author: RANDALL, Judge. MINGE, Judge

text:
    Jeffrey L. FOUST, et al., Respondents, v. John R. McFAIRLAND, et al., Appellants.
    Nos. A04-760, A04-1956.
    Court of Appeals of Minnesota.
    June 14, 2005.
    Review Filed Aug. 16, 2005.

      Ronald I. Meshbesher, John P. Sheehy, Michael C. Snyder, Pamela J. Spaulding, Meshbesher <& Spence, Ltd., Minneapolis, MN, for respondents.
    Paul V. Esposito (pro hac vice), Clausen Miller P.C., Chicago, IL; and Diane B. Bratvold, Rider Bennett, LLP; and Brian N. Johnson, Sheila T. Kerwin, Amanda M. Cialkowski, Halleland Lewis Nilan Sipkins & Johnson, P.A., Minneapolis, MN, for appellants.
    Considered and decided by RANDALL, Presiding Judge; MINGE, Judge; and PORITSKY, Judge.

       Retired judge of the district court serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const, art. VI, § 10.

   OPINION

RANDALL, Judge.

Appellants appeal from the denial of their motion for judgment notwithstanding the verdict (JNOV), new trial, or remitti-tur, alleging that (1) the evidence does not support the jury’s determination and is contrary to law, (2) certain evidence should not have been excluded, (3) respondents’ intentional destruction of evidence should result in dismissal of their claims. Appellants also appeal from the partial denial of their motion for collateral source setoff. Respondents argue that the district court properly applied the law determining the setoff. We affirm on all issues.

FACTS

The parties

This appeal arises from a $11,310,464 jury verdict. Appellants are driver John R. McFarland, his employer USF Holland, Inc., and its parent company U.S. Freight-ways, Inc. Respondents are Jeffrey and Linda Foust, (hereinafter Foust and L. Foust) who reside with their three children in Minnetonka.

The collision

On May 15, 1998, Foust suffered brain and other injuries as a result of a collision with appellants’ truck driven by McFarland. The collision occurred at the intersection of U.S. Highway 12 and County Road 6 in Orono, Minnesota. Traffic lights controlled the intersection, but a severe storm that afternoon had disabled them. A number of vehicle drivers were treating the intersection as a four-way stop because of the disabled traffic lights. Foust was among these drivers, and after waiting his turn, proceeded into the intersection. McFarland, who was driving a semi-truck at a speed of 55 mph, struck the vehicle driven by J. Foust in the intersection.

The injuries

Both sides presented extensive expert testimony regarding the extent of Foust’s brain injuries. According to respondents’ experts, Foust suffered injuries, including a diagnosis of traumatic brain injury (TBI). Respondents’ experts testified that Foust continues to suffer from frontal lobe injury, exhibited by clear deficits in attention, concentration, processing speed, learning memory and executive functioning. This injury resulted in significant impairment to Foust’s personal and social competencies.

Dr. Morgan, a neurology expert and witness for the respondents, testified that though Foust suffers from frontal lobe injury, he had a strong performance on “fund of information and vocabulary,” explaining:

we know that brain injuries more likely affect some things more than others. And that’s why we give a broad range of tests, not just those that are potentially sensitive to traumatic brain injury. And we look for separation. What you referred to were tests of fund of knowledge, fund of information, and vocabulary. And on those sorts of tests, he’s at the 91st percentile compared to others of comparable age. These are tests that we know aren’t likely to be affected by head trauma. They are very overl-earned skills. Unless you’ve got some pretty massive structural abnormalities or have been in a coma for months and are tested closer to the time of the injury, those aren’t likely to be much affected. So those tend to give you a sense of where this person is likely to have functioned before an injury because those stay up. They aren’t affected. So what these would suggest is that this is somebody who before the injury was likely to have been well above average, possibly even within what we call the superior range.
The brain is specialized and there are certain aspects of function that are more likely to be affected by others. And this more conversational, language skills, body of knowledge, the kinds of things that are going to impress on conversational contact, are intact.
The effects of traumatic brain injury are commonly most likely to show up on tests of learning and memory. He’s got a number of memory test performances that are actually below average and not even within the average range, which would be suspiciously low for him. But these are below the average range compared with others of comparable age. Similarly, on tests of more complex reasoning of different sorts, performance from the lower portion of average to below average levels would be suggestive in his case of some decline from where he was before.

Appellants presented the expert testimony of Dr. Lamberty, a neuropsychologist. Dr. Lamberty recognized that Dr. Morgan is regarded highly in the field. Lamberty agreed that Foust suffered brain injury as a result of the collision. However, Lamberty disagreed with the extent of Foust’s brain injury.

The pre-accident career

The parties agree that prior to the accident Foust was a successful businessman. Foust was a telecommunication engineer and entrepreneur. During college, Foust worked as a coal miner and eventually earned a degree in electrical engineering. Early in his career, Foust worked for technology companies, eventually starting his own company, Telinq, which developed sophisticated, high-speed multiplexer telecommunications equipment. His company sold millions of dollars of equipment. He developed products for major corporations, including Minneapolis-based ADC Telecommunications. ADC later purchased the company from Foust and hired him. According to appellants, Foust helped transform ADC into an industry giant in digital electronic telecommunications transmission.

Post-accident

The parties disagree on Foust’s ability to work after the collision. Both sides presented testimony to the jury regarding J. Foust’s post accident employment. According to a number of witnesses presented by respondents, including a number of employees of ADC, Foust had difficulties with memory, planning, and controlling his temper after returning to work. Foust missed meetings, was confused, and could no longer make critical decisions. His work performance was unacceptable. Mary Pat Pearson, Director of Human Resources, testified that Foust did not improve and ADC “couldn’t tolerate anymore.” Foust testified that he was depressed and had suicidal ideations at times. He was treated medically for this. Appellants presented expert testimony through Dr. Lamberty that Foust could be employed — though at a reduced level from pre-accident conditions.

The computer

On July 16, 2003, following the deposition of L. Foust, appellants asked respondents to produce their computers. On July 28, 2003, respondents filed an objection to this discovery request. On August 13, 2003, the district court heard the dispute. The court ordered production of respondents’ computers.

