#24680-a-RIEPEL, Circuit Judge 

2008 SD 87

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

LEWIS F. STEINMETZ, Appellant, 

 v. 

STATE OF SOUTH DAKOTA, DOC 

STAR ACADEMY, 

 and 

STATE OF SOUTH DAKOTA, 

BUREAU OF PERSONNEL, Appellees. 

* * * * 

APPEAL FROM THE CIRCUIT COURT 

OF THE SIXTH JUDICIAL CIRCUIT 

HUGHES COUNTY, SOUTH DAKOTA 

* * * * 

HONORABLE JAMES W. ANDERSON 

Judge 

* * * * 

Wm. JASON GROVES of 

Groves Law Office 

Rapid City, South Dakota Attorney for appellant. 

TIMOTHY ENGEL of 

May, Adam, Gerdes & Thompson, LLP 

Pierre, South Dakota Attorneys for appellees. 

* * * * 

 ARGUED 

 APRIL 24, 2008 

 OPINION FILED 9/3/08
#24680 

RIEPEL, Circuit Judge 

[¶1.] Lewis Steinmetz (Steinmetz) appeals an order of the circuit court 

affirming the decision of the South Dakota Department of Labor, Division of Labor 

and Management (Department) refusing to award workers' compensation benefits 

on a lump sum basis and rejecting his proposed method of calculating the present 

value of his benefits. We affirm. 

FACTS AND PROCEDURE

[¶2.] Steinmetz was injured while employed by the South Dakota 

Department of Corrections (Employer). Steinmetz filed a petition for permanent 

total disability benefits and requested a lump sum award pursuant to SDCL 62-7-6. 

Steinmetz and Employer entered into a stipulation in which Employer admitted 

that Steinmetz was permanently and totally disabled pursuant to SDCL 62-4-7 as a 

result of his work-related injury. Employer also agreed that Steinmetz was entitled 

to the payment of his attorney's fees and costs in a lump sum. The stipulation 

provided that Steinmetz's right to request a lump sum pursuant to SDCL 62-7-6 

was not impaired by the stipulation. 

[¶3.] Pursuant to ARSD 47:03:01:07, the Department calculated the present 

value of Steinmetz's future benefits as $269,897.91. Steinmetz employed the 

services of Dr. Ralph Brown (Dr. Brown) and Donald Frankenfeld (Frankenfeld) to 

opine as to the present value of his future workers' compensation benefits. Both Dr. 

Brown and Frankenfeld calculated the equivalent lump sum amount in an amount 

significantly in excess of the Department's calculation.1 

 

1. Dr. Brown calculated the present value as $364,120.21. Frankenfeld 

calculated the present value as $359,880. 
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[¶4.] The parties agreed to submit the case to the Department on stipulated 

facts. Steinmetz proffered Dr. Brown's and Frankenfeld's calculations along with a 

report from Don Herrmann (Herrmann) proposing structured settlement 

investments for Steinmetz's life, 10 years certain plus life, and 20 years certain plus 

life. The parties also stipulated to the admission of a report which concluded that if 

Steinmetz was awarded a lump sum in the amounts calculated by Dr. Brown or 

Frankenfeld, and if that lump sum, after payment of attorney's fees and costs, was 

invested as proposed by Herrmann, there would be no offset of Social Security 

Disability benefits. 

[¶5.] The Department denied Steinmetz's motion for a lump sum award of 

workers' compensation benefits and rejected Steinmetz's method of calculating the 

present value of his benefits. The Department concluded that the method of 

calculation set forth in ARSD 47:03:01:07 was valid. Steinmetz appealed to the 

circuit court. The circuit court affirmed the Department's decision. Steinmetz 

appeals. 

STANDARD OF REVIEW 

[¶6.] This case presents questions of fact, questions of law, and mixed 

questions of law and fact. "Questions of fact are subject to clearly erroneous 

review." Enger v. FMC, 2000 SD 48, ¶6, 609 NW2d 132, 134. "A decision is clearly 

erroneous if, after reviewing the entire record, the reviewing court is left with a 

definite and firm conviction that a mistake has been made." Id. (citing Sopko v. C & 

R Transfer Co., Inc., 1998 SD 8, ¶6, 575 NW2d 225, 228). "Questions of law and 

mixed questions of law and fact, on the other hand, are subject to different 

standards." Id. ¶7, 609 NW2d at 134. "Questions of law are subject to de novo 
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review; no deference is given to an agency's conclusions of law." Id. (citing Thomas 

v. Custer State Hospital, 511 NW2d 576, 579 (SD 1994)). "When the issue involves 

a question of mixed law and fact requiring the application of a legal standard, the 

Court will treat the issue as a question of law subject to de novo review." Id. (citing 

Permann v. Dep't of Labor, 411 NW2d 113, 119 (SD 1987)). The determination of 

whether a lump sum award of benefits should be granted under SDCL 62-7-6 is a 

mixed question of law and fact and is freely reviewable on appeal. Id. ¶10, 609 

NW2d at 134. 

