author: KONENKAMP, Justice.

text:
    2002 SD 130
    Ann M. RAWLS, Claimant and Appellant, v. COLEMAN-FRIZZELL, INC. and North River Insurance Co., Eployer-Insurer and Appellees.
    No. 22282.
    Supreme Court of South Dakota.
    Considered on Briefs Aug. 26, 2002.
    Decided Oct. 23, 2002.
    Dennis W. Finch of Finch, Bettmann, Maks & Hogue, Rapid City, South Dakota, Attorneys for claimant and appellant.
    Benjamin J. Eicher of Wallahan & Eicher, Rapid City, South Dakota, Attorneys for employer-insurer and appellees.
   KONENKAMP, Justice.

[¶ 1.] In this workers’ compensation case, the claimant argues (1) that several ailments, including fibromyalgia and chronic myofascial pain, arose out of injuries she suffered several years before when she fell through a trap door while working for her employer, and (2) that she should be awarded temporary total and partial disability benefits. The Department of Labor ruled that the claimant failed to show causation and denied both claims. The circuit court affirmed, and we also affirm.

Background

[¶ 2.] On December 12, 1990, Ann Rawls, while at work at her job with Coleman-Frizzell, Inc. (C-F), a manufacturer of jewelry in Rapid City, South Dakota, fell part way through a hallway trap door that had been left open for maintenance purposes. Rawls was injured and taken to the emergency room in Rapid City Regional Hospital, where she was examined and then treated for a dislocated finger. Four months later, the examining physician modified his report, at Rawls’s request, to include a statement that she had also complained of back and shoulder pain when she was admitted. On January 9, 1991, an orthopedist examined Rawls’s shoulder, cervical spine, and lumbar spine. He diagnosed a “mild contusion with some pulling of muscles and ligaments” and gave a prognosis of slow improvement over time.

[¶ 3.] After the accident at C-F, Rawls did not work a full forty-hour week there, but altogether she missed fewer than seven days. She returned to work on a part-time basis three or four days after the accident, taking pain pills for a few weeks until she was no longer able to secure further refills. Still complaining of pain, she was advised to undertake warm-water therapy. On April 8, 1991, her regular physician (Dr. Stephen Goff, a physiatrist) concluded that Rawls did not require further physical therapy, but, in view of her continued complaints of pain, recommended “work-hardening,” i.e., that her work hours per week be reduced to a comfortable level and that one hour be added each week until she was again working a full eight-hour day. Under the work-hardening program, Rawls was initially set to work four to five hours per day, but her physician later reduced her regimen to two hours per day.

[¶ 4.] C-F agreed to the work hardening program, provided her with work within her medical restrictions, and hired an attendant (Jeff Bailie) to assist Rawls in her return-to-work efforts. In the midst of this program, Rawls took a two-week vacation that had been approved by C-F before she had begun the program and resulted, to her supervisor’s displeasure, in her having to begin the program back at the two-hours-per-day level. Upon her return, she and the supervisor exchanged angry words over the effect of her vacation on her program; Rawls then told a coworker that all she needed now was “to get fired.”

[¶ 5.] Occurring in parallel with Rawls’s medical problems was her continuing difficulty in getting along with her supervisors at C-F. Testimony indicated that Rawls was initially hired because she and one of C-F’s owners attended the same church. In the three years she worked at C-F, she had a variety of jobs, beginning in the main office, then moving, at her request, to the factory where she could be more creative, then working in the retail store, and finally moving to the design department, where she worked as a “floater,” i.e., one with no specific task. Her relationship with the owner made it difficult for her various supervisors to hold Rawls to normal work rules. At this last post, her supervisor was instructed just to give her something to do. Finally, on July 15, 1991, she was fired for poor performance and insubordination.

[¶ 6.] After Rawls’s severance from CF, the company’s insurer continued to provide her with the assistance of Bailie, but the prospect of her returning to work was dimmed by the continuance of the work hardening program ordered by Goff. At some point during 1991, Bailie was replaced by Shari McDonald. Thereafter, Rawls requested that she be sent to a university to earn a master’s degree so that she could be a teacher. The insurer denied that request on the ground that other possible positions would require less expensive retraining. Finally, McDonald “closed the file” on Rawls because Rawls would not cooperate in the return-to-work effort.

[¶ 7.] In November 1991, Goff released Rawls to work an eight-hour day with the restrictions that she should alternate sitting, standing, and walking. Goff reported that Rawls was “capable of performing several repetitions per hour of bend/stoop, squat and reach above shoulder level.” He assigned Rawls an eight-percent impairment rating of her whole body.

[¶ 8.] Rawls worked sporadically as a substitute teacher and as a teacher’s aide in the Rapid City School District from September 1991 through May 1995. Throughout that period and beyond, she suffered from persistent, debilitating headaches. In April of 1992, Rawls began two seasons of employment at Mount Rushmore as a park ranger and interpretive guide. In her application for work there, she affirmed that she had no difficulty “in using arms, hands, or fingers for reaching in any direction, grasping, handling or fingering” and no “disease or disability which would make [her] employment in light-duty work a hazard to [herself] or others.” She also affirmed that she would be able to perform all the duties that the job required of her. Her position at Mount Rushmore required her to work forty hours per week, walking as well as sitting and standing for long periods. During her time at Mount Rushmore, she hiked, without incident, to the top of the mountain and back down, negotiating steep stairs and rough terrain.

[¶ 9.] In July 1992, an MRI of Rawls’s left shoulder showed a “tear of rotator cuff tendon on the left with an element of impingement at the shoulder outlet.” Surgery was prescribed, but postponed until January 4, 1993, so that she could complete the season’s work at Mount Rushmore. On June 7, 1993, her surgeon found the shoulder to be at maximum medical improvement (with a five-percent impairment to the left upper extremity). He declared Rawls capable of returning to her regular and customary work. She then completed the season’s work at Mount Rushmore. She did not, however, apply to work there for the 1994 season: she reported to a coworker that she would not be able to get along with the supervisor to whom she had reported during the previous two seasons.

[¶ 10.] In the fall of 1993, Rawls worked for two weeks at Mostly Chocolates; her tasks included rolling and dipping truffles. During that brief period, she reported pain in her right wrist. Three physicians examined her and agreed that she suffered from “mild right carpal tunnel syndrome.” By April 1994, however, another physician, a neurologist, found that the problem was “much improved to resolved.” (Rawls is not making a claim for this ailment.)

[¶ 11.] In early 1994, Dr. Goff diagnosed Rawls as having “chronic myofascial pain,” and Dr. Steven K. Hata diagnosed her as having “a chronic-cervical-strain syndrome with myofascial neck and shoulder pain and chronic-low-back-strain syndrome with myofascial pain.” Hata also found “degenerative arthritis and disc disease involving [Rawls’s] lumbar and cervical spine, with multi-level bulging discs.”

[¶ 12.] During the spring of 1994, Rawls also developed difficulty in keeping her balance when her eyes were closed. One examining physician, Dr. Hata, found, in September 1994, “no objective evidence of specific neurologic impairment causing this off balance; ... hence, patient is told that this condition is not ratable.” She was given, among other things, an MRI of her head to determine whether the problem lay there, but the results were normal. In the spring of 1995, Rawls was examined to determine her impairment rating. At that time, she was diagnosed with degenerative disc disease of her cervical and lumbar spine, with associated mechanical dysfunction and a chronic shoulder strain. The examining physician, Dr. Koehn, opined that Rawls should be able to function within her restrictions (with occasional need for conservation care for exacerbations) and, using the AMA Guidelines for the Evaluation of Permanent Impairment, calculated a twenty-percent impairment rating. In January 1996, an occupational therapist, Jeff Sjosten, performed a Functional Capacity Assessment (FCA) on Rawls. The results of the FCA showed that Rawls “may be able to work at a light level of employment ... that is self-paced and allows for frequent changes of position” but that her balance problems would prevent her from taking employment that required continual standing. According to the FCA report, her

[p]rimary limiting factor for continuing most tests was not due to back, neck, or shoulder pain, as her past medical history would predict, but was due to reoccurring loss of balance and complaints of wrist and hand pain. [Rawls] described her wrist and hand pain as a carpal tunnel type, but did not complain of these symptoms during tests that should exacerbate these symptoms. She complained of these symptoms during tests that would not normally have an effect on carpal tunnel syndrome.

[¶ 13.] In February 1996, a Rapid City dentist examined Rawls to determine whether there was a connection between her persistent headaches and dental problems. He found “no concrete evidence of temporomandibular joint problems as the cause of her headaches.” Later that year, at the insistence of C-F’s insurer, Rawls was given a personality test, the results of which were in the normal range, thus indicating no need for ongoing mental health therapy. Rawls took a ten-day vacation in Scotland (U.K., not S.D.) during 1996, and at some point during that year began caring for a two-week-old child Rawls and her husband adopted nine months later.

[¶ 14.] In April 1996, Dr. Cynthia Weaver, a rheumatologist, diagnosed Rawls as having “fibromyalgia.” Weaver specifically excluded “myofascial-pain syndrome because [Rawls’s] complaints of pain were diffuse, not localized in one discrete area as with myofascial pain.” Importantly for this case, Dr. Weaver “could not opine to a reasonable degree of medical probability of certainty that [Rawls’s] December 12, 1990, injury caused or contributed to. her development of fibromyal-gia.”

