Lagler v. Menard, Inc., #28255

CourtSupreme Court of South Dakota
Citation2018 S.D. 53
Docket Number#28266,#28255
PartiesTAMMY LAGLER, Claimant and Appellee, v. MENARD, INCORPORATED and ZURICH AMERICAN INSURANCE CO., Defendants and Appellants.
Decision Date03 July 2018

2018 S.D. 53

TAMMY LAGLER, Claimant and Appellee,
and ZURICH AMERICAN INSURANCE CO., Defendants and Appellants.



July 3, 2018

#28255, #28266-a-DG



Heidepriem, Purtell & Siegel LLP
Sioux Falls, South Dakota

Attorneys for claimant and

Woods, Fuller, Shultz & Smith, P.C.
Sioux Falls, South Dakota

Attorneys for defendants and

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GILBERTSON, Chief Justice

[¶1.] Tammy Lagler suffered a workplace injury while employed by Menard Inc. The South Dakota Department of Labor and Regulation awarded Lagler lump-sum, permanent-total-disability compensation but denied her request for attorney's fees. On appeal, the circuit court affirmed the Department's decision to award compensation but reversed the decision to award it as a lump sum. The court also reversed the Department's denial of attorney's fees. The parties each appeal various aspects of the court's decision. We affirm.

Facts and Procedural History

[¶2.] On April 21, 2007, then-47-year-old Lagler injured her right ankle while working in the garden center of the Sioux Falls Menards.1 While stepping off a raised platform, Lagler lost her balance and landed on her right foot. She heard a "pop" and felt a sharp pain on the inside of her right heel that extended up the back of her leg to the inside of her knee. Lagler also suffered minor injuries to her knee and elbow. Her ankle immediately swelled and was painful. Hours later, Lagler sought medical care. A physician's assistant (P.A.), Rodney Ridenour, examined Lagler's ankle and after ordering imaging, determined that the ankle was sprained and not fractured. Several days later, Lagler was examined by Dr. Ronald Rossing, who also diagnosed Lagler's injury as a sprain. Dr. Rossing fit Lagler with a cast shoe and advised several work restrictions: wear the cast shoe, limit stair climbing, no lifting over 25 pounds, and no walking for longer than 45 minutes at a time.

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[¶3.] Lagler continued to work at Menards. For its part, Menards accommodated Lagler's work restrictions. But Lagler continued to experience pain, and on June 6, 2007, she consulted Dr. William Bell, a board-certified orthopedic surgeon. Dr. Bell fit Lagler with a controlled-ankle-motion (CAM) boot and requested approval for a bone scan, which was approved by Menard's insurer, Zurich American Insurance Co. On July 2, Dr. Bell reviewed the bone scan, diagnosed Lagler with compression fractures in her right foot, and determined she should continue wearing the CAM boot for another four weeks. By August 1, Lagler was still experiencing significant pain even though new imaging showed "solid union of her fractures." Dr. Bell suspected the straps of the CAM boot were responsible for Lagler's continuing pain. Although Dr. Bell concluded Lagler could safely transition out of wearing the boot, she continued to wear it.

[¶4.] Lagler's condition did not improve, but physical examination revealed no objective reason for her pain. On September 5, 2007, writing in Lagler's medical records, Dr. Bell noted: "[Lagler] is in for follow-up on her foot pain. She's really not doing any better. She's still complaining of a tremendous amount of kind of ankle, hind foot, mid foot pain." On September 24, after receiving Zurich's approval, Dr. Bell ordered magnetic resonance imaging (MRI) of Lagler's right ankle and foot. Based on the MRI, Dr. Bell determined that there were no abnormalities and that Lagler's ligaments and tendons were "intact without significant degenerative change." Unable to identify a cause of Lagler's continuing pain, Dr. Bell referred Lagler to another physician, with Zurich's approval.

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[¶5.] Lagler began seeing Dr. David Watts, another board-certified orthopedic surgeon. On October 2, 2007, Lagler reported pain along her right instep. Dr. Watts injected lidocaine, a local anesthetic, into Lagler's posterior tibialis tendon, and she experienced nearly total relief. But when Dr. Watts asked Lagler to perform a single heel raise, she was not able to do so. Dr. Watts diagnosed Lagler with posterior tibialis tendinitis and concluded it was related to work. After conservative treatments were unsuccessful, Dr. Watts performed surgery on Lagler to repair the tendon. During surgery, Dr. Watts discovered that Lagler's tendon was frayed. Dr. Watts concluded that because Lagler had continuous pain in the same area since the April 2007 accident, her tendinitis and subsequent surgery resulted from a work-related injury.

