Introduction

In Pham v. Smithfield Foods, the South Dakota Supreme Court resolves two recurring issues in workers’ compensation practice: whether an employer’s voluntary payment of benefits—without a Department-approved order or settlement—shifts the burden of proof or invokes SDCL 62-7-33’s “change in condition” review mechanism; and how reviewing courts should treat an administrative law judge’s credibility determinations when competing medical experts disagree on causation.

The Court holds that SDCL 62-7-33’s review procedure applies only where there is an existing, established obligation to pay workers’ compensation benefits, typically through a final Department order or Department-approved settlement. Voluntary payments do not create an ongoing obligation, do not shift the burden of proof, and do not require the employer to demonstrate a change in condition to end benefits. Accordingly, the claimant retains the burden to prove that the work injury remains a “major contributing cause” of the claimed condition and the need for treatment under SDCL 62-1-1(7).

The Court further underscores the deference owed to the Department’s (here, the ALJ’s) fact-finding under the clear error standard and clarifies that while a treating or examining physician’s opinion may be afforded “substantial weight,” it does not automatically trump a records-review expert when the treating opinion lacks support in the underlying facts and medical history.

Case Background and Key Issues

Claimant Jody Pham, a longtime Smithfield Foods employee, developed neck and right shoulder complaints in 2015 following repetitive, physically demanding work. Smithfield, a self-insured employer, voluntarily paid medical benefits for more than two years. In 2017, Pham underwent a C5-6 discectomy and fusion. By mid-2018, Smithfield suspended workers’ compensation benefits, obtaining an IME and paying a permanent partial impairment award (8% whole person impairment) while disputing further causation.

After additional care under group health insurance—including a 2020 ulnar nerve decompression—Pham petitioned for a hearing seeking medical benefits. The ALJ credited Smithfield’s expert (an orthopedic surgeon who reviewed the full medical record, including pre-injury headaches and shoulder complaints) over Pham’s treating physiatrist (who was unaware of key pre-injury records) and held that Pham failed to prove that her employment was a major contributing cause of the claimed conditions and need for ongoing treatment.

The circuit court reversed, sua sponte invoking SDCL 62-7-33 to hold that Smithfield bore the burden to show a change in condition to terminate benefits, and alternatively finding clear error in the ALJ’s weighing of experts. The Supreme Court granted Smithfield’s appeal.

Issues:

• Whether SDCL 62-7-33 required Smithfield to prove a change in condition to end benefits after making voluntary payments, thereby shifting the burden of proof.
• Whether the ALJ clearly erred in crediting Smithfield’s records-review expert over Pham’s examining/treating physician on medical causation.

Summary of the Opinion

• SDCL 62-7-33 does not apply where an employer has made voluntary payments without a Department-approved settlement or final order establishing an ongoing payment obligation. Voluntary payments alone do not shift the burden or require the employer to prove a change in condition to terminate benefits.
• The claimant retains the burden to prove by a preponderance of the evidence that the work injury is a “major contributing cause” of the claimed condition and need for treatment (SDCL 62-1-1(7)), established to a reasonable degree of medical probability.
• ALJ’s credibility determinations are entitled to deference; the Department’s factual findings are reviewed for clear error. The ALJ permissibly credited the employer’s expert, whose opinion rested on the full medical record, over the claimant’s treating physician, whose opinion did not account for key pre-injury records.
• Result: The Supreme Court reversed the circuit court and reinstated the ALJ’s denial of additional workers’ compensation benefits.

Detailed Analysis

1) Statutory Framework and the Court’s Reading of SDCL 62-7-33

SDCL 62-7-33 authorizes the Department to “review” payments already “made or to be made” and to end, diminish, increase, or award such payments upon a “change in the condition of the employee.” The Supreme Court emphasizes the statute’s text and context: it regulates modification of established payment obligations and presupposes an existing duty to pay, generally arising from either a final Department order or a Department-approved settlement/stipulation.

In Pham, there was no such obligation. Smithfield’s payments were voluntary; there had been no prior Department adjudication of compensability, no approved settlement, and no order obligating ongoing payment. Consequently, there was nothing for the Department to “review” under SDCL 62-7-33. The circuit court’s contrary interpretation would improperly convert voluntary payments into a perpetual obligation and undermine the statute’s text and purpose.

The Court also highlights harmony with SDCL 62-7-35.1, which bars claims for “additional compensation” unless the claimant files a petition within three years from the last payment. That statute expressly distinguishes SDCL 62-7-33 proceedings, confirming the Legislature contemplated voluntary payments without burden-shifting or ongoing liability.