ANALYSIS 

ISSUE ONE

[¶7.] Whether the Department erred in denying Steinmetz's request 

for a total lump sum payment of benefits. 

[¶8.] "The allowance of a lump-sum award is the exception and not the 

general rule." Id. ¶11, 609 NW2d at 135 (quoting Wulff v. Swanson, 69 SD 539, 

543, 12 NW2d 553, 555 (1944)). The rationale behind this policy has been explained 

in prior cases: 

Since compensation is a segment of a total income 

insurance system, it ordinarily does its share of the job 

only if it can be depended on to supply periodic income 

benefits replacing a portion of lost earnings. If a . . . 

totally disabled worker gives up these reliable periodic 

payments in exchange for a large sum of cash 

immediately in hand, experience has shown that in many 

cases the lump sum is soon dissipated and the workman 

is right back where he would have been if workmen's 

compensation had never existed. 

Id. ¶11, 609 NW2d 135 (quoting 8 Larson's Workers' Compensation Law, §82.71 

(1999)). 
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[¶9.] "The beginning point of any consideration of the justifiability of lumpsumming in a particular case is the standard set by the statute." 8 Larson's 

Workers' Compensation Law, §132.07[2][a] (2007). SDCL 62-7-6 allows lump sum 

awards under certain circumstances. It provides: 

An employer or employee who desires to have any unpaid 

compensation paid in a lump sum may petition the 

Department of Labor asking that the compensation be paid 

in that manner. If, upon proper notice to interested parties 

and proper showing before the department, it appears in 

the best interests of the employee that the compensation be 

paid in lump sum, the secretary of labor may order the 

commutation of the compensation to an equivalent lumpsum amount. That amount shall equal the total sum of 

the probable future payments capitalized at their present 

value on the basis of interest calculated at a rate per year 

set by the department with annual rests in accordance 

with rules promulgated pursuant to chapter 1-26. If there 

is an admission or adjudication of permanent total 

disability, the secretary may order payment of all or part 

of the unpaid compensation in a lump sum under the 

following circumstances: 

(1) If the employee has exceptional financial need 

 that arose as a result of reduced income due 

 to the injury; or 

(2) If necessary to pay the attorney's fees, costs 

 and expenses approved by the department 

 under § 62-7-36. 

If a partial lump sum payment is made, the amount of the 

weekly benefit shall be reduced by the same percentage 

that the partial lump sum bears to the total lump sum 

computation. The remaining weekly benefit is subject to 

the cost of living allowance provided by § 62-4-7. Any 

compensation due to beneficiaries under § 62-4-12 to 62-4-

22, inclusive, may not be paid in a lump sum, except for 

the remarriage lump sum provided in § 62-4-12. 

SDCL 62-7-6 (emphasis added). 

[¶10.] "Our statute authorizing a lump-sum payment clearly sets out the 

circumstances under which such a payment can be made." Thomas, 511 NW2d at 
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580. "First, it must be in the 'best interests of the employee.'" Id. "Our prior 

decisions confirm that the primary emphasis must be placed on providing an 

injured worker with a reliable stream of income to replace lost wages and benefits." 

Id. See also Caldwell v. John Morrell & Co., 489 NW2d 353 (SD 1992); Wulff, 69 SD 

539, 12 NW2d at 553. "Second, in the case of a worker who has been permanently 

and totally disabled . . . a lump sum may be ordered if the worker has an 

'exceptional financial need that arose as a result of reduced income due to the 

injury.'" Thomas, 511 NW2d at 580 (quoting SDCL 62-7-6(1)). "Third, a lump sum 

may be ordered, in the case of a permanent total disability, when necessary to pay 

the attorney's fees, costs and expenses." Id. (citing SDCL 62-7-6(2); SDCL 62-7-36). 

The Department found that Steinmetz established that a lump sum award would be 

in his best interest. However, Steinmetz failed to establish that he had "exceptional 

financial need that arose as a result of reduced income due to the injury." 