[¶ 15.] Beginning in March 1998," Rawls had a series of thirteen sessions with Dr. Donald Burnap, a Rapid City psychiatrist. He diagnosed Rawls as having a “chronic pain disorder and dysthmic disorder.” He also opined that Rawls’s trap-door injury was “the primary causative factor” of her then-current symptoms:

In reviewing all of the medical records, she got hurt, and she continues to have a specific pattern of pain and dysfunction that matches the kind of injury she experienced, in that fall, to certain parts of her body; injured in certain ways, and she still exhibits the same picture.

Some two months later, Dr. Hata found that Rawls “has a sleep disturbance. The fact that she does have fibromyalgia syndrome complicates matters as she could very well also have sleep apnea causing disturbed sleep[; in] particular!,] leg-jerking complaints!,] which bother her a lot[,] might relate to such.”

[¶ 16.] Her prospects for employment are mixed. One vocational rehabilitation specialist, hired by Rawls, testified that with her current restrictions, Rawls is unemployable, has no transferable skills, and “is hot a candidate for retraining or rehabilitation programs.” Another rehabilitation specialist, hired by C-F’s insurer, testified that Rawls “is employable, given her current restrictions, but that such employment would not provide her with a substantial wage”; he also opined that Rawls “is fully employable, given her restrictions on the 1996 FCA.” As to her current situation, Rawls remains “totally unemployed,” as she has been since 1995, but she can walk four to five miles per day and maintains, at the Rapid City YMCA, an exercise program that includes weight lifting and aerobic conditioning classes.

[¶ 17.] In a memorandum decision, the Department’s ALJ found that Rawls could not establish that her various injuries and complaints were caused by her accident at C-F and that, therefore, Rawls’s current condition is not compensable. The ALJ did find, however, that Rawls’s request for temporary total and partial disability benefits due for lost time before June 7, 1993, was to be granted. ' Upon C-F’s filing a motion for reconsideration on the second issue, the ALJ reversed her decision. Rawls appeals on the following issues: (1) Did her condition arise out of and in the course of her employment with C-F? (2) Is Rawls entitled to additional disability benefits?

Standard of Review

[¶ 18.] Our standard of review, delineated in SDCL 1-26-36, requires us to give great weight to the findings and inferences made by the Department on factual questions. Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 6, 575 N.W.2d 225, 228. We examine agency findings in the same manner as the circuit court to decide whether they were clearly erroneous in light of all the evidence. Id. Only if, after careful review of the entire record, we are definitely and firmly convinced that a mistake has been made, will we reverse. Id. Questions of law, of course, are fully reviewable. Id.

Analysis and Decision

[¶ 19.] We begin with our accustomed understanding that workers’ compensation statutes should be construed liberally in favor of injured employees. Id. at ¶ 8, 575 N.W.2d at 229. The overall purpose of workers’ compensation is to provide for employees who have lost their ability to earn because of an employment-related accident, casualty, or disease. Id.

[¶ 20.] As the extensive factual background shows, Rawls has had a number of serious medical problems: dysthymic disorder, either fibromyalgia or myofas-cial-pain syndrome, severe headaches, sleep apnea, difficulty in maintaining balance, and damaged spinal discs. To prevail on a claim for workers’ compensation, however, Rawls must do more than prove that an injury sustained at her workplace preceded her medical problems. The axiom “post hoc, ergo propter hoc,” refers to “the fallacy of ... confusing sequence with consequence,” and presupposes a false connection between causation and temporal sequence. Black’s Law Dictionary 1186 (7th ed 1999). This maxim has little value in the science of fixing medical causation. See, e.g. Young v. Hickory Business Furniture, 353 N.C. 227, 538 S.E.2d 912, 916 (2000). Indeed, Rawls has the burden of proving all facts essential to sustain an award of compensation. King v. Johnson Bros. Constr. Co., 83 S.D. 69, 155 N.W.2d 183, 185 (1967). In Caldwell v. John Morrell & Co., we explained what is required of claimants in South Dakota if they are to prevail on a claim for workers’ compensation:

Before an employee can collect benefits under our [workers’] compensation statutes, [she] must establish, among other things, that there is a causal connection between [her] injury and [her] employment. That is, the injury must have its origin in the hazard to which the employment exposed the employee while doing [her] work. This causation requirement does not mean that the employee must prove that [her] employment was the proximate, direct, or sole cause of [her] injury; rather, the employee must show that [her] employment was “a contributing factor ” to [her] injury-

489 N.W.2d 353, 358 (S.D.1992) (emphasis in original) (internal citations and quotations omitted). “The employee’s burden of persuasion is by a preponderance of the evidence.” Id. The statutes in effect at the date of injury apply to the rights of all parties in any claim for workers’ compensation benefits. Helms v. Lynn’s, Inc., 1996 SD 8, ¶ 11, 542 N.W.2d 764, 766. In December 1990, SDCL 62-1-1 defined “injury” or “personal injury” as “only injury arising out of and in the course of the employment, and shall not include a disease in any form except as it shall result from the injury.”

[¶ 21.] In a case such as this, the testimony of professionals is crucial in establishing that the employment was “a contributing factor” to the injury complained of

because the field is one in which [laypersons] ordinarily are unqualified to express an opinion. Unless its nature and effect are plainly apparent, an injury is a subjective condition requiring an expert opinion to establish a causal relationship between the incident and the injury or disability. A [claimant’s] compensation award cannot be based on possibilities or probabilities, but must be based on sufficient evidence that the claimant incurred a disability arising out of and in the course of [the claimant’s] employment. Medical testimony to the effect that it is possible that a given injury caused a subsequent disability is insufficient, standing alone, to establish the causal relation under [workers’] compensation statutes.

Day v. John Morrell & Co., 490 N.W.2d 720, 724 (S.D.1992). What, then, did the various experts have to say about Rawls’s condition? Psychiatrist Burnap, who began examining Rawls more than eight years after the trap-door incident, opined that her accident at C-F was “the primary causative factor” of her then-current symptoms. He based that opinion on his examination of Rawls’s medical records.

[¶ 22.] Rheumatologist Weaver diagnosed Rawls as suffering from fibromyalgia (not myofascial-pain syndrome), but was unable to rule out any of several possible causes and indeed admitted that the cause of that affliction is unknown. Physiatrist Goff, who, not knowing of Rawls’s injured rota-tor cuff, pronounced her as having achieved maximum medical improvement as early as November 1991, diagnosed her as suffering from myfascial-pain syndrome. He also asserted that he agreed with Dr. Weaver’s assessment (though she did not agree with his), and affirmed that “we [in the medical profession] don’t know what fibromyalgia is.” He offered an opinion on causation, with the vague assertion that “there has been established an association between [trauma and fibromyalgia].” Neurologist Hata attributed Rawls’s balance problems to her “postural derange-ments,” but did not offer an opinion that the cause of this problem was specifically the fall through the trap door. Physiatrist Goff also addressed Rawls’s balance problems. He believed that injuries to the neck can cause balance problems, but could not affirm that an injury to Rawls’s neck did cause her balance problems, let alone the necessary antecedent fact that the trap-door incident caused her to suffer a neck injury. At most, Goff testified that the numerous tests to which Rawls submitted ruled out a number of other causes.

[¶ 23.] When asked for her opinion, to a reasonable degree of medical probability, that the original injury caused or contributed to developing fibromyalgia, Dr. Weaver answered: “If [Rawls] had a cervical strain, which Dr. Goff states that she did when he saw her a month later, if she had a whiplash type injury at the time, that does seem to be associated with developing fibromyalgia, yes.” In giving his opinion on the causation of the myofacial pain, Dr. Goff testified that “the syndrome complex that she’s now experiencing is a domino effect of the injury she sustained when she fell through the trap door.” Yet, with the current lack of medical knowledge in the area, which both Drs. Weaver and Goff acknowledged, such opinions are at least open to doubt.

[¶ 24.] Weaver conceded that she could not “say that other things did not cause it, too.” “We don’t know the cause and effect,” she testified. Goff admitted that there exists an ongoing debate in the medical community over the association of trauma and fibromyalgia. It is true that, as we have recognized, the Department cannot arbitrarily ignore uncontroverted expert testimony. Foltz v. Warner Transp., 516 N.W.2d 338 (S.D.1994). Here, although the only medical opinions offered were those rendered by experts for Rawls, the ALJ was not bound to accept them reflexively, without considering the basis for the opinions and the expertise of the persons giving them. And because these diagnoses were based on subjective complaints, the ALJ was entitled to consider Rawls’s own account of her symptoms and her inconsistent history. With such concerns, we cannot say that the ALJ committed clear error in rejecting these opinions about illnesses of unknown etiology and in concluding that Rawls had failed to show that her partial fall through the open trap door was a contributing factor in her condition. Accordingly, we affirm the Department’s ruling on this issue.

[¶ 25.] As to the second issue, whether Rawls is entitled to additional disability benefits, we affirm the rulings below. Since Rawls did not prevail on the first issue, she cannot prevail on the second.

[¶ 26.] Affirmed.

[¶ 27.] GILBERTSON, Chief Justice, and SABERS, Justice and AMUNDSON, Retired Justice, and MARTIN, Retired Circuit Court Judge, sitting by Order of the Court, concur.

[¶ 28.] MARTIN, Retired Circuit Court Judge, sitting for ZINTER, Justice, disqualified.

      . Others at C-F testified that they had received notice that the trap door was to be open for a period that day. Rawls claims not to have been so notified.

      . Rawls also testified that she suffered extensive bruising on her right knee and thigh, down her calf on the inside of her right leg, and all over her left arm, elbow, and hand.