After trial began, appellants’ forensic computer expert, Mark Lanterman reported to appellants that during an examination of respondents’ computer, he determined that some data had been permanently deleted. Appellants moved to dismiss respondents’ negligence claims, based on this spoliation of evidence. Alternatively, appellants requested a mistrial, continuance, or adverse inference instruction.

A few days later, Lanterman, testifying outside of the presence of the jury stated that he had found child pornography on the computer. In addition to the child pornography, Lanterman found a number of other documents including correspondence between Foust and other people. He found some illegal downloads of intellectual property. Appellants sought to introduce the evidence found on the computer. Some of the evidence was allowed, but much of it was denied. Appellants assert the denial was erroneous.

Then on September 3, 2003, appellants claimed that Lanterman had found that portions of unallocated space on the laptop computer had been “scrubbed” using a “Wipelnfo” program. The Wipelnfo program is a computer program that permanently deletes data from the hard drive of a computer.

On the same day, the district court made a determination that respondents were responsible for spoliation of computer data. As a result, the court granted appellants’ request for sanctions and concluded that an adverse inférfence instruction would be read to the jury. The district court then determined that any evidence of the child pornography, and other bad acts, was “unnecessarily confusing, misleading, cumulative, and more prejudicial than probative” and ruled it inadmissible. The court further determined that neither Lanterman nor Foust could be questioned regarding circumstances surrounding the spoliation.

On September 12, 2003, the jury returned a verdict for respondents in the amount of $11,310,464.64. It apportioned fault of 80% to appellants and 20% to respondents. The court entered judgment for respondents in the amount of $9,048,371.71 exclusive of statutory costs, disbursements, and interests.

Following judgment, appellants moved for multiple collateral source setoffs. The parties first stipulated to an award of $135,464.64 in past medical expenses. The parties then agreed to a $20,000 setoff and another setoff for Blue Cross’ $42,983.37 payment. Then appellants requested an additional setoff of $72,481.27 for amounts billed by medical providers for Foust’s care, but which was discounted pursuant to the agreement between the medical providers and the medical insurance company. The district court denied appellants’ request for a setoff for those medical bills charged but not paid for by Foust and not paid by the medical insurance company.

This appeal followed.

ISSUES

1. Did the district court err by applying Patton v. Newmar Corp. and its progeny in this intentional spoliation of evidence case?

2. Did the district court err by barring introduction of evidence during cross-examination and closing argument about the circumstances of the spoliation?

3. Did the district court err in denying appellants’ requested setoff amount?

ANALYSIS

1. Did the district court err in its application of Patton v. Newmar Corp. in this spoliation of evidence case?

The district court has broad authority in determining what, if any, sanction is to be imposed for spoliation of evidence. Patton v. Newmar Corp., 538 N.W.2d 116, 118-19 (Minn.1995). On review, an appellate court considers whether the district court is authorized to impose a sanction for spoliation of evidence and, if so, whether it abused its discretion by imposing such a sanction, Wajda v. Kingsbury, 652 N.W.2d 856, 860 (Minn.App.2002), review denied (Minn. Nov. 19, 2002), and will not reverse unless it is clear that no reasonable person would agree with the district court’s decision. Patton, 538 N.W.2d at 119.

Appellants assert that the Patton abuse-of-discretion standard of review is inappropriate in spoliation cases where a party intentionally and in bad faith destroys evidence. Appellants argue that a de novo standard of review should be applied. We disagree. There is no authority limiting Patton to cases involving only negligent or unintentional destruction of evidence. Rather, “Patton applies to any case where critical evidence has been destroyed.” See Wajda, 652 N.W.2d at 864. Regardless of intent, disposal of evidence is spoliation when a party knows or should know that the evidence should be preserved for pending or future litigation. Patton, 538 N.W.2d at 119.

A. Patton and its Progeny

Appellants first argue that Patton does not meet the needs of justice in intentional spoliation cases. We are not sure why Patton does not. “Spoliation” of evidence simply refers to the destruction of relevant evidence by a party. Hoffman v. Ford Motor Co., 587 N.W.2d 66, 71 (Minn.App.1998). While courts have long afforded redress for the destruction of evidence, Federated Mut. Ins. Co. v. Litchfield Precision Components, Inc., 456 N.W.2d 434, 436 (Minn.1990), Minnesota does not recognize an independent spoliation tort. Id. at 437.

Spoliation sanctions are typically imposed where one party gains an eviden-tiary advantage over the opposing party by failing to preserve evidence. See Himes v. Woodings-Verona Tool Works, Inc., 565 N.W.2d 469, 471 (Minn.App.1997), review denied (Minn. Aug. 26, 1997). This is true where the spoliator knew or should have known that the evidence should be preserved for pending or future litigation; the intent of the spoliator is irrelevant. Patton, 538 N.W.2d at 119. When the evidence is under the exclusive control of the party who fails to produce it, Minnesota also permits the jury to infer that “the evidence, if produced, would have been unfavorable to that party.” Federated Mut., 456 N.W.2d at 437; see also Wajda, 652 N.W.2d at 861.

Further, “[t]he propriety of a sanction for the spoliation of evidence is determined by the prejudice resulting to the opposing party.” Hoffman, 587 N.W.2d at 71. Prejudice is determined by considering the nature of the item lost in the context of the claims asserted and the potential for correcting the prejudice. Patton, 538 N.W.2d at 119.

Appellants argue that Patton is inapplicable here because (1) it has only been applied in civil cases involving unintentional or negligent spoliation, and (2) the prejudice requirement requires actual knowledge of the nature of the item lost, and the district court here did not “know exactly what was lost.” Appellants thus arg-ue that this case is different from a Patton case because of respondents’ bad faith and intentional spoliation of evidence. Appellants argue that since the contents of the evidence from the computer were destroyed, the district court could not accurately determine prejudice — “because it had no basis for determining the prejudice.” As a result, appellants contend the court should be guided by the purpose of punitive damages, which is to “punish the perpetrator, to deter repeat behavior and to deter others from engaging in similar behavior.” Appellants argue that the district court sanctions here were too weak to constitute punitive sanctions. Appellants wanted, if it could, an outright dismissal with prejudice of the plaintiffs’ case. In the alternative, appellants wanted a mistrial/continuance and other sanctions.