[¶11.] Prior to 1993 the South Dakota Legislature restricted lump sum 

awards to those situations in which it was in the claimant's "best interests."2 "This 

Court has identified four factors for defining these 'best interests:' 

2. SDCL 62-7-6 (1992) provided: 

An employer or employee who desires to have any unpaid 

compensation paid in a lump sum may petition the 

department of labor asking that the compensation be paid 

in that manner. If, upon proper notice to interested 

parties and proper showing before the department, it 

appears in the best interests of the employee that the 

compensation be paid in lump sum, the secretary of labor 

may order the commutation of the compensation to an 

equivalent lump-sum amount. That amount shall equal 

the total sum of the probable future payments capitalized 

at their present value on the basis of interest calculated 

at a rate per year set by department rule or regulation 
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1. Age, education, mental and physical condition, and 

 actual life expectancy. 

2. Family circumstances, living arrangements, and 

 responsibilities to dependents. 

3. Financial condition, including all sources of income, 

 debts and living expenses. 

4. Reasonableness of plan for investing the lump sum 

 proceeds and ability to manage invested funds or 

 arrangement for management by others." 

Enger, 2000 SD 48, ¶13, 609 NW2d at 135 (quoting Thomas, 511 NW2d at 580). 

However, the legislature amended SDCL 62-7-6 in 1993. 1993 SD Laws ch 379, §4. 

The restriction on filing a petition for a lump sum payment in "complete disability" 

cases during the first six months following injury was replaced with the current 

language which provides that in cases of permanent total disability a lump sum 

may be ordered upon a showing by claimant of "exceptional financial need that 

arose as a result of reduced income due to the injury" or to pay attorney fees. SDCL 

62-7-6. 

[¶12.] "'The first and most important rule of statutory construction is to 

determine and give effect to the intention of the legislature.'" Nelson v. School Bd. 

of Hill City School Dist. No. 51-2 of Pennington County, 459 NW2d 451, 454 (SD 

1990) (quoting Watertown Independent School Dist. No. 1 v. Thyen, 83 SD 309, 314, 

with annual rests. In cases where there is complete 

disability, no petition for commutation to a lump-sum 

basis may be entertained by the department until six 

months after the date of the injury. Any compensation 

due to beneficiaries under §§ 62-4-12 to 62-4-22, inclusive, 

may not be paid in a lump sum, except for the remarriage 

lump sum provided in § 62-4-12. 
#24680 

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159 NW2d 122, 125 (1968)). "'The law must be so construed as to give effect to all of 

its provisions, if possible.'" Id. at 455 (quoting Beitelspacher v. Winther, 447 NW2d 

347, 351 (SD 1989)). This Court must apply the language of SDCL 62-7-6 as 

enacted by the legislature. By amending the statute in 1993 the legislature has 

required that in cases involving permanent total disability a claimant must show 

not only that a lump sum award is in the claimant's best interest, but that either 

the claimant has "exceptional financial need that arose as a result of reduced 

income due to the injury" or that a lump sum award is necessary to pay attorney's 

fees, costs and expenses. The parties agreed to allow the payment of attorney's fees 

in a lump sum so that is not in issue. While Steinmetz may have shown that a 

lump sum award would be in his best interests based on his investment proposals, a 

showing of "exceptional financial need" caused by his injury is required by SDCL 

62-7-6 before a lump sum may be awarded. The parties agreed to submit this case 

to the Department on stipulated facts. As discussed above, Steinmetz submitted his 

experts' reports calculating the present value of a lump sum award, Herrmann's 

proposed structured settlement investments and a report showing that there would 

be no offset of Social Security Disability benefits if he were awarded a lump sum 

based on his experts' calculations. In reviewing the record, Steinmetz offered no 

evidence of "exceptional financial need."3 The order of the circuit court is affirmed 

3. SDCL 62-7-6 requires that the injured worker show "exceptional financial 

need that arose as a result of reduced income due to the injury[.]" (emphasis 

added). At oral arguments, Steinmetz's counsel argued that exceptional 

financial need was shown in this case by the mere fact that Steinmetz's 

income is reduced following his permanent and total disability. In every case 

of permanent and total disability the injured employee suffers a reduction in 

income due to his or her injury. Reduced income alone is not enough to show 

"exceptional financial need." 
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as to this issue. 

ISSUE TWO 

[¶13.] Whether ARSD 47:03:01:07 produces an equivalent lump sum 

amount as required by SDCL 62-7-6. 