      .Rawls later testified that she made this comment out of frustration and that she did not mean it.

      . As Rawls's rotator cuff injury presumably occurred in the trap-door incident, C-F's insurer paid Rawls temporary total disability for her period of recuperation from her shoulder surgery.

      . Other MRI studies did, however, reveal that Rawls has a bulging disc in her neck and another in her lower back. Neither disc has been found to be impinging on any nerves or causing symptoms. No causation for these bulging discs has been established.

      . Dysthymic disorder is defined as: "depressed mood for most of the day, for more days than not, as indicated either by subjective account or observation of others, for at least 2 years.” Dysthymic Disorder, 300.4, DSM-IV.

      . The ALJ rejected Dr. Burnap's opinion.

      . One court defines fibromyalgia as "an affliction in which inflammation of the muscles and the fibrous covering of the muscles causes chronic pain.” Ex parte Kmart Corp., 812 So.2d 1205, 1206 (Ala.2001). According to the 2001 Mayo Foundation for Medical Education and Research (MFMER), it is "a chronic condition characterized by fatigue and widespread pain in the fibrous tissues in one’s muscles, ligaments, and tendons.” See also Webster’s Medical Dictionary (1996), and The Merck Manual of Diagnosis and Therapy (17th ed 1999). Several courts acknowledge that the medical profession has not been able to establish a precise etiology for fibromyalgia. See Safeway, Inc. v. Mackey, 965 P.2d 22, 27 (Alaska 1998); Waldorf Corp. v. Industrial Comm’n, 303 Ill.App.3d 477, 236 Ill.Dec. 890, 708 N.E.2d 476, 480 (1999). In the latter case, one physician testified that, in his own experience, some 25% of the 500-1000 patients he had treated for fibromyalgia began to experience its symptoms “after an injury at work.” Id. at 480. Frequently, if not always, fibromyalgia “is a condition manifested solely by subjective complaints of the patient.” I'd. at 481. The South Dakota Department of Labor has rejected fibromyalgia as compensable as a matter of law. Duchscher v. Rushmore Plaza Holiday Inn and Kemper Nat’l. Ins. Cos., HF No. 450, 1992/93. This Court has,' to date, made no ruling on the question.

      . We are not here implying that we would require a complete understanding of the etiology of fibromyalgia to hold that, in a given case, a work-related injury was a contributing factor to that affliction. “A finding that a disease is work-connected will not be re- ( versed as being based on speculation and conjecture merely because the medical profession does not fully understand the etiology of the disease.” Certi-Serve, Inc. v. Industrial Comm'n, 101 Ill.2d 236, 78 Ill.Dec. 120, 461 N.E.2d 954, 958 (1984) (quoting A. Larson, Workmen’s Compensation § 80.31(c) (1983)). In our case, for Rawls to prevail, she must make a lesser showing (which she failed, through expert testimony, to make) that, by a preponderance of the evidence, her workplace accident was a contributing factor to her injury, not the greater showing of the precise, detailed manner in which the accident caused the injury. The Waldorf court puts the matter succinctly: “while the etiology of fibromyalgia is unknown, that fact does not compel the conclusion that the claimant was incapable of proving a causal connection.” 708 N.E.2d at 481.


source: Caselaw Access Project

author: SABERS, Justice. KONENKAMP, Justice. GILBERTSON, Chief Justice

license: Public Domain

text:
    2002 SD 131
    Shirleen OLSON-ROTI, Marcia Hohn, Mary Thompson, Gert Hein, Teresa Fonder, Pegge Starr, Verdell Knittel, Sandy Brueske, Sally Weber, Tiffany Tebay, Connie Hjelm And Susie Smith, Plaintiffs and Appellants, v. Linda KILCOIN, as Personal Representative of Bert Van Dyke and Van Dyke Supply Company and Ferro Corporation, Defendants and Appellees.
    Nos. 22244, 22245.
    Supreme Court of South Dakota.
    Argued Aug. 27, 2002.
    Decided Oct. 23, 2002.

      Rick Johnson of Johnson, Eklund, Nicholson & Peterson, Gregory, SD, for plaintiffs and appellants.
    Susan Brunick Simons of Davenport, Evans, Hürwitz & Smith, Sioux Falls, SD, for defendants and appellees.
   SABERS, Justice.

[¶ 1J Justice RICHARD W. SABERS delivers the majority opinion of the Court on Issue 1, which holds that hearsay statements by the decedent were admissible.

[¶ 2.] Justice SABERS delivers the majority opinion on Issue 2, which holds that Olson-Roti alleged a cause of action in her complaint and may pursue punitive damages.

[¶ 3.] The separate writings of Justice JOHN K. KONENKAMP, joined by Justice ROBERT A. AMUNDSON, and of Chief Justice DAVID GILBERTSON, joined by Justice STEVEN ZINTER, control Issue 3, and hold that a claim for punitive damages does not survive the tortfeasor’s death.

[¶ 4.] Justice SABERS dissents on Issue 3.

[¶ 5.] SABERS, Justice, writing the majority opinion on Issues 1 and 2.

[¶ 6.] Shirleen Olson-Roti and 11 others (collectively Olson-Roti) employed by Van Dyke Supply Company filed suit against Company and its owner, Bert Van Dyke, claiming damages for intentional and negligent exposure to dangerous chemicals. Van Dyke died prior to completion of the lawsuit and his daughter, Linda Kilcoin, was named personal representative of his estate and substituted as a defendant (collectively Company). Company now claims 1) on notice of review, that hearsay statements by decedent Van Dyke are inadmissible, 2) that Olson-Roti cannot pursue punitive damages without a separate cause of action, and 3) that a claim for punitive damages does not survive a tortfeasor’s death. The trial court granted the motion for summary judgment on Issue 3 and ruled that hearsay statements made by Van Dyke were admissible under SDCL 19-16-34. We affirm all issues through separate opinions.

FACTS

[¶ 7.] Van Dyke owned Company, located in Woonsocket, South Dakota. Among other products, Company manufactured eyes used by taxidermists. The eyes were made of glass and painted in two “eye rooms.” Company employed approximately 30 women to paint the glass eyes.

[¶ 8.] Company purchased dry paint pigment from Ferro Corporation in Pittsburgh, Pennsylvania, and mixed the dry pigment with other paints to create the paint used on the glass eyes. When delivered, the paint drums were labeled with content descriptions and were accompanied by material safety data sheets. The paints contained both lead and cadmium. After delivery, the paint was either stored in small jars, which were placed on the painting tables for the hand painters, or was attached to an airbrush for the paint sprayers. There were no labels on the jars used by the workers and the labels on the paint drums had been removed.

[¶ 9.] There was a general rule prohibiting eating in the eye rooms, but the rule was not strictly enforced until March 1994, when Van Dyke informed the employees that eating in the eye rooms was not permitted. He later posted signs indicating that eating in the eye rooms was prohibited.

[¶ 10.] In April 1994, Sally Weber, a supervisor in one of the eye rooms, underwent a blood test, which indicated a high level of lead in her blood. Upon learning the results, Weber advised another employee, Shirleen Olson-Roti, to visit hep doctor. She also underwent a blood test, which indicated a high level of lead in her blood. Olson-Roti reported the results of her blood test to Van Dyke and he suggested that all of the employees who worked in the eye rooms have their blood tested. Blood testing revealed that 8 women had toxic lead poisoning levels and 12 women had elevated levels. Olson-Roti claims the eye room workers were never informed of the presence of lead and cadmium in the paints they used.

[¶ 11.] In March 1995, Van Dyke sold Company to Cabela’s. Olson-Roti filed suit against Van Dyke and Company on February 27, 1996, alleging that Van Dyke and Company intentionally and negligently exposed employees to dangerous chemicals. An amended complaint was filed March 12, 1996 and a second amended complaint was filed February 5, 1997, which added Ferro Corporation as a defendant. Ferro Corporation was later dismissed by stipulation.

[¶ 12.] Company moved for summary judgment on May 4, 1999, arguing that the exclusivity provision under worker’s compensation law, SDCL 62-8-6, precluded Olson-Roti’s lawsuit. The trial court denied the motion, stating that the exclusivity provision of SDCL 62-8-6 does not prohibit employees from bringing lawsuits for the intentional torts of their employers.

[¶ 13.] The motion for summary judgment was renewed on September 11, 2000. The trial court denied the renewed motion for summary judgment on October 30, 2000.

[¶ 14.] On August 22, 2001, Company filed a motion for summary judgment on the basis that a claim for punitive damages did not survive the death of Van Dyke. Company also challenged the admissibility of hearsay statements made by Van Dyke and presented through the affidavits and testimony of two former Company employees, Robert Rieger and Robert Kokesh.

[¶ 15.] The hearsay statements were those of Van Dyke and went directly to his knowledge of the dangers to the women and his refusal to warn them of those dangers. For example, when asked whether the women knew of the danger inherent in their work environment, Van Dyke replied, “[w]hat they don’t know won’t hurt them.” When advised that he should warn the women of the health risks inherent in working with the paint, he asked, “[w]ell, who would I get to paint this if they knew about this?” Kokesh also testified that he heard Van Dyke telling a plant manager that “the stuff would be gone in two weeks” and ordering the manager not to say a “... word about it to anyone else.”

[¶ 16.] A hearing was held on December 6, 2001. On January 3, 2002, the trial court granted the motion for summary judgment on punitive damages but determined that the hearsay statements were admissible.

[¶ 17.] Olson-Roti appeals the summary judgment on Issue 3 and Company filed notice of review on Issue 1. For the purposes of brevity and clarity, we address the notice of review first, as Issue 1. .

