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NELVA BLENNER, Claimant and Appellee, v. CITY OF RAPID CITY, Employer and Appellant, and SOUTH DAKOTA MUNICIPAL LEAGUE WORKERS COMPENSATION FUND, Insurer and Appellant. [2003 SD 121] South Dakota Supreme Court Appeal from the Circuit Court of The Sixth Judicial Circuit Hughes County, South Dakota Hon. Max A. Gors, Judge FRANK DRISCOLL of DeMersseman Jensen Rapid City, South Dakota Attorneys for appellee. MARK J. WELTER of Woods, Fuller, Shultz & Smith Sioux Falls, South Dakota Attorneys for appellants. Argued February 13, 2003 Opinion Filed 10/1/2003 #22512, 22526 GIENAPP, Circuit Judge [¶1.] Circuit Judge David R. Gienapp, sitting for Justice Richard W. Sabers, disqualified, delivers the majority opinion of the Court on Issue One, which holds that Blenner's loss of use rating should not have been added to her partial disability rating. [¶2.] Justice Steven L. Zinter delivers the majority opinion on Issue Two, which holds that prejudgment interest on the permanent partial disability benefits runs from the date of the impairment rating and is calculated on each payment as it becomes due. [¶3.] Judge Gienapp dissents on Issue Two. [¶4.] Circuit Judge Gienapp delivers the majority opinion on Issue Three, which holds that the prejudgment interest rate is the Category C rate pursuant to SDCL 54-3-16(3). [¶5.] GIENAPP, Circuit Judge, writing the majority opinion on Issue One. [¶6.] This is an appeal by the City of Rapid City (Employer) and the South Dakota Municipal League Worker's Compensation Fund (Insurer) from a circuit court decision and order affirming a decision of the Department of Labor in a workers' compensation case commenced by Nelva Blenner. We reverse and remand. FACTS AND PROCEDURE

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[¶7.] While employed by the South Dakota School of Mines and Technology as a secretary, Nelva Blenner (Blenner) suffered a back injury. In 1978 she underwent back surgery to correct the problem. In connection with the 1978 back injury the physician reported a fifteen percent whole person impairment rating to the insurer. [¶8.] After employment with the School of Mines, Blenner became employed by the Rapid City Police Department as a sergeant. The injury at issue in this case occurred while she was receiving training on a new weight machine on February 23, 1993. The trainer forgot to reduce the weight setting on the machine and when Blenner got on the machine to exercise, her lower back was immediately injured. As a result, she underwent two microdiscectomies in 1993 and a spinal fusion in 1994. After Blenner's accrued sick leave was exhausted in October 1994 she resigned from the Rapid City Police Department. [¶9.] Prior to the injury Blenner had received a two-year degree in general studies. Insurer agreed to allow her to return to Black Hills State University in January 1995 to complete her bachelor's degree. Insurer paid rehabilitation benefits from January 1995 through December 31, 1996, and also paid all of the total temporary disability benefits that Blenner was entitled to prior to her receiving her permanent partial disability rating. [¶10.] Insurer had Blenner examined by Dr. Lee Ahrlin who found that Blenner had attained maximum medical improvement and gave a twenty-five percent whole person permanent partial disability (PPD) rating. Dr. Ahrlin subtracted the fifteen percent whole person impairment rating from the previous injury which occurred at the time Blenner was employed by the South Dakota School of Mines. This resulted in a finding that Blenner had a net ten percent PPD rating as a result of the police department injury. Blenner did not agree that the PPD rating adequately reflected her loss and petitioned for benefits pursuant to Cozine v. Midwest Coast Transport, Inc., 454 NW2d 548 (SD 1990). [¶11.] A hearing was held before the Administrative Law Judge (ALJ). At issue was the extent of Blenner's entitlement to Cozine benefits for loss of use under SDCL 62-1-1(9) and SDCL 62-4-6. Three vocational rehabilitation expert witnesses testified at the hearing. One of the experts was called by Blenner and the other two experts were called by the Employer/Insurer. The ALJ rejected the testimony of Blenner's expert. The ALJ found that one of the Employer/Insurer's experts found a loss of earning capacity in the amount of eighteen percent and the other Employer/ Insurer's expert found a loss of earning capacity of thirty-eight percent. The ALJ averaged the eighteen percent and thirty-eight percent to get a Cozine loss of twenty-eight percent. In addition the ALJ found there was a ten percent net medical impairment rating of the whole body. The ALJ added this ten percent to the twenty-eight percent Cozine loss for a total loss of thirty-eight percent. The ALJ also awarded interest on the ten percent permanent partial disability from the date of the rating until paid. [¶12.] The circuit court affirmed the decision of the ALJ. The circuit court established the rate of interest on the permanent partial disability at ten percent. APPEAL ISSUES ISSUE ONE Should the Department of Labor have added Blenner's loss of use rating to her permanent partial disability rating? ISSUE TWO Should the Department of Labor have awarded interest on the permanent partial disability benefits from the date of the impairment rating? NOTICE OF REVIEW ISSUE ISSUE THREE

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If interest is recoverable, what is the applicable rate of interest? STANDARD OF REVIEW [¶13.] The standard of review in workers' compensation cases is well established. Davidson v. Horton Industries, Inc., 2002 SD 27, 641 NW2d 138. Under SDCL 1-26-37, when the issue is a question of fact the clearly erroneous standard is applied to the agency's findings; however, when the issue is a question of law the actions of the agency are fully reviewable. Id. ANALYSIS ISSUE ONE [¶14.] Should the Department of Labor have added Blenner's loss of use rating to her permanent partial disability rating? [¶15.] The ALJ found that the twenty-eight percent Cozine benefit should be added to the ten percent medical impairment rating. The circuit court affirmed. [¶16.] At the time of Blenner's injury, SDCL 62-1-1(9) read as follows: "Permanent partial disability," a loss of use of the body or member of the body which is partial and permanent and shall be determined by a medical impairment rating, expressed as a percentage of the effected body part, using the guide to evaluation of permanent impairment established by the American medical association, third edition, November 1988. In addition to the medical impairment rating as set forth above, the employee is entitled to receive up to an additional fifty percent of the affected body part if the medical impairment rating given does not adequately reflect his loss of use as measured by the ability of the employee to perform work in the open labor market and to earn comparable wages taking into consideration the employee

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