Respondents, on the other hand, argue that the district court properly weighed the various factors and came up with appropriate sanctions. Respondents claim the district court did not abuse its discretion by allowing the trial to continue. The circumstances surrounding the accident were supported by the testimony of a number of eyewitnesses. The large amount of expert testimony, along with other evidence substantially supported Foust’s injuries. Appellants had a significant amount of adverse medical testimony. The district court concluded that the missing evidence did not substantially and materially affect the overall claim. We agree. Both the record and the law support the district court’s determination. First, Patton is the law in Minnesota on spoliation. See Wajda, 652 N.W.2d at 864 (“Patton applies to any case where critical evidence has been destroyed.”). Second, Minnesota law does not differentiate between intentional and unintentional spoliation. See Patton, 538 N.W.2d at 118 (regardless of intent, disposal of evidence is spoliation when a party knows or should know that the evidence should be preserved for pending or future litigation). Third, as in other spoliation cases, the court here had to calculate its determination of prejudice based partly on unavailable evidence. Spoliation cases, by their nature, require at least a partial inference of prejudice based on unobtainable (spoiled) evidence. This case is not “special” as appellants’ claim.

We find nothing unique about a spoliation case where the spoliation is intentional. The district court, within its discretion, weighed the entire record in front of it, the nature of the item lost, the context of the claims asserted, and the potential for correcting the prejudice. The court gave appellants’ argument credence when it determined that the destruction of the computer evidence was prejudicial to appellants. The district court, using its discretion, sanctioned respondents, and properly applied current Minnesota law (Patton) on spoliation.

B. Adverse inference instruction

Appellants challenge the district court’s sanction for spoliation of evidence, arguing that the adverse instruction sanction given “is not harsh enough.” Courts can sanction a party for spoliation of evidence when one party gains an evidentiary advantage due to its failure to preserve evidence after that party has been given the opportunity to examine it. Himes, 565 N.W.2d at 471. The Patton court addressed the authority of the district court in these matters when it stated:

While we have never specifically addressed the scope of the trial court’s authority to impose a sanction for spoliation of evidence, we often have commented that courts are vested with considerable inherent judicial authority necessary to their “vital function — the disposition of individual cases to deliver remedies for wrongs and ‘justice freely and without purchase; completely and without denial; promptly and without delay, conformable to the laws.’ ” The task of determining what, if any, sanction is to be imposed is implicated by the broad authority provided the trial court.

Patton, 538 N.W.2d at. 118-119 (citations and quotations omitted). The party challenging the trial court’s choice of a sanction has the difficult burden of convincing an appellate court that the trial court abused its discretion — “a burden which is met only when it is clear that no reasonable person would agree [with] the trial court’s assessment of what sanctions are appropriate.” Id. at 119.

Appellants argue that the district court abused its discretion by refusing to allow a mistrial or continuance, instead of the less harsh sanction of an adverse instruction. They argue that they were greatly prejudiced — given the relevance of some of the recovered documents. Specifically, they argue that they needed time to properly develop the already-recovered evidence, focusing on the correlation between pornography and heightened depression and anxiety.

Respondents, on the other hand, argue that the district court’s determination to use the sanction of an adverse inference instruction was sound. They argue that the court corrected based its decision on the nature of the documents admitted, the weight of the medical testimony, and the evidence showing J. Foust’s abilities.

The trial court has discretion whether to grant a continuance, and its ruling will not be reversed absent a showing of clear abuse of discretion. Dunshee v. Douglas, 255 N.W.2d 42, 45 (Minn.1977). “The test is whether a denial prejudices the outcome of the trial.” Weise v. Comm’r of Pub. Safety, 370 N.W.2d 676, 678 (Minn.App.1985). A trial court will not be reversed unless its failure to declare a mistrial or to grant a new trial constituted a clear abuse of discretion. See, e.g., Reese v. Ross & Ross Auctioneers, Inc., 276 Minn. 67, 71, 149 N.W.2d 16, 19 (1967); Colgan v. Raymond, 275 Minn. 219, 226, 146 N.W.2d 530, 535 (1966); Harris v. Breezy Point Lodge, Inc., 238 Minn. 322, 329-30, 56 N.W.2d 655, 660 (1953).

The district court ultimately determined that the sanction of an unfavorable inference instruction was appropriate. Specifically, on September 3, 2003, the court stated:

I believe a sanction is appropriate but not a draconian sanction, so what I’m going to do is have the [appellants] prepare ... an instruction that I’m going to read to the jury during the final instructions consistent with Civ JIG 12.35, which reads that, “If either party does not produce evidence that the party could reasonably be expected to produce” and intentionally destroys evidence which that party has been ordered to produce “and fails to give a reasonable explanation, you may decide that the ... evidence would have been unfavorable to that party” And I’ll consider proposed instructions from either side, but I am going to give an unfavorable inference instruction.
I think I’ve imposed the least severe sanction that I could have imposed. I could have imposed a much more severe sanction but, given the nature of the allegations here of the frontal lobe injury and how it may or may not affect Mr. Foust’s cognitive functioning, I really do continue to feel that the relevancy of — of whatever might have been found was small in comparison to the potential to confuse the jury and to be more prejudicial than probative. So I’m — I’m comfortable with the fact that in all likelihood if there had been anything found on these hard drives; it probably wouldn’t have come in anyhow. But the conduct of Mr. and Mrs. Foust in intentionally violating my order requires a serious sanction and I’m going to give this instruction. I think it’s fair. I think it punishes somebody for intentional misconduct, which is what I’ve determined here, and I think it comes within the Court’s discretion under Patton v. Neixmar where the court says at page 119 that, “One challenging the trial court’s choice of a sanction has the difficult burden of convincing an appellate court that the trial court abused its discretion — ‘a burden which is met only when it is clear that no reasonable person would agree [with] the trial court’s assessment of what sanctions are appropriate,’ ” citing Marrocco v. General Motors, [966 F.2d 220 (]7th Cir.1992). And I think a — I think this is a reasonable sanction.

Based upon the record, the district court made a determination of an appropriate sanction. The court recognized the seriousness of respondents’ conduct, weighed the record and made a determination that an unfavorable inference instruction was appropriate. The use of an unfavorable inference instruction is a sanction permitted by Minnesota courts in spoliation of evidence claims. See Federated Mut., 456 N.W.2d at 436-37. Further, the court favorably ruled for appellants’ by allowing the instruction to be read to the jury before deliberations. We see no reason for a new rule of law calling for a presumption that a dismissal with prejudice of the spoiling party’s claims is the best and fairest sanction when the spoliation is intentional. “Intentional” is certainly a factor, but it is not conclusive.