STANDARD OF REVIEW

[¶ 18.] Our standard of review for summary judgment is well established and is “whether a genuine issue of material fact exists and whether the law was correctly applied.” Manuel v. Wilka, 2000 SD 61, ¶ 17, 610 N.W.2d 458, 462 (quoting Parmely v. Hildebrand, 1999 SD 157, ¶ 7, 603 N.W.2d 713, 715-16 (citations omitted)). Questions of law are reviewed de novo without deference to the trial court. City of Colton v. Schwebach, 1997 SD 4, ¶ 8, 557 N.W.2d 769, 771 (citing Jasper v. Smith, 540 N.W.2d 399, 401 (S.D.1995)).

[¶ 19J “[E]videntiary rulings made by the trial court are presumed correct and are reviewed under an abuse of discretion standard.” State v. Perovich, 2001 SD 96, ¶ 11, 632 N.W.2d 12, 15 (citing State v. Goodroad, 1997 SD 46, ¶ 9, 563 N.W.2d 126, 129). “The test is not whether we would have made the same ruling, but whether we believe a judicial mind, in view of the law and the circumstances, could have reasonably reached the same conclusion.” Goodroad, 1997 SD 46 at ¶ 9, 563 N.W.2d at 129 (citing State v. Rufener, 392 N.W.2d 424, 426 (S.D.1986)). While the “ultimate decision to admit or not admit evidence is reviewable under the ‘abuse of discretion’ standard, the court’s preliminary determination of whether the hearsay, evidence is reliable will not be overturned unless it is clearly erroneous.” State v. Davi, 504 N.W.2d 844, 849 (S.D.1993) (quoting Matter of R.S.S., 474 N.W.2d 743, 749 (S.D.1991)).

[¶ 20.] 1. WHETHER THE TRIAL COURT ERRED IN CONCLUDING THAT VAN DYKE’S STATEMENTS ARE ADMISSIBLE UNDER SDCL 19-16-34.

[¶ 21.] Robert Rieger, an employee of Company, through an affidavit and live testimony, stated that he had discussions with Van Dyke regarding the exposure of the workers in the eye rooms to lead and cadmium. He stated that when he approached Van Dyke about the missing paint drum labels, Van Dyke told him, “[w]hat they don’t know won’t hurt them.” Robert Kokesh, a maintenance employee at Company, stated in a sworn affidavit, that he was ordered to clean up the eye rooms prior to the arrival of an OSHA inspector. He stated that because of his exposure to the paint, he became ill and learned that he had a high concentration of lead in his system. Kokesh stated that he heard Van Dyke tell his son-in-law, Bill Kilcoin, that “the stuff would be gone in two weeks and they were not to say a ‘word about it’ to anyone.”

[¶ 22.] Following a hearing regarding the reliability of Rieger and Kokesh’s statements, the trial court concluded,that the statements were admissible under SDCL 19-16-34. Company argues that the trial court erred in concluding that Van Dyke’s statements were admissible through the testimony of Rieger and Kok-esh, claiming that the testimony is neither reliable nor corroborated by other evidence.

[¶ 23.] SDCL 19-16-34, which addresses the admissibility of a decedent’s statements, provides:

In actions, suits, or proceedings by or against the representatives of deceased persons including proceedings for the probate of wills, any statement of the deceased, whether oral or written shall not he excluded as hearsay, provided that the trial judge shall first find as a fact that the statement was made by decedent, and that it was in good faith and on decedent’s personal knowledge.

(emphasis added). This Court liberally construes this statute so as to achieve its intended purpose. Estate of Regennitter, 1999 SD 26, 589 N.W.2d 920. The admission of a statement under SDCL 19-16-34 is within the trial court’s discretion. Martinson v. Holso, 424 N.W.2d 664, 667 (S.D.1988) (citing In re Congdon’s Estate, 74 S.D. 306, 310, 51 N.W.2d 877, 879 (1952); Cox v. Bowman, 71 S.D. 72, 75, 21 N.W.2d 277, 278-79 (1945)).

[¶ 24.] The trial court determined that Van Dyke’s statements were admissible. It stated:

[T]here is corroboration and [ ] we have two people having heard the statement from the decedentf.] [W]e also have the labels that were torn off the paint cans, and so there is sufficient corroboration to make it admissible.
Now, the balance of the arguments really go to the weight or credibility of the evidence in the jury’s determination should they base their decision on those statements. That’s up for the jury ultimately to determine, but the court does rule that they are admissible statements from decedent, and the court would allow the Plaintiffs to present that information.

The trial court determined that the testimony offered by Olson-Roti was based on personal knowledge and good faith affidavits. In addition, the trial court concluded that their testimony was corroborated by the missing labels on the paint cans. Company has failed to show that the trial court was clearly erroneous in determining that the hearsay statements are reliable or that the trial court abused its discretion in concluding that Van Dyke’s statements are admissible under SDCL 19-16-34. Therefore, we affirm.

[¶ 25.] 2. WHETHER OLSON-ROTI ALLEGED A SEPARATE CAUSE OF ACTION TO SUPPORT HER CLAIM FOR PUNITIVE DAMAGES.

[¶ 26.] Company argues that South Dakota case law permits punitive damages only when they are supported by a separate cause of action. It argues that Olson-Roti is erroneously claiming that her claim for punitive damages is a separate cause of action, while it is only an element of damages. This point was conceded on oral argument by counsel for Olson-Roti.

[¶ 27.] This Court has stated that punitive damages are allowable only when supported by a cause of action. See Henry v. Henry, 2000 SD 4, ¶ 5, 604 N.W.2d 285, 288 (quoting Schaffer v. Edward D. Jones & Co., 521 N.W.2d 921, 928 (S.D.1994) (holding that “punitive damages are not allowed absent an award for compensatory damages”)). “If a jury returns a verdict in the plaintiffs favor for zero damages in a case that requires proof of damages as an essential element, then the cause of action has not been proved, and no punitive damages can be awarded.” Henry, 2000 SD 4 at ¶ 7, 604 N.W.2d at 288, 289 (citing Prosser & Keeton on The Law of Torts § 2 (5th ed.1984)).

[¶ 28.] Olson-Roti- alleged 3 causes of action: 1) strict liability in tort, 2) intentional tort, and 3) negligent tort. In count 1 of her complaint, she stated: “[t]hat the operations, of the eye paint room using toxic chemicals, organic solvents, lead, cadmium, and heavy materials constituted an abnormally dangerous activity and Defendants are strictly liable therefore.” In count 2, she stated that: “Defendants knowingly exposed the Plaintiffs to injurious chemicals, including carcinogens, without warning them and without taking steps to provide proper ventilation, safety devices or testing. That Defendants knew that injuries to the Plaintiffs were substantially certain to result from the exposure to the toxic and carcinogenic substances.” In count 3, she alleged that: “[t]he Van Dyke Defendants were negligent in exposing the workers to toxic chemicals, cadmium, organic solvents, lead and heavy metals in the following manner[.]” Therefore, Olson-Roti alleged a cause of action in her complaint and she may pursue a claim for punitive damages.

[¶ 29.] GILBERTSON, Chief Justice, and KONENKAMP, AMUNDSON, and, ZINTER, Justices, concur.

[¶ 30.] The holding of Issue 3, which is that a claim for punitive damages does not survive the tortfeasor’s death, is controlled by the writings of Justice KONENKAMP and Chief Justice GILBERTSON.

KONENKAMP, Justice.

[¶ 31.] It is not the policy of South Dakota law to punish the next generation for the wrongs of the last. And a dead wrongdoer is far beyond our temporal power to penalize. As the Restatement provides, in survival actions, “the death of the tortfeasor terminates liability for punitive damages.” Restatement (Second) of Torts § 926(b) (1979); see also Restatement (Second) of Torts § 908 cmt. a (no punitive damages against representative of deceased tortfeasor in a death action).

[¶ 32.] Punitive damages in South Dakota are not designed to compensate victims. As Prosser explains, “it is generally ' agreed that punitive damages are a windfall to the plaintiff and not a matter of right[.]” Prosser and Keeton on Torts § 3, 14 (5th ed. 1984); cf. Mongold v. Estate of Gilbert, 114 Ohio Misc.2d 32, 758 N.E.2d 1245, 1247 (Ct.Comm.Pl.2000) (punitive damages not awarded as additional compensation but to punish and deter conduct).

[¶ 33.] The punitive and deterrent aims of exemplary damages are inseparable. Our Legislature has spoken clearly on this point: a jury “may give damages for the sake of example, and by way of punishing the defendant.” SDCL 21-3-2 (emphasis added). Therefore, both punishment of the tortfeasor and deterrence are required to satisfy the statutory punitive damage provision. As one California appeals court held in interpreting a similar provision, “[s]ince the purpose of punitive damages is to punish the wrongdoer for his acts ... and to deter him from the commission of like wrongs in the future, the reason for such damages ceases to exist with his death.” Whelan v. Rallo, 52 Cal.App.4th 989, 60 Cal.Rptr.2d 876, 877 (1997). Assessing punitive damages against an estate serves to neither punish nor deter the tortfeasor.

[¶ 34.] Concededly, the acts alleged against the decedent in this case describe reprehensible conduct. But we cannot ignore the clear language in our punitive damage statute declaring the purpose for punitive damages: to deter and punish wrongdoers, not their heirs.

[¶ 35.] Therefore, we affirm on Issue 3.

