S.D. Supreme Court Hears Appeal Over Whether 2010 Fall Voids 1994 Workers’ Comp Settlement

The South Dakota Supreme Court heard oral arguments in appeal No. 331059, David Wedge v. Mid Continent Media, over whether an insurer may seek to alter benefits under SDCL 62-7-33 after earlier administrative and circuit-court rulings. Counsel for the appellant and the insurer presented competing accounts of the medical record and procedural history, and the court recessed after counsel declared the case fully submitted.

Appellant’s attorney Nathan Obiat argued that the dispute is primarily jurisdictional and preclusion-based, pressing the court to treat prior Department of Labor orders and contempt findings as final on the issues they resolved. "There are 3 issues presented by this appeal," Obiat told the justices, framing the first as dispositive: "whether the circuit court erred in declining to apply the doctrines of res judicata, judicial estoppel, and ... to preclude consideration of a change in condition pursuant to SDCL 62-7-33." He told the court the administrative record and related federal litigation produced multiple final orders and admissions by the insurer that, in his view, should bar relitigation of compensability and related medical benefits.

The case’s factual core is undisputed in outline: a catastrophic cervical-spine workplace injury in 1991 left Wedge (also referenced in the record with variant spellings) with a fusion and severe disability; a 1994 settlement with the then-carrier, Crum and Forrester, obligated the insurer to provide medical benefits under SDCL 62-4-1. Subsequent disputes produced a 2014 petition to the Department of Labor and multiple partial summary-judgment orders and contempt proceedings that counsel for Wedge described as establishing finality on key matters.

Counsel for the insurer, identifying himself as Bart McClay, countered that the appeal turns on causation and intervening cause doctrine. McClay said medical evidence shows a "dangerously defective fire door handle" caused a distinct and severe injury in April 2010 that produced new spinal injuries and surgical care. "When the forces and acceleration that occurred by virtue of Mr. Wedge pulling on that doorknob ... that's all that was needed," McClay argued, urging the court to treat the 2010 event as an independent intervening cause under established intervening-cause principles.

The justices pressed both sides on two overlapping legal questions. First, they queried how SDCL 62-7-33, a statutory vehicle that expressly contemplates reopening benefits for a change in condition, should be reconciled with ordinary preclusion doctrines (claim preclusion and judicial estoppel). Appellant counsel invoked this court’s Hayes decision and pointed to an operative date approach (citing an alleged operative date of 08/03/2010 in Hayes and a later contempt finding dated 12/29/2016 in this record) to argue that no permissible change-of-condition claim postdates the relevant cutoff.

Second, the bench examined medical causation: whether the ALJ and the circuit court properly weighed competing expert accounts (including testimony attributed to a Dr. Sabo and to treating physician Dr. Goodhope), whether the record supports a finding that the 2010 fall merely aggravated the 1991 injury or instead produced a new, superseding injury, and what standard applies — the Caldwell contribution test applicable to the 1991 standard or Larson’s intervening-cause framework for later events. The justices repeatedly pressed both sides on whether the administrative findings reflected a clear-error problem or raised questions of law for this court to decide.

Appellant emphasized that the 1994 settlement established Wedge’s status as permanently and totally disabled and argued that the Department of Labor’s later change-of-condition finding is inconsistent with that settlement-based status. "We would respectfully request the court reverse the Department of Labor and the circuit court's conclusion with respect to res judicata, judicial estoppel, and reverse the circuit court's conclusion that there was a change of condition pursuant to 62-7-33," Obiat said in rebuttal.

Defense counsel told the court that partial summary judgments in the administrative record were interlocutory and that the 2010 incident produced distinct injuries that justified the insurer’s 62-7-33 filing. He described factual and medical detail intended to show a sudden, forceful event — not a mere exacerbation of the prior condition — and relied on analogous precedent and the court’s intervening-cause jurisprudence.

The justices asked whether, if the insurer prevailed, additional administrative proceedings would follow to determine any decrease, termination, or apportionment of benefits under 62-7-33; both sides acknowledged the possibility that further proceedings before the Department of Labor could be required to implement an altered benefits determination.

The court recessed after both sides completed argument and the Chief Justice announced the case was "fully submitted." No decision or timetable for an opinion was announced from the bench during the session recorded in the transcript. The issues presented — the interplay of SDCL 62-7-33 with preclusion doctrines and the factual question whether the April 2010 fall was an intervening cause or an aggravation — are likely to determine whether Wedge retains the benefits conferred or whether the insurer may reopen benefits on the basis of changed condition.

Next steps: the court will issue an opinion resolving the legal questions and the factual-appellate issues; the transcript records the case as submitted and the court in recess.