2. Did the district court err by barring introduction of evidence during cross examination and closing argument about the circumstances of the spoliation?

Appellants next argue that the district court committed reversible error by excluding all evidence surrounding the circumstances of the spoliation. Absent erroneous interpretation of the law, the question of whether to admit or exclude evidence is within the district court’s discretion. Kroning v. State Farm Auto. Ins. Co., 567 N.W.2d 42, 45-46 (Minn.1997). Evidentiary error is prejudicial if it might reasonably be said to have changed the result of the trial. Poppenhagen v. Sornsin Constr. Co., 300 Minn. 73, 79-80, 220 N.W.2d 281, 286 (1974); see State v. Bolte, 530 N.W.2d 191, 198 (Minn.1995) (providing that an error in admitting evidence is prejudicial “if there is a reasonable possibility that the verdict might have been more favorable to the defendant if the evidence had not been admitted”) (quotation omitted).

Under Minn. R. Evid. 401, “ ‘[r]elevant evidence’ means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” The comments to Minn. R. Evid. 401 provide, “[i]f the offer has any tendency to make the existence of a fact of consequence more or less probable than it would be without the evidence it is relevant. A slight probative value is sufficient under rule 401.” Relevant evidence that is not prohibited by the statfe or federal constitutions, by statutory requirements, or by the rules, of evidence is admissible. Minn. R. Evid. 402.

Under Minn. R. Evid. 403, relevant evidence may be excluded “if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” Rule 403 “favors the admission of relevant evidence by requiring a determination that its probative value be ‘substantially’ outweighed by the dangers listed in the rule.... ” Minn. R. Evid. 408 comm, cmt. The district court is afforded broad discretion to determine if relevant evidence must be excluded under rule 403, and this court will not reverse that decision unless the district court “clearly abused” its discretion. Wagner v. Thomas J. Obert Enter., 396 N.W.2d 223, 229 (Minn.1986).

Appellants argue that the circumstances surrounding the spoliation of evidence are important because they offer clues about the importance of the destroyed evidence. Appellants argue that they should have been able to question their computer expert, Lanterman, about the evidence, or, respondent Foust should have been required to explain it. Specifically, appellants argue that the evidence of the child pornography bore on the weight to be given to Foust’s injuries and L. Foust’s consortium claim.

Respondents argue that the evidence was properly excluded based on relevancy. They contend that appellants only wanted to admit the pornography evidence to show that Foust was a bad character and had committed bad acts.

The district court stated:

[O]nce the court ordered production of the computers, it’s my finding — and the evidence is overwhelming — that either Mr. or Mrs. Foust used the Wipe Info program to wipe out information prior to the time that the computers were delivered to the Road Runner Transportation Company as evidenced by Exhibit 13. I have serious doubts as to the relevancy, and its my considered judgment, based on everything that I’ve heard, that even if the information that was wiped out had not been wiped out, that its probative value would have outweighed its prejudicial effect.
In this case, based on everything I’ve heard, there should be redress and the redress will be in the form of an unfavorable inference. We’re not going to go into it in cross. I think the defense has all the ammunition it needs, and, as I’ve indicated under Rule 403, everything I’ve heard here would indicate that no matter what was found, it would be likely found by myself that it’s unnecessarily confusing, misleading, cumulative, and more prejudicial than probative.

The district court sat through hours of expert testimony in this case. We find no error by the district court in determining that the introduction of certain evidence concerning the spoliation was more prejudicial than probative.

We understand appellants’ claim that they wanted extensive cross-examination and their own expert to testify that if a computer user is so sophisticated as to be able to use deletion software correctly, it shows a high degree of intelligence and cognitive ability and would have a bearing on the extent of the brain injury. However, as respondents point out, the district court acknowledged that argument, and pointed to the extensive testimony, lay and expert, on both sides as to the degree of plaintiffs brain injury. The district court reasoned that some of the information was character assassination and was more prejudicial than probative. We have no reason on appellate review to disturb the district court’s conclusions.

The district court could have given other sanctions, but it did not. We review what the district court did. The sanctions it chose were easily within the bounds of its discretion.

3. Did the district court err in denying appellants’ requested setoff amount?

Finally, appellants argue that the district court erred in failing to reduce the amount of the award by $72,481.27 — the amount billed by medical providers for J. Foust’s care, but which was discounted. Minnesota’s collateral source statute provides in pertinent part:

Subd. 2. Motion. In a civil action, whether based on contract or tort, when liability is admitted or is determined by the trier of fact, and when damages include an award to compensate the plaintiff for losses available to the date of the verdict by collateral sources, a party may file a motion within ten days of the date of entry of the verdict requesting determination of collateral sources. If the motion is filed, the parties shall submit written evidence of, and the court shall determine:
(1) amounts of collateral sources that have been paid for the benefit of the plaintiff or are otherwise available to the plaintiff as a result of losses except those for which a subrogation right has been asserted; and
(2) amounts that have been paid, contributed, or forfeited by, or on behalf of, the plaintiff or members of the plaintiffs immediate family for the two-year period immediately before the accrual of the action to secure the right to a collateral source benefit that the plaintiff is receiving as a result of losses.
Subd. 3. Duties of the court, (a) The court shall reduce the award by the amounts determined under subdivision 2, clause (1), and offset any reduction in the award by the amounts determined under subdivision 2, clause (2).

Minn.Stat. § 548.3, subds. 2, and 3 (2002).

A primary purpose of the collateral source statute is to avoid double recovery by a plaintiff. Imlay v. City of Lake Crystal, 453 N.W.2d 326, 331 (Minn.1990). While a primary purpose of the collateral source statute is to prevent double recoveries by a plaintiff, the statute does not prohibit double recoveries in all instances. Smith v. Am. States Ins. Co., 586 N.W.2d 784, 786 (Minn.App.1998), review denied (Minn. Feb. 18,1999).

Appellants contend that they are entitled to a collateral source deduction to prevent respondents from recovering, as a result of the insurance deduction, the costs of surgery from both Blue Cross and Blue Shield and from appellants. Respondents, on the other hand, argue that what the district court did is supported by statute and caselaw.