[¶ 36.] AMUNDSON, Retired Justice, concurs.

[¶ 37.] GILBERTSON, Chief Justice, and ZINTER, Justice, concur in result.

[¶ 38.] SABERS, Justice, dissents.

GILBERTSON, Chief Justice

(concurring in the result).

[¶ 39.] While Olson-Roti mounts an impressive argument based on equitable public policy, this is not an equitable issue. Rather, the statutory interpretation of our punitive damage statute alone controls the resolution of this issue. In this jurisdiction, punitive damages have not been recoverable at common law, but rather, only where specifically authorized by statute. Vilhauer v. Horsemen’s Sports, Inc., 1999 SD 93, ¶¶ 19-20, 598 N.W.2d 525, 529-30; Thu v. American Family Ins. Co., 292 N.W.2d 109, 110-11 (S.D.1980). SDCL 21-3-2 states:

In any action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, or in any case of wrongful injury to animals, being subjects of property, committed intentionally or by willful and wanton misconduct, in disregard of humanity, the jury, in addition to the actual damage, may give damages for the sake of example, and by way of punishing the defendant, (emphasis added).

The content of this statute has remained virtually unchanged since its enactment by the Dakota Territorial Legislature in 1877. Schaffer v. Edward D. Jones & Co., 1996 SD 94, ¶ 22, 552 N.W.2d 801, 809, n. 6.

[¶ 40.] At virtually the same time, the Supreme Court of Iowa was asked to decide the very question that is now before us. In Sheik v. Hobson, 64 Iowa 146, 19 N.W. 875 (Iowa 1884), the court held that a claim of slander against a decedent defendant survived his demise and compensatory damages could be awarded against his estate. However, the court noted that claims for punitive damages uniformly died with the decedent.

But [plaintiff] had no personal interest in the question of [defendant’s] punishment. So far as [defendant] was concerned, the punitory powers of the law ceased when he died. To allow exemplary damages now, would be to punish his legal and personal representatives for his wrongful act; but the civil law never inflicts vicarious punishment.

19 N.W. at 875-76. See also Rowen v. Le Mars Mut. Ins. Co. of Iowa, 282 N.W.2d 639, 661 (Iowa 1979); Wolder v. Rahm, 249 N.W.2d 630, 632 (Iowa 1977).

[¶41.] The pertinent language of SDCL 21-3-2 appears to be the same as California in that it is allowed punitive damages “in addition to the actual damages,” and “for the sake of example and by way of punishing the defendant.” Evans v. Gibson, 220 Cal. 476, 489, 31 P.2d 389, 395 (Cal 1934). At the time of the Evans decision, that court’s research indicated that no case could be located which authorized a claim for punitive damages to survive the defendant’s death and be pursued against the decedent’s estate. 220 Cal. at 490, 31 P.2d at 395. See also 25 C.J.S. Damages 125(3).

[¶ 42.] Although somewhat more recent, the Supreme Court of Minnesota arrived at the same result based on its conclusion that the statutory intent of the punitive damage statute was for punishment of the tortfeasor and future deterrence of similar acts by the tortfeasor. The court concluded that neither purpose applied to a decedent. See Thompson v. Petroffs Estate, 319 N.W.2d 400, 408 (Minn.1982). The Court further found as “not persuasive” the plaintiffs claim that the allowance of punitive damages would serve as a deterrent to third parties. Id.

[¶ 43.] Fundamentally, I disagree with the public policy method of analysis for a resolution of this issue. It is not an examination of the majority vs. minority positions and a determination of which is most “persuasive.” In this case, it is solely a question of statutory interpretation and what the Legislature in 1877 intended when it enacted the predecessors to SDCL 21-3-2. The reliance on cases to the contrary which were decided for the most part a 100 years or more after the enactment of SDCL 21-3-2, provide no basis for a “judicial amendment” to the clear meaning of the statute. The weighing of the public policy benefits of one view as against the other is the prerogative of the Legislature, not this Court in the clear absence of a legislative directive for us to do so.

[¶ 44.] The statute in dispute is drawn in the public policy and language of 1877. It may today seem to some to be archaic and incapable of serving the state’s current public policy goals. However, as Justice Hugo Black once observed concerning the related issue of constitutional interpretation:

I realize that many good and able [persons] have eloquently spoken and written, sometimes in rhapsodical strains, about the duty of this Court to keep the Constitution in tune with the times. The idea is that the Constitution must be changed from time to time and that this Court is charged with a duty to make those changes. For myself, I must with all deference reject that philosophy. The Constitution makers knew the need for change and provided for it. Amendments suggested by the people’s elected representatives can be submitted to the people or their selected agents for ratification. That method of change was good for our Fathers, and being somewhat old-fashioned I must add it is good enough for me.

Pitts v. Larson, 2001 SD 151, ¶ 35, 638 N.W.2d 254, 264 (Gilbertson, J., dissenting) (citing Griswold v. Connecticut, 381 U.S. 479, 522, 85 S.Ct. 1678, 1702, 14 L.Ed.2d 510, 537 (1965) (Black, J., dissenting)).

[¶ 45.] Thus, claims for punitive damages under our statute do not survive the tortfeasor’s death and cannot be enforced against the tortfeasor’s estate or heirs.

[¶ 46.] ZINTER, Justice, concurs.

SABERS, Justice (dissenting).

[¶ 47.] I dissent on Issue 3 for all of the following reasons because the estate of a tortfeasor should be subjected to liability for punitive damages to the extent of the estate’s ill-gotten gains.

[¶ 48.] South Dakota’s survival statute, SDCL 15-4-1, provides:

All causes of action shall survive and be brought, notwithstanding the death of the person entitled or liable to the same. Any such action may be brought by or against the executor or administrator or successors in interest of the deceased,

(emphasis added).

[¶ 49.] Our holding on Issue 2 purports to allow recovery of punitive damages against the estate of a deceased tortfeasor in the circumstances of this case. However, Company argues that punitive damages are not recoverable against the estate of a deceased tortfeasor because the dual purposes of the punitive damages statute, punishment and deterrence, are not satisfied. Specifically, it argues that since Van Dyke is deceased he cannot be “punished” in accord with South Dakota’s statute allowing for punitive damages. This assertion should fail in light of the fact that an obvious desire of human nature is to leave a legacy to one’s heirs. A person is punished, through his estate, when his estate is diminished to the extent of his ill-gotten wealth. Furthermore, the objectives of punishment and deterrence are achieved by imposition of punitive damages against the estate of a wrongdoer. Allowing for the recovery in these circumstances would punish Van Dyke through his estate and deter others from similar wrongdoing in the future.

[¶ 50.] This rule would

send[] a forceful message that a person’s assets may not be insulated by the happenstance of death. Although ordinarily earmarked for the decedent’s heirs, such assets may be required to satisfy both compensatory and punitive damage awards flowing from his or her wrongdoing. We see nothing unjust in this principle.

Haralson v. Fisher Surveying, Inc., 201 Ariz. 1, 31 P.3d 114, 118-19 (2001). Clearly, to permit the wrongdoer’s estate to escape liability on the basis of his death would create a windfall to the heirs and in effect punish the victims.

[¶ 51.] I recognize that a majority of jurisdictions who have considered this issue do not permit an award of punitive damages against a tortfeasor’s estate. I have no quarrel at this time with the majority rule insofar as it deals with a tort-feasor’s actions in a non-economic situation. For example, a DUI tortfeasor whose negligence results in death to himself and others obviously causes adverse consequences to his family or heirs and they seldom profit from his wrong. In fact, the family and heirs are damaged by that tortfeasor’s actions.

[¶ 52.] Company asserts that imposition of punitive damages against the tort-feasor’s estate would result in injury to the innocent heirs. However, here, in an economic situation, Van Dyke, Company, and his estate clearly profited from his wrongful actions and his heirs have no lawful or justifiable claim to his ill-gotten gains. Moreover, a beneficiary’s rights are always subject to the lawful debts of and claims against the estate. In the instant case, the heirs to Van Dyke’s estate would not be damaged or injured but would simply be denied the profits the estate received through the wrongful behavior of the decedent. In other words, the heirs would be denied only those profits the estate would not have had but for Van Dyke’s tortious behavior at the expense of the victims.

[¶ 53.] These facts should lead us to find the reasoning of the minority more persuasive.

There is no logical reason why courts should allow a punitive damage award against a defendant who survives a judgment, but deny it where death occurs earlier. Suppose, for example, two individuals commit equally culpable and outrageous acts. One is comatose and, for all practical purposes, has no reasonable chance of recovery. The other is dead. Is there a way to explain why the unconscious tortfeasor would have his assets exposed to punitive liability, while the deceased’s estate would be immunized from it? Surely the answer does not lie in our inability to punish the wrongdoer.
Because punitive damages can serve as both an example and a deterrent to others in the community, we hold that there is no per se prohibition against their imposition upon a decedent’s estate. Such an award is peculiarly within the province of the trier of fact.The jury should also be reminded of its right to decline a punitive verdict altogether. Moreover, the parties are free to argue the reasonableness and advisability of such an award. Thus, an estate is placed in the same position as any other defendant against whom a punitive award is sought

Haralson, 31 P.3d at 118-19 (emphasis added). See also Ellis v. Zuck, 546 F.2d 643, 644-45 (5th.Cir.1977) (holding that punitive damages may be assessed against the estate of a deceased tortfeasor); Tillett v. Lippert, 275 Mont. 1, 909 P.2d 1158, 1162 (1996) (holding that punitive damages may be assessed against a tortfeasor’s estate for “sake of example”); Hofer v. Lavender, 679 S.W.2d 470, 474-75 (Tex.1984) (holding that punitive damages may be assessed against a tortfeasor’s estate for purposes of deterrence, inconvenience, public good and other losses); Shirley v. Shirley, 261 Ala. 100, 73 So.2d 77, 85 (1954) (stating that state wrongful death statute is interpreted to permit punitive damage awards on a general deterrence theory).