[¶6.] Following surgery, Lagler was fitted with a progressive-weight-bearing CAM boot for rehabilitation. But on April 30, 2008, only three months after surgery, Lagler reported to P.A. Angela Majeres, who worked with Dr. Watts, that she had a resurgence of pain and new tenderness along her Achilles tendon. On June 2, Lagler returned to Dr. Watts and reported that while she no longer had pain in her posterior tibialis tendon, she was experiencing new pain along her Achilles tendon. Dr. Watts diagnosed her with Achilles tendinitis. He restricted her to sedentary work only.

[¶7.] Lagler continued to experience worsening and new pain. On July 30, 2008, Dr. Watts diagnosed Lagler with "Achilles tendinitis with retrocalcaneal bursitis." Retrocalcaneal bursitis is an inflammation of the bursa, which is a fluid-filled sac located between the tendon and bone. Dr. Watts opined that the

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immediate cause of the inflammation was a congenital deformity in Lagler's foot known as "Haglund's deformity," which is a condition where the back of the heel pokes into the soft tissue near the Achilles tendon. In Dr. Watts's opinion, wearing a CAM boot after the April 2007 injury caused Lagler to change her gait, which in turn caused her congenital condition to become symptomatic. Thus, Dr. Watts concluded that Lagler's pain ultimately stemmed from her work-related injury. On August 6, 2008, Dr. Watts sought approval from Zurich to perform a second surgery on Lagler.

[¶8.] Zurich assigned claims specialist Mary Lemieux to Lagler's case.2 Lemieux's notes indicate she contacted Dr. Watts's office on August 6, 2008, to request information on the proposed procedure. Viewing the delay as a refusal to cover the second surgery, Lagler filed a petition for a hearing with the Department on August 28. Lemieux's notes during this time indicate she made several attempts to obtain information from Dr. Watts's office. On September 15, records indicate a 5.8-minute-long telephone call occurred between Lemieux and one of more than fifty extensions at Dr. Watts's office. Lemieux's notes describe the September 15 call: "Angie Roberts, Dr. Watts' nurse, called me. We discussed the etiology of this. Can be due to heels, i.e., pump bump but really it's more of an idiopathic condition. Not related to ankle injury. Is she then disabled due to the Haglund's? Yes, not due to the original injury." Testimony would later establish, however, that not only was this conversation not noted in Lagler's records, nobody in Dr. Watts's office is

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named "Angie Roberts." On September 17, without completing either an independent medical examination or an independent examination of Lagler's medical records, Zurich sent a fax to Dr. Watts's office that officially denied payment for Lagler's second surgery. And on September 22, Zurich stopped all disability payments to Lagler.

[¶9.] On October 27, 2008, Lagler was examined by another orthopedic surgeon, Dr. Eric Watson. Dr. Watson agreed with Dr. Watts's diagnosis regarding Haglund's deformity and retrocalcaneal bursitis. Dr. Watson also concluded that the surgery proposed by Dr. Watts would relieve Lagler's pain, but Dr. Watson did not express an opinion as to whether Lagler's April 2007 injury caused her current symptoms. Believing that Lagler was running out of nonsurgical options, Dr. Watson recommended Lagler undergo a second surgery to correct her Haglund's deformity and to remove the inflamed bursa.

[¶10.] After first denying coverage for a second surgery and terminating compensation, Zurich then engaged Dr. Richard Farnham to conduct an independent examination of Lagler's medical records.3 Dr. Farnham did not physically examine Lagler; instead, he reviewed the treatment records of P.A. Ridenour and Drs. Rossing, Bell, Watts, and Watson. Dr. Farnham concluded that Lagler's April 2007 injury did not cause either her posterior tibialis tendinitis or her

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Haglund's deformity. He also concluded that not even Lagler's first ankle surgery was causally related to the April 2007 injury.

[¶11.] On February 11, 2009, Lagler accepted Dr. Watson's recommendation, and Dr. Watson performed the surgery on February 19. Following her second surgery, Lagler initially reported that her condition was improving. But by the end of April 2009, she complained of swelling in her foot. Dr. Watson directed Lagler to engage in only sedentary work until July 15 and to work no more than 35 hours per week as tolerable. Eventually, Lagler could not tolerate even 35 hours per week, so on June 11, 2010, Dr. Watson changed the restriction to a maximum of 30 hours per week. Dr. Watson also referred Lagler to Dr. Jerry Blow, another board-certified physician. Dr. Blow evaluated Lagler on August 19 and reviewed her medical records and Dr. Watts's deposition. Dr. Blow agreed with Dr. Watts that Lagler's April 2007 injury was responsible for her posterior tibialis tendinitis and retrocalcaneal bursitis.

[¶12.] The financial and emotional impact of the foregoing on Lagler was severe. While she continued to work throughout 2007, she had no income between September 2008 and April 2009. And after returning to work, her physical limitations reduced the number of hours she could work in...

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