The parties disagree over the application of Stout v. AMCO Ins. Co., 645 N.W.2d 108 (Minn.2002) to this case. The district court relied on Stout in making its determination. In Stout, the supreme court considered a nearly identical argument, holding that a no-fault insurer may not “attempt[ ] to reduce its obligation to provide basic economic loss benefits on the ground that another source of benefits has stepped in and decreased the amount of the injured person’s medical bills — whether by paying them, obtaining discounts, or some other means.” 645 N.W.2d at 114. The court, also, stated that,

[a] reduction in the amount billed, whether obtained pursuant to a settlement agreement or a health insurer’s fee schedule, does not modify the amount of medical expense incurred. We therefore conclude that the medical expense incurred by [the claimant] is the full amount reflected on his medical bills, and not the amount that was paid in satisfaction of those bills as the result of collateral transactions involving [the claimant’s] health insurer.

Id. at 113 (citations omitted); see also Collins v. Farmers Ins. Exchange, 271 Minn. 239, 244, 135 N.W.2d 503, 507 (1965) (holding that a no-fault insurer must reimburse an insured the amount of medical expenses incurred and “not the amount he paid as a result of a collateral transaction”). We understand, as appellants note, that the applicable statute in Stout was the Minnesota No Fault Automobile Insurance Act (Minn.Stat. §§ 65B.41-65B.71) (2002), not the collateral source statute. Under the No Fault Act, a plaintiff may recover “for all loss suffered through injury arising out of the maintenance or use of a motor vehicle....” Minn.Stat. § 65B.44, subd. 1(a) (2002). However, we find the purpose behind both statutes to have similarities.

The jury was given the gross amounts of the victim’s medical bills and returned a verdict of $11,310,464.04. Following the final judgment, appellants moved for collateral source setoffs. The parties agreed to a calculation of $135,464.64 for past medical expenses. The parties agreed to a $20,000 setoff and then another setoff of Blue Cross’ $42,983.37 payment. Appellants are entitled to those in-chambers collateral source setoffs. However, we conclude that appellants are not entitled to their requested third setoff of $72,481.27. That amount was never paid, but rather represents an amount which the medical insurance providers billed Foust but did not attempt to collect pursuant to Foust’s employer’s medical plan.

The jury was given the gross amount of the respondents’ medical bills, as both sides agreed that was proper. The issue is, does the insurance company get a collateral source reduction in the verdict for money they did not pay, but the victim did not have to pay either. The district court ruled that the benefit had to fall someplace and he placed it with the injured victim, who had indirectly paid for the reduction in what the insurance company had to pay by paying premiums to his insurance company who, in turn, negotiated favorable terms for their subscribers. We conclude the district court was correct in its determination that appellants are not entitled to a collateral source deduction for medical charges billed by medical providers but not paid for by the insurance companies and not paid for by the victim.

DECISION

The district court properly applied Minnesota law in determining sanctions for spoliation of evidence and properly used its discretion under Minn. R. Evid. 403, in determining that certain evidence should be excluded at trial.

The district court properly determined the extent of the collateral source setoff that appellants were entitled to.

The record contains competent evidence to sustain the verdict on negligence and the damages assessed by the jury.

The district court did not err by not granting a JNOV, or a new trial, or a remittitur.

Affirmed.

MINGE, Judge

(concurring in part, dissenting in part).

I concur in the opinion and decision but respectfully dissent with respect to that portion dealing with collateral source set-off. The record reflects that respondent’s medical bills were discounted as a result of contractual agreements between his healthcare providers and his healthcare insurer. Respondent was entitled to this discount as a function of his enrollment in a healthcare plan and the payment of premiums. Such discounts are commonplace and often dramatic.

Reliance on Stout v. AMCO Ins. Co., 645 N.W.2d 108 (Minn.2002), is misplaced. That decision was based on claims under the No-Fault Act. Minn.Stat. §§ 65B.41-65B.71 (2004). The court was concerned that the no-fault insurer was dilatory in paying claims. 645 N.W.2d 108 at 111, 114. Our case arises under the collateral source statute. Minn.Stat. § 548.3 (2004). This court should not add to the surreal world of healthcare billing by giving the discounted portion of a bill asset status. I would limit recovery to what is payable. We cannot afford the luxury of windfalls.

      . The exact amount of child pornography is disputed.

      . To further bolster its argument, appellant wishes to supplement the appellate record with outside material not presented to the district court, arguing that they were simply aiding this court by calling attention to research material available in the public domain. However, this court may not consider matters outside the record on appeal and must strike references to such matters from the parties’ briefs. Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn.App.1992), aff'd, 504 N.W.2d 758 (Minn.1993). The reference material consists of support for appellant’s argument, it is the type of evidence that is required to be put in the record and submitted to the district court. Thus, although these articles are available to the public, they cannot be considered as part of the record on appeal.

      . The court then went on to cite relevant authority for the unfavorable inference instruction.


source: Caselaw Access Project

author: STONEBURNER, Judge. DIETZEN, Judge

license: Public Domain

text:
    Carla Diane TEZAK, as trustee for the heirs and next of kin of Martin Tezak, Respondent, v. Bruce BACHKE, et al., Appellants.
    No. A04-2134.
    Court of Appeals of Minnesota.
    June 21, 2005.

      Timothy A. Little, Little & Tierney, P.A., Duluth, MN, for respondent.
    John D. Kelly, Kenneth A. Kimber, Hanft Fride, P.A., Duluth, MN, for appellants.
    Considered and decided by STONEBURNER, Presiding Judge, HUDSON, Judge, and DIETZEN, Judge.
   OPINION

STONEBURNER, Judge.

Appellants, who are liable for a decedent’s special damages arising out of an automobile accident, challenge the district court’s summary judgment determination that respondent may recover, as special damages under Minn.Stat. § 573.02, subd. 2, the full amount of decedent’s reasonable medical expenses related to the accident rather than the amount for which the decedent’s health insurer settled the medical providers’ claims for those expenses.