[¶ 54.] I recognize the importance of avoiding windfalls even when the victims are innocent, as in this case. Therefore, I would hold that those wrongfully injured in an economic situation may recover from the estate of the wrongdoer only to the extent they can prove that the estate profited from the wrong by a preponderance of the evidence.

[¶ 55.] This rule is based on sound public policy. First, it is a fundamental common law principle that no person should be entitled to profit from his or her own wrong. Bosse v. Quam, 537 N.W.2d 8, 14 (S.D.1995) (Sabers, J., dissenting); Dacy v. Gors, 471 N.W.2d 576, 582 (S.D.1991) (Sabers, J., dissenting). Second, no person should receive a windfall at the expense of those wrongfully injured. This is in accord with the general principle that “equity will not tolerate unjust enrichment.” Parker v. Western Dakota Insurors, Inc., 2000 SD 14, ¶ 31, 605 N.W.2d 181, 193 (Gilbertson, C.J., dissenting) (citing People ex rel. Palmer v. Peoria Life Ins. Co., 376 Ill. 517, 34 N.E.2d 829, 834 (1941)). To the extent an estate profits from the wrongful activity of a decedent, there is a direct windfall to the heirs at the expense of those who are injured. Neither fairness nor equity should permit such a result.

[¶ 56.] Accordingly, I would reverse the trial court’s grant of summary judgment and remand this issue for proceedings consistent with this dissent.

      . Congress has defined lead and cadmium as hazardous chemicals in need of regulation. 15 U.S.C. § 2601. Lead poisoning affects the neurological system, the blood, the kidneys, the gastrointestinal tract and the heart. Cadmium is a known carcinogen.

      . The Environmental Protection Agency considers a lead level of 40 mcg/dL in a person’s blood toxic. The Mayo Clinic considers a lead level of 30 mcg/dL in a person’s blood to be toxic. (R. at 284). Normal lead levels are 10 mcg/dL or less. (R. at 64).

      . Originally SDCL 21-3-2 constituted two separate statutes. See 1877 Civ.Code § 1946 and § 1974. However, the relevant language which we are now called upon to interpret remained intact through the combination of these two statutes in 1939. See SDC 37.1902.

      . The Evans interpretation of statutory language of § 3294 of the California Civil Code, which is the same as SDCL 21-3-2, is particularly persuasive as the source notes of SDCL 21-3-2 and the preface to the 1877 Dakota Territorial Code indicate it was based upon that California statute. 1877 Dak. Terr.Code page V of the preface. See also Trouten v. Heritage Mut. Ins. Co., 2001 SD 106, ¶ 31, 632 N.W.2d 856, 863, n. 3.

      . SDCL 21-3-2 provides: “In any action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, actual or presumed ... the jury, in addition to the actual damage, may give damages for the sake of example, and by way of punishing the defendant.”


author: CADY, Justice.

text:
    David McILRAVY, Appellant, v. NORTH RIVER INSURANCE COMPANY and Crum & Forster Insurance, Appellees.
    No. 01-0008.
    Supreme Court of Iowa.
    Oct. 9, 2002.

      Maureen Roach Tobin of Whitfield & Eddy, P.L.C., Des Moines, for appellant.
    Stephen D. Hardy and Michael A. Car-money of Grefe & Sidney, P.L.C., Des Moines, for appellees.
    Mark S. Soldat, Algona, and David D. Drake of Lawyer, Lawyer, Dutton & Drake, West Des Moines, filed a brief on behalf of amicus curiae Iowa Trial Lawyers Association, by the Core Group of its Workers’ Compensation Section.

      . Also appearing on behalf of the amicus curiae were Stephen D. Lombardi of the Lombardi Law Firm, West Des Moines; Max J. Schott and Jason D. Neifert of Max Schott & Associates, Des Moines; Thomas A. Palmer of Lawyer, Dougherty, Palmer, & Flansburg, P.L.C., West Des Moines; Robert R. Rush of the Rush Law Firm, Cedar Rapids; David W. Stamp of Ball, Kirk & Holm, P.C., Waterloo; Janice Valentine, Fort Dodge; Mindi Ver-vaecke of Fitzsimmons & Vervaecke, Mason City; Joseph L. Walsh of Hedberg, Ward, Owens & Vonderhaar, Des Moines; and Thomas M. Wertz of the Wertz Law Firm, Cedar Rapids.

   CADY, Justice.

The primary issue we face in this appeal is whether an injured worker presented a viable cause of action against his employer’s workers’ compensation carrier for bad faith in denying his claim for workers’ compensation benefits. The district court granted the carrier’s motion for summary judgment and the court of appeals affirmed the decision. On further review, we vacate the decision of the court of appeals, affirm the decision of the district court in part and reverse in part, and remand for further proceedings.

I. Background Facts and Proceedings.

David Mcllravy was employed by Ace Construction Company as an iron worker. His work commonly required him to bend, lift, stoop, carry, and climb. He normally wore a tool belt that weighed approximately twenty pounds.

On August 7, 1997, Mcllravy injured his right knee while working at a job site in Ames. Mcllravy was helping erect a building at the time. The injury occurred after Mcllravy descended from a ladder and was walking across a level cement floor to pick up some items some distance away. While walking, he felt and heard a pop in his knee. He was not wearing his tool belt at the time, and was not carrying anything. He had experienced no prior problems with his knee. Mcllravy felt no pain at the time and completed his work tasks for the day. That evening, however, after returning home, his knee began to swell. It was extremely sore and stiff the following morning. Mcllravy went to the work site in the morning, but the condition of his knee prevented him from working after a short period of time. His employer directed him to a medical clinic in West Des Moines, where he was referred to Jon C. Gehrke, M.D., an orthopedic surgeon.

On August 12, 1997, a claims examiner employed by the workers’ compensation carrier for Ace Construction, North River Insurance Company/Crum & Forster Insurance Company, interviewed Mcllravy for the purpose of determining whether to pay benefits for the injury. On August 18 the claims examiner sent Mcllravy a letter advising him that benefits were denied. The letter explained that the knee injury was idiopathic and only coincidentally occurred during working hours.

On August 25, 1997, Dr. Gehrke sent a letter to the claims examiner indicating he performed an MRI on Mcllravy’s right knee. The procedure revealed the injury was a torn medial meniscus. He further expressed his opinion, without explanation, that the injury was “work-related.” After conservative treatment failed, Dr. Gehrke performed partial medial menisectomy surgery to repair the knee. North River made no effort to obtain an independent medical examination to dispute or corroborate Dr. Gehrke’s opinion on the cause of the injury. The company also did not consult an attorney to determine whether Dr. Gehrke’s letter had any impact on the denial of Mcllravy’s claim.

North River continued to deny benefits and Mellravy filed a contested case proceeding with a demand for penalty benefits. The parties deposed Dr. Gehrke in February 1998, who explained he believed the injury sustained by Mellravy was work-related because Mellravy was working when the injury occurred and his job involved heavy labor activities, which placed him at greater risk for such injuries than workers engaged in less labor intensive activities. North River did not obtain a medical expert to review Dr. Gehrke’s opinion following the deposition, and conducted no further investigation.

The industrial commissioner awarded benefits to Mellravy, and assessed a penalty for the unreasonable denial of benefits. The district court affirmed the decision of the industrial commissioner on its review of the case, and our court of appeals affirmed the decision of the district court on appeal.

On August 3, 1999, Mellravy filed a tort action against North River for bad faith refusal to pay the workers’ compensation benefits. North River moved for summary judgment, and Mellravy moved for partial summary judgment. North River argued that Mcllravy’s action was required to be dismissed because the workers’ compensation claim was fairly debatable as a matter of law. Mellravy argued that the element of the bad faith tort requiring him to establish the absence of a reasonable basis for denying benefits was established as a matter of law under the doctrine of issue preclusion when the industrial commissioner awarded penalty benefits as a part of its decision to award workers’ compensation benefits.

The district court denied Mcllravy’s motion for a partial summary judgment and granted summary judgment for North River. It found that the doctrine of issue preclusion was inapplicable to the case, and further found there was no substantial evidence presented to establish the absence of a reasonable basis by North River for denying benefits. The district court found the claim for benefits was fairly debatable at the time of denial because the cause of injury was idiopathic. The court of appeals affirmed. It found there was a reasonable debate whether the injury was caused by Mcllravy’s individual susceptibility to the injury or the heavy labor activities associated with his job because Mellravy was not engaged in any work activity that placed stress or trauma on his knee at the time of the injury.

II. Scope of Review.

We review a ruling on a summary judgment motion for errors at law. Harvey v. Care Initiatives, Inc., 634 N.W.2d 681, 683 (Iowa 2001); Crippen v. City of Cedar Rapids, 618 N.W.2d 562, 565 (Iowa 2000); Swartzendruber v. Schimmel, 613 N.W.2d 646, 649 (Iowa 2000). A district court properly grants summary judgment when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Iowa R. Civ. P. 1.981(3); State ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 149 (Iowa 2001); Crippen, 618 N.W.2d at 565; Swartzendruber, 613 N.W.2d at 649. A factual issue is “material” when “the dispute is over facts that might affect the outcome of the suit.” Fouts ex rel. Jensen v. Mason, 592 N.W.2d 33, 35 (Iowa 1999) (citation omitted). The burden is on the party moving for summary judgment to prove the facts are undisputed. Interstate Power Co. v. Ins. Co. of N. Am., 603 N.W.2d 751, 756 (Iowa 1999); Sandbulte v. Farm Bureau Mut. Ins. Co., 343 N.W.2d 457, 464 (Iowa 1984).