2) The Burden of Proof on Compensability and Causation

The Court reaffirms that a claimant must prove compensability—including that the work injury is a “major contributing cause” of the claimed condition and need for treatment—by a preponderance of the evidence, to a reasonable degree of medical probability. Sustaining a work injury does not automatically entitle the employee to all subsequent benefits; causation must be medically established for each claimed condition and treatment phase.

The Court rejects Pham’s post-hearing reliance on Hanson v. Penrod Construction Co. and SDCL 62-4-1 (the employer must furnish “necessary” medical care). Those provisions and Hanson’s burden allocation concern disputes over treatment once compensability is established. They do not displace the predicate requirement that the claimant prove compensability under SDCL 62-1-1(7). The Court further notes SDCL 62-4-1.1 preserves the employer’s right to deny payment based on non-compensability.

3) Deference to the Department: Clear Error Review and Expert Weighing

Reviewing the ALJ’s factual findings for clear error, the Court rejects the circuit court’s reweighing of medical opinions. The ALJ was entitled to credit the employer’s expert (who reviewed the full medical record—including pre-injury migraines, neck, and shoulder complaints; normal EMGs; and intraoperative neuromonitoring—consistent with a degenerative progression) over the claimant’s treating physiatrist (who lacked awareness of significant pre-injury records and certain specialty records).

Addressing Peterson v. Evangelical Lutheran Good Samaritan Society, the Court clarifies that while an examining physician’s opinion can be afforded “substantial weight,” it is not a per se rule compelling acceptance over a records-review expert. Ultimately, “expert testimony is entitled to no more weight than the facts upon which it is predicated,” and the Department remains best positioned to assess credibility and evidentiary weight.

4) Precedents and Their Influence

• Textual interpretation cases: The Court relies on plain-language canons articulated in Betty Jean Strom Trust v. SCS Carbon Transportation, LLC and Puffy’s, LLC v. Department of Health, beginning with statutory text to discern legislative intent. This drives the conclusion that SDCL 62-7-33 presupposes an existing obligation.
• Scope of SDCL 62-7-33: The Court cites Johnson v. UPS, Whitney v. AGSCO Dakota, Kasuske v. Farwell, Ozmun, Kirk & Co., and Sopko v. C & R Transfer Co. to illustrate that SDCL 62-7-33 is the mechanism to modify a Department order or Department-approved settlement—i.e., where an obligation already exists. In contrast, no such predicate existed in Pham.
• Compatibility with limitations: SDCL 62-7-35.1’s three-year filing window from the last payment for “additional compensation” confirms that voluntary payments do not morph into established obligations or affect burden-shifting. The Court underscores that the circuit court’s reading would be inconsistent with this structure.
• Burden on reasonableness of treatment vs. compensability: Hanson concerns disputes about the necessity/suitability of care under SDCL 62-4-1 once compensability is established, and the Court cautions that it cannot be used to shift the initial causation burden.
• Encouragement of voluntary payments: Persuasive authorities—Salisbury v. Illinois Workers’ Compensation Commission and Rogers v. Jack’s Supper Club—reinforce that voluntary payments are not admissions of liability and that public policy favors prompt, voluntary benefits without penalizing employers later.
• Causation and proof standards: Arneson v. GR Management and Darling v. West River Masonry supply the familiar rules: preponderance of evidence, major contributing cause, medical probability (not possibility), and the necessity for precise, well-supported expert evidence.
• Agency deference and expert credibility: News America Marketing v. Schoon, Hughes v. Dakota Mill & Grain, Uhre Realty Corp. v. Tronnes, and Gordon v. St. Mary’s Healthcare Center all reinforce the deferential clear-error standard and the Department’s superior position to weigh witnesses.
• Clarification of Peterson: The Court narrows any overreading of Peterson, explaining that “substantial weight” for an examining physician is a factor, not a rule of decision that overrides agency credibility determinations.

5) Application to the Record

The ALJ’s decision emphasized that Pham’s treating expert, Dr. Ripperda, lacked key pre-injury records (notably, documented migraines and shoulder complaints predating 2015), did not review certain orthopedic records, and linked multiple conditions (headaches, thoracic outlet syndrome, adhesive capsulitis, ulnar neuropathy) to the 2015 work activities without engaging contradictory evidence (normal EMGs, negative neuromonitoring, and common idiopathic nature of adhesive capsulitis in the relevant demographic).

Dr. Jensen’s analysis—grounded in the full record—characterized Pham’s condition as a degenerative cervical process inconsistent with a work-caused major contributing cause for the claimed conditions and subsequent treatments. The ALJ found this more persuasive and the Supreme Court concluded that this weighing was not clearly erroneous.