FACTS

The parties submitted this matter to the district court based on stipulated facts. Respondent is trustee for the heirs and next-of-kin of Martin Tezak. Tezak was injured when the automobile he was driving was struck by an automobile driven by appellant Jill Bachke. Appellant Bruce Bachke is the owner of the vehicle driven by Jill Bachke and he consented to Jill Bachke’s use of the vehicle. Tezak was not negligent. The collision was caused, at least in part, by Jill Bachke’s negligence. Tezak incurred medical expenses in excess of $100,000 related to the accident. Tezak initiated a lawsuit against appellants but died of causes unrelated to the accident before that lawsuit was completed, and the lawsuit was dismissed. Tezak’s health insurer settled all claims for medical expenses related to the accident for $32,000.

Respondent, as trustee for the heirs and next-of-kin of Tezak, purchased the health insurer’s subrogation rights and initiated this action against appellants under Minn. Stat. § 573.02, subd. 2 (2004), for special damages, including the full amount of medical expenses billed to Tezak by medical providers. Appellants sought to limit respondent’s claim for medical expenses to the $32,000 amount for which the medical bills were settled by Tezak’s health insurer.

The district court determined that respondent may claim the full amount of expenses billed. Judgment was entered consistent with the parties’ stipulation, in which respondent agreed to limit her claim to $100,000, and this appeal followed.

ISSUE

May the trustee for the heirs and next-of-kin of a person who is injured in an automobile accident and who dies of causes unrelated to the accident, after acquiring the subrogation rights of the decedent’s health insurer, pursue a claim for the full amount of medical expenses incurred by the decedent as a result of the accident?

ANALYSIS

When a district court grants summary judgment based on the application of a statute to undisputed facts, the district court’s decision is purely a legal conclusion reviewed de novo. Lefto v. Hoggsbreath Enters., Inc., 581 N.W.2d 855, 856 (Minn.1998). The issue presented in this case is one of first impression in Minnesota.

MinmStat. § 573.02, subd. 2 (2004) provides:

When injury is caused to a person by the wrongful act or omission of any person ... and the person thereafter dies from a cause unrelated to those injuries, the trustee ... may maintain an action for special damages arising out of such injury if the decedent might have maintained an action therefore had the decedent lived.

“ ‘Special damages’ are those damages to which an exact dollar amount can be assigned, such as medical expenses or lost wages to date of death.” Deal v. Northwood Children’s Home Soc’y., 608 N.W.2d 922, 925 n. 1 (Minn.App.2000), review denied (Minn. June 13, 2000).

Appellants rely on general principles governing compensatory damages to argue that respondent’s claim should be limited to damages for which a person has actual losses. See, e.g., Phelps v. Commonwealth Land Title Ins. Co., 537 N.W.2d 271, 275 (Minn.1995) (noting that compensatory damages are generally synonymous with actual damages, but damages may be multiplied when statute provides for multiplication of actual damages to arrive at compensatory damages). Appellants also rely on cases that hold that parties should not receive “double recovery” of damages. See, e.g., Imlay v. City of Lake Crystal, 453 N.W.2d 326, 332 (Minn.1990) (noting that stated purpose of collateral-sources statute, Minn.Stat. § 548.36, is to prevent double recoveries by plaintiffs, which is a legitimate purpose).

No Minnesota cases have addressed the issue of whether a trustee may recover from the person who caused the accident, as special damages under Minn.Stat. § 573.02, subd. 2, the full amount of medical expenses incurred as a result of the accident when medical providers have settled for less than the full amount. But in a case involving a claim for economic-loss benefits under Minn.Stat. § 65B.46,. subd. 1 (2000), which provides for basic eeonomic-loss benefits for persons who suffer loss from an injury arising out of the maintenance or use of a motor vehicle, the supreme court declined to allow a tortfeasor to benefit from a settlement agreement between an injured party’s health insurer and medical providers and allowed full recovery of medical expenses incurred. Stout v. AMCO Ins. Co., 645 N.W.2d 108 (Minn.2002).

The decision in Stout is based primarily on an analysis of the language of the No Fault Act. The Act makes economic-loss benefits payable on a monthly basis as the loss accrues and provides that loss accrues as medical expense is incurred. Minn. Stat. § 65B.54, subd. 1 (2004). The supreme court held that “[a] reduction in the amount billed, whether obtained pursuant to a settlement agreement or a health insurer’s fee schedule, does not modify the amount of medical expense incurred.” Stout, 645 N.W.2d at 113. Stout relied on the reasoning in Collins v. Farmers Ins. Exch., 271 Minn. 239, 135 N.W.2d 503 (1965). Id. at 112-13. In that case, Collins, the insured, sued an insurance company to recover medical expenses under an automobile policy that provided $5,000 worth of coverage for “reasonable [medical] expenses actually incurred.” Collins, 271 Minn, at 240-41, 135 N.W.2d at 504-05. Collins was billed in excess of $5,000 by medical providers but was able to settle the provider’s claims for $2,250. Id. at 241, 135 N.W.2d at 505. The insurer claimed that the expense Collins incurred was the amount Collins paid pursuant to the settlement, but the supreme court stated that the definition of “incur” is “ ‘to become liable for’ as distinguished from actually ‘pay for.’ ” Id. at 244, 135 N.W.2d at 507. The holding in Collins is that the insured became liable for, and therefore incurred, the amount originally billed, and not the amount Collins paid as a result of a collateral transaction. Id.

The stipreme court in Stout noted that under case law in Minnesota, “if there is to be a windfall either to an insurer or to an insured, the windfall should go to the insured” because it is more just “ ‘that the insured who has paid a premium should get all he paid for rather than that the insurer should escape liability for that for which it collected a premium.’ ” 645 N.W.2d at 114 (quoting Van Tassel v. Horace Mann Ins. Co., 296 Minn. 181, 187, 207 N.W.2d 348, 352 (1973)). Recognizing that Stout, the insured, had not paid a premium for the coverage provided, the supreme court nonetheless concluded that it was more just that any windfall should go to Stout rather than the insurer of the vehicle that struck him. Id. at 114-15. Although Stout and Collins are distinguishable from the case before us, which does not involve the construction of the No Fault Act or an insurance policy, the cases are instructive.

In this case, we must determine whether the amount of medical expenses recoverable as special damages under MinmStat. § 573.02, subd. 2, is the reasonable amount billed by the providers or the amount by which those bills were settled by a health insurer prior to initiation of the action under Minn.Stat. § 573.02, subd. 2. We conclude that resolution of this issue turns on whether the collateral-source statute or the common-law collateral-source rule applies to the difference between the amount billed and the amount for which the bills were settled.