In ruling on a summary judgment motion, the facts must be viewed in a light most favorable to the party resisting the motion. McNally & Nimergood v. Neumann-Kiewit Constructors, Inc., 648 N.W.2d 564, 570 (Iowa 2002) (citation omitted); State ex rel. Palmer, 637 N.W.2d at 149; Crippen, 618 N.W.2d at 565. The court must consider on behalf of the non-moving party every legitimate inference that can be reasonably deduced from the record. State ex rel. Palmer, 637 N.W.2d at 149; Crippen, 618 N.W.2d at 565; Shivvers v. Hertz Farm Mgmt., Inc., 595 N.W.2d 476, 479 (Iowa 1999). An inference is legitimate if it is “rational, reasonable, and otherwise permissible under the governing substantive law.” Butler v. Hoover Nature Trail, Inc., 530 N.W.2d 85, 88 (Iowa Ct.App.1994) (citation omitted). On the other hand, an inference is not legitimate if it is “based upon speculation or conjecture.” Id. If reasonable minds may differ on the resolution of an issue, a genuine issue of material fact exists. Swartzendruber, 613 N.W.2d at 649; Shivvers, 595 N.W.2d at 479.

III. Applicability of Issue Preclusion.

Mellravy argues that the element of the bad faith tort requiring him to establish the absence of a reasonable basis for denying benefits was established as a matter of law under the doctrine of issue preclusion when the industrial commissioner awarded penalty benefits as a part of its decision to award workers’ compensation benefits. In so arguing, Mellravy seeks to intermingle two distinct methods by which a self-insured employer or an employer’s workers’ compensation carrier may be penalized due to their delay in payment of workers’ compensation benefits.

The first method is described by statute. It arises from the language of Iowa Code section 86.13, which states in part:

If a delay in commencement or termination of benefits occurs without reasonable or probable cause or excuse, the workers’ compensation commissioner shall award benefits in addition to those benefits payable under this chapter, or chapter 85, 85A, or 85B, up to fifty percent of the amount of benefits that were unreasonably delayed or denied.

Iowa Code § 86.13 (1999) (emphasis added).

The determination of whether a delay “occurs without reasonable or probable cause or excuse,” requires an examination of the employer’s or the carrier’s actions in response to the employee’s claim. Id. A delay in commencement of benefits is permissible if “(1) the delay was necessary for the insurer to investigate the claim or (2) the employer had a reasonable basis to contest the employee’s entitlement to benefits.” Christensen v. Snap-On Tools Corp., 554 N.W.2d 254, 260 (Iowa 1996) (emphasis added). “A ‘reasonable basis’ for denial of the claim exists if the claim is ‘fairly debatable.’” Id. In every section 86.13 claim, “[t]he focus is on whether timely payment of the benefits due was made and if not, whether there was a reasonable excuse for the failure to make timely payment of the amount owed.” Id.

The second method by which a self-insured employer or employer’s workers’ compensation carrier may be penalized for a delay in payment of benefits is by a private cause of action for first-party bad faith. This cause of action arises from “ ‘the knowing failure to exercise an honest and informed judgment’” on the part of a defendant from whom the employee seeks compensation due to work-related injuries. Kiner v. Reliance Ins. Co., 463 N.W.2d 9, 12 (Iowa 1990) (quoting Anderson v. Cont’l Ins. Co., 85 Wis.2d 675, 271 N.W.2d 368, 376 (1978)). As we observed recently: “to establish a claim for first-party bad faith, the insured must prove two facts: (1) that the insurer had no reasonable basis for denying benefits under the policy and, (2) the insurer knew, or had reason to know, that its denial was without basis.” United Fire & Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 657 (Iowa 2002) (citing Kiner, 463 N.W.2d at 12); see also Dolan v. Aid Ins. Co., 431 N.W.2d 790, 794 (Iowa 1988) (citation omitted) (adopting the first-party bad faith cause of action in Iowa); Boylan, 489 N.W.2d at 744 (extending the first-party bad faith cause of action into the area of workers’ compensation). The two-part test for first-party bad faith applies no matter what type of insurance is provided by the defendant insurer, including workers’ compensation. Bad faith claims are applicable to workers’ compensation insurers because they hold the discretionary power to affect the statutory rights of workers, which clearly reflects their obligation to act in good faith in the exercise of this authority.

Given the use of the phrase “reasonable basis” in the standard for imposition of the statutory penalty and in the standard for imposition of a civil penalty, it is understandable that Mcllravy would utilize the potential preclusive effect one reasonable basis determination would have on the other reasonable basis determination in either of the particular contexts in which the standards apply. In fact, Mcllravy offers at least one recent case in support of his argument that issue preclusion applies in this case. See Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 398 (Iowa 2001). Unfortunately, Mcllravy’s reading of the Gibson case stretches its language too far. In Gibson, we only considered the commissioner’s prior finding of no reasonable basis for a refusal to pay workers’ compensation benefits as a factor in our review of the sufficiency of the evidence to support the submission of a claim for punitive damages in the bad faith action. Id. We did not address whether or not such evidence was “preclusive” of a further determination of whether a reasonable basis existed in a common law action. See id.

Moreover, there are a number of differences between the statutory and common law provisions under which-Mcll-ravy has sought redress. The most significant for this case is the difference in burdens of proof placed on the parties in the two different proceedings. In the administrative context, where the industrial commissioner is responsible for applying the provisions of section 86.13, the defendant/employer or carrier bears the burden of proving that its denial of benefits had a reasonable basis. Christensen, 554 N.W.2d at 260. On the other hand, in a civil case where the trier-of-fact is responsible for applying the common law standards of the first-party bad faith tort, the plaintiff/insured bears the burden of proof. See United Fire & Cas. Co., 642 N.W.2d at 657; Dolan, 431 N.W.2d at 794.

The primary purpose of issue preclusion is to protect litigants from the “vexation of relitigating identical issues with identical parties or those persons with a sufficient connective interest to the prior litigation” with an additional benefit of promoting judicial economy. State ex rel. Casas v. Fellmer, 521 N.W.2d 738, 740-41 (Iowa 1994) (citation omitted). There are, however, four exceptions to issue preclusion. The fourth exception is the most relevant for our disposition of the preclusion issue in this case:

Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in the following circumstances: ...
(4) The party against whom preclusion is sought had a significantly heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action; the burden has shifted to his adversary; or the adversary has a significantly heavier burden than he had in the first action.

Heidemann v. Sweitzer, 375 N.W.2d 665, 667-68 (Iowa 1985) (emphasis added) (quoting Restatement (Second) of Judgments § 28(4) (1982)).

In this case, the burden has shifted between the two parties. In the administrative procedure, the burden was on North River. In this civil suit, Mcllravy has the burden. Given the different burdens of proof between the two different penalty mechanisms and the two different stages of the North River/Mcllravy dispute, issue preclusion is inapplicable in this case. The district court was correct in overruling Mcllravy’s motion for partial summary judgment on this issue.

IV. Propriety of Summary Judgment.

The second issue we face in this appeal is whether the district court properly granted summary judgment in favor of North River based on the court’s finding that Mcllravy failed to present substantial evidence- to establish the absence of a reasonable basis by North River for denying ' benefits. In Thompson v. United States Fidelity & Guaranty Co., 559 N.W.2d 288, 290 (Iowa 1997), we observed, “the question of whether the fairly debatable issue was one for the court or the jury depends on the facts of the individual case.” Ultimately,

there are no unique rules that apply when a district court rules on a directed-verdict motion in a bad-faith case. In such a case, as in all others,
[t]ime-honored rules govern our review of [a court’s ruling on] such motions. The primary standard is that of substantial evidence; where no substantial evidence exists to support each element of a plaintiffs claim, directed verdict or judgment n.o.v. is proper. Substantial evidence is that which a “reasonable mind would accept as adequate to reach a conclusion.” Where reasonable minds could differ on an issue, directed verdict is improper and the case must go to the jury-

Thompson, 559 N.W.2d at 290-91 (quoting Stover v. Lakeland Square Owners Ass’n, 434 N.W.2d 866, 873 (Iowa 1989) (citations omitted)); see also United Fire & Cas. Co., 642 N.W.2d at 657 (whether a claim is fairly debatable is appropriately decided by the court as a matter of law) (citation omitted). Therefore,

a court should direct a verdict for the defendant only when, viewing the record in the light most favorable to the claimant, there is no substantial evidence to support the elements of the claim, ie., that the insurer lacked a reasonable basis for denial and that it knew or should have known it lacked such a basis.

Thompson, 559 N.W.2d at 291 (citations omitted).

