden of proving all the facts essential to compensation”) (citations

omitted). It is undisputed that Wellman made no attempt to secure employment

with another employer after being terminated. Rather, he adjudged, on his own

accord, that no one would hire him because of his disability. However, he provided

no other testimony or evidence that his disability deprived him of an income,

decreased his income, or otherwise hampered his ability to earn an income.

________________________
(. . . continued)
worker could show he actually lost income because of his disability, he would
be entitled to receive disability benefits, despite his discharge for cause), cert.
denied, 909 A2d 726 (NJ 2006); Seagraves v. Austin Co. of Greensboro, 472
SE2d 397, 401 (NCCtApp 1996) (same); State ex rel. Sanese Servs. v. Indus.
Comm’n, 680 NE2d 991, 992-93 (Ohio 1997) (declaring that employee conduct
should not be the “preeminent” factor determining wage loss); RSG Forest
Prods. v. Jensen, 873 P2d 324, 326 (OreCtApp 1994) (“Because claimant ‘left
work’ and suffered a loss of earnings related to his injury, the fact that
employer fired claimant for reasons unrelated to his injury does not preclude
him . . . from receiving interim compensation.”); Howze v. Workers’ Comp.
Appeal Bd., 714 A2d 1140, 1142 (PaCommwCt 1998) (concluding that because
the claimant’s loss of wages was due in part to his work-related injury,
claimant was entitled to continue receiving his benefits, even after he was
terminated for cause).

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Wellman’s self-serving testimony, without more, is insufficient to meet his burden

of proof.

[¶17.] In conclusion, termination for cause does not automatically preclude a

claimant from receiving TPD benefits he would otherwise be awarded. However, in

order to receive such an award, the claimant bears the burden of proving loss of

income or ability to earn an income attributable to the work-related disability.

Wellman failed to meet this burden. Therefore, we affirm the Department and

circuit court’s denial of TPD benefits to Wellman.

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

MEIERHENRY, Justices concur.

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