We first note that the collateral-source statute applies to the $32,000 for which the health insurer settled the medical provider’s claims. Minn.Stat. § 548.36, subd. 1 (2004) (defining collateral source as “payments related to the injury ... in question made to the plaintiff, or on the plaintiffs behalf up to the date of the verdict”). Under the collateral-source statute, however, the parties agree that the $32,000 paid by the health insurer will not be set off from any recovery by respondent because respondent obtained the health insurer’s subrogation rights. Respondent’s right to recover the $32,000 is not disputed. The issue is whether respondent can recover the $68,000 gap between what the medical providers billed decedent and the $32,000 paid by decedent’s health insurer to settle the medical providers’ bills.

We next conclude that the collateral-source statute does not apply to the $68,000, because the gap between the bills and the settlement was not a payment made to anyone and therefore is not a collateral source as defined by the statute. MinmStat. § 548.36, subd. 1; Smith v. Am. States Ins. Co., 586 N.W.2d 784, 786 (Minn.App.1998), review denied (Minn. Feb. 18, 1999) (holding that payments not yet received due to insurer’s denial of coverage or discontinuation of payments based on insured’s failure to show continued entitlement to benefits are not collateral sources under statutory definition because they have not been paid). Although the collateral-source statute abrogated the common-law collateral-source rule in some situations, when benefits are not subject to the collateral-source statute, the common-law collateral-source rule still applies. Smith, 586 N.W.2d at 786. Under the common-law rule:

‘if the plaintiffs special damages ... such as hospital or medical expenses or loss of wages, are paid for by some third person, either as a gift or on the basis of some contractual obligation, this circumstance does not bar the plaintiff from recovering this item from the defendant, even though it may in effect accord to the plaintiff a double benefit or a double recovery.’

Id. (quoting Beschnett v. Farmers Equitable Ins. Co., 275 Minn. 328, 332, 146 N.W.2d 861, 864 (1966)).

Appellants argue that the gap between the amount billed and the settlement in this case does not fall under the common-law collateral-source rule because, as with the collateral-source statute, it was not “paid” to anyone. But in the context of a lawsuit against tortfeasors to recover for injuries sustained in an automobile accident, the supreme court has held that under the common-law collateral-source rule, a father had a right to recover special damages for the reasonable value of medical expenses for care provided to his injured son, although the provider (Shriner’s Hospital) did not charge the family anything for the child’s care. Hueper v. Goodrich, 314 N.W.2d 828, 831 (Minn.1982) (citing Dahlin v. Kron, 232 Minn. 312, 45 N.W.2d 833 (1950) for the proposition that a plaintiff could recover the reasonable value of medical services provided by a hospital even though those services were rendered gratuitously by the hospital).

We do not see a distinction between the value of services gratuitously rendered in the cases cited above and the $68,000 debt extinguished by the action of decedent’s health insurer in this case, and we conclude that the $68,000 difference between the amount billed and the amount paid is covered by the common-law collateral-source rule. See Duluth Steam Coop. v. Ringsred, 519 N.W.2d 215, 217 (Minn.App.1994) (quoting Restatement (Second) of Torts § 920A(2) (1979), for the proposition that the “tortfeasor’s responsibility to compensate for all harm that he causes [is] not confined to the net loss that the injured party receives,” and that “[t]he law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him”).

Our conclusion is consistent with Foust v. McFarland, 698 N.W.2d 24 (Minn.App. June 14, 2005), an opinion released after this case was submitted. In that personal-injury case arising out of an automobile accident, appellants requested a set off from a jury award of past medical expenses for $72,481.27 billed by medical providers but discounted pursuant to an agreement between the medical providers and the injured person’s health insurer. Id., at 29. As in this case, we noted in Foust that the collateral source statute does not prohibit double recoveries in all instances. Id. at 35 (citing Smith v. American States Ins. Co., 586 N.W.2d 784, 786 (Minn.App.1998)). And we concluded that appellants were not entitled to a deduction for medical charges billed by medical providers but not paid for. Id. at 36.

In this case, the district court appropriately analyzed this case under the common-law collateral-source rule and correctly concluded that respondent may recover as special damages the value of the reasonable medical services provided to decedent in the amount stipulated to by the parties.

DECISION

Under the common-law collateral-source rule, which governs this case, respondent is entitled to recover the full amount of medical expenses billed for decedent’s injuries arising out of the accident (subject to the stipulated limit) as special damages in her action under Minn.Stat. § 573.02, subd. 2 (2004).

Affirmed.

DIETZEN, Judge

(dissenting).

I respectfully dissent. Respondent-trustee asserts subrogation rights she acquired from decedent’s health insurer, which had previously settled and discharged decedent’s outstanding medical bills that exceeded $100,000, for $32,000. The issue in this ease is whether “special damages” under the Wrongful Death Act (WDA), Minn. Stat. § 573.02, subd. 2 (2004), extend beyond the subrogation rights purchased by respondent to include a financial windfall of $68,000, which amount was not paid to discharge the bills. Because I conclude that “special damages” do not extend beyond the amount actually paid to purchase the subrogation rights, I dissent. Two reasons support my conclusion.

First, statutory interpretation results in the conclusion that “special damages” are limited to medical expenses actually paid. The WDA is in derogation of the common law, which barred “a right of recovery for death by wrongful act.” Cashman v. Hedberg, 215 Minn. 463, 466, 10 N.W.2d 388, 390 (1943); see also Hachmann v. Mayo Clinic, 150 F.Supp. 468, 469 (D.Minn.1957) (applying state law) (“The [WDA] is purely a creature of the legislature and is in derogation of the common law.”). Statutes in derogation of the common law are strictly construed. Rosenberg v. Heritage Renovations, LLC, 685 N.W.2d 320, 327-28 (Minn.2004) (“[I]t is not presumed that the legislature intended to abrogate or modify a rule of the common law on the subject any further than that which is expressly declared or clearly indicated.”) (alteration in original) (quoting 73 Am. Jur. 2d Statutes § 191 (2001)).