A key dispute in this case focuses on the point in time at which a court should look to determine the reasonableness of an insurer’s actions in denying benefits in light of the evidence in its possession. Mcllra-vy asserts that North River’s obligation to act reasonably was present throughout all stages of their dispute, including the point in time after North River’s first denial of benefits when it received the letter from Dr. Gehrke opining that Mcllravy’s injury was work-related. North River argues that it had a reasonable basis in denying benefits initially and need not reestablish such a basis at subsequent points in time, particularly if such a reassessment was supported by the opinion of a doctor with no training in making determinations of legal causation. We have previously indicated that in cases of this type the inquiry must focus on the defendant’s initial denial as well as “whether, at some later date, [the insurer] became aware there was no reasonable basis to continue denying plaintiffs’ claim.” Dirks v. Farm Bureau Mut. Ins. Co., 465 N.W.2d 857, 862 (Iowa 1991); see also Squealer Feeds v. Pickering, 530 N.W.2d 678, 683 (Iowa 1995). For that reason, we must consider whether North River initially had a reasonable basis for denying McIlravy’s claim, and, if so, whether North River later continued to have a reasonable basis to deny Mcllravy’s claim after its initial denial.

We conclude the information gathered from the initial interview of Mcll-ravy gave North River a reasonable basis to deny the claim. An injury must arise out of the worker’s employment to be com-pensable. This means “‘the injury must not have coincidentally occurred while at work, but must in some way be caused by or related to the working environment or the conditions of ... employment.’ ” Floyd v. Quaker Oats, 646 N.W.2d 105, 107 (Iowa 2002) (quoting Miedema v. Dial Corp., 551 N.W.2d 309, 311 (Iowa 1996)). Based on McIlravy’s statement that he was merely walking when the injury occurred, it was reasonable for North River to conclude the injury coincidentally occurred while at work. Mcllravy was not doing anything at the time that he would not have been doing outside of his employment. We recognize that our workers’ compensation law does not require the work place activity to involve more hazard or exertion than a claimant’s activities outside the work place as a condition of compensability. Floyd, 646 N.W.2d at 108. Yet, this does not mean an injury sustained while walking, without any additional evidence connecting the injury in some way to the work place environment, is compensable. See Miedema, 551 N.W.2d at 311 (injury sustained while going to the bathroom not connected with employment). A compensable injury still must be related to the working environment or the conditions of employment. Floyd, 646 N.W.2d at 107-08.

In this case, on the date North River wrote the letter denying the claim, it knew Mcllravy was simply walking at the time of injury, with no additional facts to indicate the work environment or conditions of work contributed in any way to the injury. Although Mcllravy was engaged in a work activity, there was nothing to suggest that something about the work environment or condition of work contributed to the injury. Thus, the question is whether North River later became aware there was no reasonable basis to continue to deny the claim.

The evidence submitted at the summary judgment proceeding showed North River received the letter from Mcllravy’s treating physician six days after it denied the claim. This letter expressed a clear opinion that the injury was work-related, but provided no further explanation. The entire relevant portion of the five-sentence letter stated:

On August 7, 1997, he injured his right knee while at work. An MRI was obtained, revealing a large medial meniscus tear — this is definitely a work-related injury.

Although the opinion was expressed by Dr. Gehrke with a high degree of certainty, the letter did not include any reasons, medical or otherwise, to support the opinion. Other than the unsupported opinion of the doctor, North River had no additional facts or information to reevaluate its earlier response that the injury was not work-related.

However, North River later received additional information explaining Dr. Gehrke’s opinion. This information was obtained during the course of his deposition in February 1998. Dr. Gehrke explained that the injury was work-related because Mcllravy was at work, his profession involved heavy lifting activities, and the nature of his profession placed him at greater risk for knee injuries than other professions. The new information North River received from this deposition was that Mcllravy was at greater risk of sustaining a knee injury than workers in less labor-intensive professions. This was evidence that the injury sustained by Mcllravy was related to “ ‘the working environment or the conditions of ... employment.’” Floyd, 646 N.W.2d at 107 (citation omitted). It explained, for the first time, why the injury was work-related.

Notwithstanding this new evidence, North River continued to deny the claim. Moreover, it failed to present evidence in the course of the summary judgment proceeding to show that it conducted a further investigation in response to the new evidence. It failed to respond to this new evidence by investigating whether iron workers are more susceptible to knee injuries and failed to seek another medical opinion to refute or confirm Dr. Gehrke.

Although the new information provided in the deposition did not necessarily render the compensability issue undebatable, it did transform the reasonableness of the continued denial by North River into a jury question. The reasonableness of the denial of a workers’ compensation claim by an insurer is a question of law only when the evidence is undisputed and only one inference can be drawn from the evidence. The facts of this case were undisputed, but the inferences were not. Bad faith may be inferred from a flawed investigation, and the facts of this case place the adequacy of the investigation conducted by North River after the deposition of Dr. Gehrke into question. See Reuter v. State Farm Mut. Auto. Ins. Co., 469 N.W.2d 250, 254-55 (Iowa 1991). We recognize an incomplete investigation will not alone support recovery for bad faith if the insurer nevertheless had a reasonable basis for denial. Id. Yet, the failure of North River to investigate in this case went to the very foundation of the basis for its denial. North River previously denied the claim based on the lack of facts to show the injury was work-related, and the deposition of Dr. Gehrke supplied the missing facts. A reasonable inference to be drawn from North River’s failure to investigate further is that it knew it had no reasonable basis for denying McIlravy’s claim. See id. at 254. This inference required the district court to deny the summary judgment motion.

V. Conclusion.

We conclude the district court properly overruled Mcllravy’s motion for partial summary judgment on issue preclusion based on its finding that the issue of North River’s reasonable basis for denying Mell-ravy workers’ compensation benefits was not precluded by the reasonable basis determination made through the course of prior proceedings in this dispute. However, we find Mcllravy presented substantial evidence that North River did not have a reasonable basis for its denial of his workers’ compensation benefits after the deposition was taken. We conclude that the district court erred by granting North River’s motion for summary judgment on the reasonable basis determination.

DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

      . At first blush, a cause of action for bad faith pursued by an employee against an employer's workers’ compensation carrier appears to be a matter of "third-party” bad faith more than one of "first-party” bad faith. See Long v. McAllister, 319 N.W.2d 256, 262 (Iowa 1982) (refusing to recognize a tort cause of action for bad faith by a third party against a carrier for its failure to settle the third-party's claim against the carrier's insured). However, when first adopting the bad faith cause of action in the workers' compensation context, we determined that such a suit is more accurately considered as one for first-party bad faith given "the obligations that [Iowa Code §§ 86.13, .27] and administrative regulations place on the insurer.” Boylan v. Am. Motorists Ins. Co., 489 N.W.2d 742, 743 (Iowa 1992). Since that time, cases alleging bad faith on the part of a workers' compensation carrier have been considered under the first-party bad faith rubric. We take that approach in this case as well.

      . We emphasize that the burden is on a claimant to prove both that an injury "arose out of" and "in the course of” employment. Koehler Elec. v. Wills, 608 N.W.2d 1, 3 (Iowa 2000); see also Iowa Code § 85.3(1) (1999). The arising out of” element means there must be "a causal relationship between the employment and the injury.” Koehler Elec., 608 N.W.2d at 3 (citation omitted). The injury must be a natural incident of the work, meaning the injury is a rational consequence of a hazard connected with the job. Id. "In other words, the injury must not have coincidentally occurred while at work, but must in some way be caused by or related to the working environment or the conditions of ... employment.” Miedema v. Dial Corp., 551 N.W.2d 309, 311 (Iowa 1996). The testimony of the treating physician in this case that the type of work performed by Mcllravy placed him at greater risk for the type of knee injury he sustained does not alter the "arising out of” employment legal standard, but is evidence provided to establish the standard in this case. The opinion by the treating physician acknowledges that such an injury can coincidentally occur to workers, but the opinion also expresses the view that it is more probable the injury to Mcllravy was causally related to the particular strenuous conditions of his employment.

      . North River rejected the medical opinion of the treating physician without explanation, and continued to rely upon its fact-based position that the injury only coincidentally occurred to Mcllravy while he was at work. However, North River had no medical evidence to support this position, and had knowledge that the only medical evidence in the case rejected the position.
      In Gilbert v. USF Holland, Inc., 637 N.W.2d 194 (Iowa 2001), we held that a workers' compensation claim was fairly debatable even though there was uncontested medical evidence that the injury arose from employment. However, in Gilbert, the claimant reported two different versions of how his back injury was sustained. The first version reported by the worker was that it occurred as he merely stood up from a table. The second version was that it occurred while he was pulling a dock plate. The medical evidence in the case concerning causation was based on the second version. This meant a reasonable person' could accept the medical evidence and still reasonably debate the "arising out of” employment element of the claim by rejecting the version of the facts supporting the medical opinion. Thus, Gilbert is distinguishable from this case on the facts.
      In this case, the facts concerning how the injury occurred are not in dispute, nor is the medical evidence of causation. While the facts alone do not disclose whether the injury arose out of employment, the additional medical evidence does not support causation. Medical evidence need not be accepted, but it can only be rejected based on valid specific reasons. See Catalfo v. Firestone Tire & Rubber Co., 213 N.W.2d 506, 510 (Iowa 1973). North River offered no reasonable basis to reject this evidence. The treating physician tied the injury to the work environment or conditions of employment. These conditions included repetitive lifting, climbing, and extra weight required to be carried by the worker, as well as the circumstances immediately pri- or to the injury. The uncontested evidence in the case satisfied the "arising out of” employment element of a workers' compensation claim, and North River's continued denial of the claim could only be grounded on the unexplained rejection of the medical evidence of causation. North River failed to obtain medical evidence to explain why the injury was probably just a coincidence of employment, and not a natural incident of the work performed by Mcllravy. Consequently, a jury issue was generated whether or not this denial constituted bad faith.