[¶14.] Steinmetz asserts that the formula used by the Department to 

calculate the present value of a lump sum award does not produce an equivalent 

lump sum amount as required by SDCL 62-7-6. The core of Steinmetz's argument 

is that the one percent cap on cost-of-living-adjustments (COLAs) for a lump-sum 

award produces an award which is not "equivalent" to that which would be received 

under periodic payments, as mandated by SDCL 62-7-6. Steinmetz argues that the 

Department exceeded the statutory authority granted to it by SDCL 62-7-6 when it 

promulgated ARSD 47:03:01:07. 4 Alternatively, he argues that SDCL 62-7-6 is 

4. ARSD 47:03:01:07 provides: 

 

Lump sum commutation for permanent partial disability 

shall equal the sum of the probable future payments 

capitalized at their present value on the basis of interest 

calculated at the rate of ten-year treasury notes on the 

date of injury as determined by the records of the federal 

reserve library, rounded to the nearest one-fourth of one 

percent, using the following formula: 

 V1/52 - Vn/52

Pn = ----------------------------------------------------------- 

 1 - V1/52

 where 

P = Present value of $1.00 a week payable for n 

weeks 

V = Present value of $1.00 due at the end of the 

year 

n = Number of weeks for which payments are to be 

made 
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unconstitutional because the delegation of authority contained in the statute is 

unlimited or without sufficient standards. 

[¶15.] Employer argues that if this Court affirms the Department's refusal to 

award Steinmetz's benefits in a lump sum, it is not necessary to reach this issue. 

We agree. If Steinmetz's benefits are not paid in a lump sum there is no need from 

Steinmetz's perspective to determine the present value of those benefits. However, 

Steinmetz's counsel asserts that the parties entered into a stipulation regarding 

attorney's fees which preserved counsel's interest in the calculation of the lump sum 

value. The stipulation regarding attorney fees agrees to the payment of Steinmetz's 

attorney's fees, tax and costs based upon the Department's calculation of present 

value under the challenged administrative rule. It provides that "[t]his payment 

will not impair or limit Claimant's rights under [Claimant's Motion for Lump 

Sum]." (emphasis added). The stipulation preserves Steinmetz's right to pursue a 

lump sum award, but does not provide that his counsel has an interest in pursuing 

the motion independent of Steinmetz. It merely states that if Steinmetz is 

successful in his motion the payment made to his counsel "shall serve as a credit 

 

Lump sum commutation for permanent total disability 

shall be calculated in the same manner except that the 

interest rate shall be reduced one percent as a setoff for 

the cost-of-living allowance provided by SDCL 62-4-7. The 

number of weeks for which payments are made shall be 

determined by the life expectancy tables found in 

Appendix A at the end of this chapter. The interest rate 

used, exclusive of the cost-of-living allowance setoff, may 

not vary more than two percent above or below the 

interest rate on ten-year treasury notes on March 4, 1992, 

as determined from the records of the federal reserve 

library.
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should a greater lump sum value be determined." The stipulation does not give 

Steinmetz's counsel a justifiable interest independent of his client. 

[¶16.] Steinmetz's counsel also asserts that an injured worker's counsel has 

an interest in determining the present value of his client's benefits for the purpose 

of calculating attorney's fees. Counsel for Steinmetz fails to cite any authority in 

support of this claim. The failure to cite authority is a violation of SDCL 15-26A60(6). 

[¶17.] The issue of whether ARSD 47:03:01:07 produces an equivalent lump 

sum amount as required by SDCL 62-7-6 is not ripe for review and this Court 

declines to address it. "Ripeness involves the timing of judicial review and the 

principle that '[j]udicial machinery should be conserved for problems which are real 

and present or imminent, not squandered on problems which are abstract or 

hypothetical or remote."' Meinders v. Weber, 2000 SD 2, ¶39, 604 NW2d 248, 263 

(Boever v. South Dakota Bd. of Accountancy, 526 NW2d 747, 750 (SD 1995) (quoting 

Gottschalk v. Hegg, 89 SD 89, 228 NW2d 640, 643-44 (1975))) (alterations in 

original). "Courts should decide only mature controversies, eschewing advisory 

opinions and conjectural questions." Id. (citing Kneip v. Herseth, 87 SD 642, 214 

NW2d 93, 96 (1974)). "'Even if a court has jurisdiction to decide the 

constitutionality of the law, it should decline to do so if the issue is so premature 

that the court would have to speculate as to the presence of a real injury.'" Id.

(quoting Boever, 526 NW2d at 750 (citing Meadows of West Memphis v. City of West 

Memphis, 800 F2d 212, 214 (8thCir 1986))). 
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[¶18.] Therefore, the circuit court's order affirming the Department's decision 

is affirmed as to the denial of a lump sump award and this Court does not reach 

Steinmetz's claims regarding ARSD 47:03:01:07. 

[¶19.] RIEPEL, Circuit Judge, for ZINTER, Justice, disqualified. 

[¶20.] GILBERTSON, Chief Justice, SABERS, KONENKAMP and 

MEIERHENRY, Justices, concur.