Impact and Practical Implications

A) Statutory and Doctrinal Impact

• SDCL 62-7-33 narrowed: The decision solidifies that § 62-7-33 is a modification tool only for established obligations—primarily Department orders or Department-approved settlements. Employers’ voluntary payments, including permanent partial impairment payments memorialized to the Department, do not convert into ongoing obligations or trigger change-in-condition review.
• No burden-shift from voluntary payments: Claimants must be prepared to prove compensability whenever challenged, even after extended periods of voluntary payments.
• Hanson/SDCL 62-4-1 confined: Disputes about reasonableness/necessity of treatment arise only after compensability is established. Counsel should avoid conflating those burdens with the threshold causation inquiry under SDCL 62-1-1(7).
• Clarified reading of Peterson: Treating/examining status is a factor, not a trump card; ALJs may credit a records-review expert where grounded in a more complete and persuasive evidentiary foundation.

B) Litigation Strategy

• For claimants:
  • Develop comprehensive medical causation proof that addresses pre-injury history and contradictory diagnostic findings (e.g., normal EMGs, intraoperative neuromonitoring).
  • Do not assume prior voluntary payments or a PPD payment will shift the burden or establish ongoing entitlement.
  • Calendar SDCL 62-7-35.1’s three-year window from the last payment for any “additional compensation” claim.
• For employers/self-insurers:
  • Voluntary payments remain a safe practice to ensure prompt care without conceding liability, but be clear in communications that payments are without prejudice to compensability disputes.
  • When disputing ongoing benefits, assemble a complete record review and identify pre-injury complaints and diagnostic inconsistencies.
  • If a Department order or settlement exists and circumstances have changed, use SDCL 62-7-33 and develop “change in condition” evidence.
• For the Department and reviewing courts:
  • Maintain strict adherence to pre-hearing issue framing; avoid introducing new statutory theories sua sponte post-hearing that were neither pleaded nor litigated.
  • Apply clear error review rigorously; refrain from reweighing expert credibility absent a definite and firm conviction of error.

C) Anticipated Future Disputes

• What qualifies as an “established obligation” short of a formal order or approved settlement? The cases suggest Department-approved stipulations and orders suffice; mere Department receipt of a payment memorandum, without more, does not.
• Boundary questions may arise where employers issue acceptance letters or formal “admissions” of compensability. Absent Department action approving a settlement or entering an order, Pham indicates SDCL 62-7-33 still does not apply.

Complex Concepts Simplified

• Compensability (SDCL 62-1-1(7)): An injury is compensable if it arises out of and in the course of employment, and if the work injury is a “major contributing cause” of the specific condition for which benefits are sought.
• Major contributing cause: Work must be a significant cause of the condition and need for treatment; it is more than mere contribution but need not be the sole cause. It must be proven to a reasonable degree of medical probability.
• Voluntary payments vs. established obligations: Voluntary payments are made without a Department order or approved settlement and do not create a continuing legal duty to pay. Established obligations arise from Department action (orders or approved settlements).
• SDCL 62-7-33 (change in condition review): A procedure to modify existing obligations based on a change in the employee’s condition since the obligation arose. It does not apply where no prior obligation exists.
• SDCL 62-4-1 vs. SDCL 62-1-1(7): Section 62-4-1 governs the employer’s duty to furnish necessary medical care once an injury is compensable. Section 62-1-1(7) governs the threshold question of compensability and causation.
• Clear error review: An appellate standard deferring to the Department’s factual findings and credibility determinations; reversal occurs only when the appellate court is left with a definite and firm conviction that a mistake has been made.
• Weight of expert testimony: The persuasiveness of an expert depends on the completeness and accuracy of the facts underlying the opinion. Treating/examining status is significant but not determinative.

Conclusion

Pham v. Smithfield Foods establishes a clear and practical rule: voluntary workers’ compensation payments do not trigger SDCL 62-7-33’s change-in-condition review, do not impose an ongoing payment obligation, and do not shift the burden of proof on compensability. Claimants continue to bear the burden to prove, with competent medical evidence to a reasonable probability, that their work injury is a major contributing cause of the claimed condition and need for treatment.

The decision also reinforces the high deference due to the Department’s evidentiary assessments under the clear error standard. A treating or examining physician’s opinion may be influential but is not automatically dispositive; expert opinions rise and fall with the factual foundation on which they are built.

By aligning SDCL 62-7-33 with its text and purpose, and by clarifying the proper allocation of burdens and standards of review, the Court promotes predictability, encourages prompt voluntary payments, and preserves the Department’s central role in weighing medical causation in workers’ compensation disputes.