In two older cases, the supreme court stated that the WDA “is remedial in character and thus requires a liberal construction.” Shumway v. Nelson, 259 Minn. 319, 322, 107 N.W.2d 531, 533 (1961); Bolinger v. St. Paul & Duluth R.R. Co., 36 Minn. 418, 421, 31 N.W. 856, 857 (1887). But those cases were limited to determining who could bring a cause of action under the WDA and did not address whether the damages allowable under the statute extended to include a windfall recovery. Shumway, 259 Minn. at 323, 107 N.W.2d at 534; Bolinger, 36 Minn. at 421, 31 N.W. at 857. In this case, the dispute is not whether respondent may maintain an action under the WDA, but whether the WDA limits respondent’s damage award to her actual out-of-pocket medical expenses.

According to state law, “[a] cause of action arising out of an injury to the person dies with the person of the party in whose favor it exists, except as provided” by the WDA. MinmStat. § 573.01 (2004). Because decedent’s medical expenses arose out of injuries caused by the wrongful act of another, respondent’s sole remedy to recover those expenses is under the WDA. In short, the decedent’s trustee “may maintain an action for special damages arising out of such injury if the decedent might have maintained an action therefor had the decedent lived.” Minn. Stat. § 573.02, subd. 2 (emphasis added). “Special damages” are not defined by statute. Recent caselaw holds that “special damages” include “those damages to which an exact dollar amount can be assigned, such as medical expenses.” Deal v. Northwood Children’s Home Soc’y, 608 N.W.2d 922, 925 n. 1 (Minn.App.2000), review denied (Minn. June 13, 2000). Clearly, the WDA only provides a limited right of recovery to the decedent’s surviving spouse and dependents. For example, pain and suffering and loss of wage-earning potential are not recoverable. Minn.Stat. § 573.02, subd. 2 (providing that trustee may only receive special damages). It is axiomatic that limited statutory rights cannot be expanded beyond their strict construction.

Respondent asks us to interpret “special damages” under the WDA to extend beyond her out-of-pocket expenses to allow a financial windfall of $68,000. The object of all statutory interpretation and construction is to “ascertain and effectuate” the intent of the legislature. Minn.Stat. § 645.16 (2004). Here, I discern no legislative intent to provide a financial windfall to respondent that exceeds the actual medical expenses already paid. Consequently, I would not construe legislative intent to abrogate the common law absent a clear legislative intent to do so.

The majority construes the No Fault Act, the collateral-source statute, and collateral-source common law to conclude that respondent is deserving of a financial windfall. But the legislative intent of the No Fault Act and the collateral-source statute, as well as collateral-source common law, do not substitute for the legislative intent of the WDA. See id. Instead, the crux of this case is the statutory interpretation of the WDA. And the WDA creates a limited right of recovery for the surviving spouse and dependents of the decedent. Given that statutes in derogation of common law are to be strictly construed, it follows that respondent is only entitled to “special damages” for the out-of-pocket medical expenses that were paid by decedent’s health insurer.

Second, since respondent is pursuing the subrogation rights of decedent’s health insurer she is only entitled to the rights, as limited by the WDA, that the insurer had to pursue. The subrogation rights restrain respondent’s recovery in two ways. First, the WDA limits the ability of respondent and decedent’s health insurer to recover “special damages” under the WDA. By purchasing the subrogation rights from the medical insurer, respondent cannot evade the limits already imposed by the WDA. Second, as the subro-gee, respondent stands in the place of the health insurer and is entitled to the insurer’s rights and remedies, but is entitled to no further rights. See Black’s Law Dictionary 1467 (8th ed. 2004) (defining subrogation as “[t]he principle under which an insurer that has paid a loss under an insurance policy is entitled to all the rights and remedies belonging to the insured against a third party with respect to any loss covered by the policy”). Since subrogation rights are limited to the amount paid, respondent only purchased the right to pursue the $32,000 that was paid by the medical insurer.

Because I conclude that “special damages” of the WDA do not extend past the subrogation rights that respondent purchased from decedent’s health insurer, I would reverse and remand for the district court to enter judgment for respondent in the amount of $32,000.

      . Tezak’s no-fault insurer paid $20,000 for his medical expenses. That payment and set-off for that payment is not at issue in this lawsuit.

      .The collateral-source statute excludes the deduction of collateral-source amounts paid for the benefit of the plaintiff for which a subrogation right has been asserted. Minn. Stat. § 548.36, subd. 2(1) (2004). And because respondent acquired the subrogation rights of decedent’s health insurer, the health insurer's subrogation rights are considered to have been "asserted” in this case. See Buck v. Schneider, 413 N.W.2d 569, 570-71 (Minn.App.1987) (holding that injured employee who was assigned employer/insurer subrogation rights to workers' compensation payments had asserted the subrogation right within the meaning of subdivision 2(1) in suit against third party responsible for his injuries).

      . The parties stipulate that decedent was billed in excess of $100,000 but respondent has agreed to limit her claim to $100,000, therefore we are using $100,000 as the amount billed for purposes of our analysis.

      . The dissent would preclude this recovery because the health insurer would not have been able to assert a subrogation claim for this gap, overlooking the fact that respondent is not suing to assert the health insurer’ sub-rogation claim, but is suing for special damages that decedent could have sued for had he lived. Nothing in the wrongful-death statute places a limitation on respondent's claim that would not have applied to decedent. Minn. Stat. § 573.02, subd. 2.


author: SABERS, Justice.

text:
    2005 SD 64
    Vanessa L. MUDLIN, Plaintiff and Appellee, v. HILLS MATERIALS COMPANY and Liberty Mutual Insurance Company, Defendants and Appellants.
    No. 23432.
    Supreme Court of South Dakota.
    Argued April 26, 2005.
    Decided May 25, 2005.

      Wm. Jason Groves, Groves Law Office, Rapid City, SD, for plaintiff and appellee.
    Gregory G. Strommen of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, Rapid City, SD, for defendants and appellants.
   SABERS, Justice.

[¶ 1.] Vanessa Mudlin (Mudlin) was employed by Hills Materials Company (Hills) of Rapid City, South Dakota. She was assigned to a crew that was working on a road construction project near Faith, South Dakota. While traveling to the job site, Mudlin was injured as a result of a one-vehicle accident. She filed a claim for workers’ compensation against Hills and its insurer. The South Dakota Department of Labor ruled in favor of Mudlin. The circuit court affirmed and Hills appeals to this Court. We affirm.

Facts

[¶ 2.] In the spring of 1999, Mudlin lived in Rapid City, South Dakota, and was employed by Hills as a flagger, laborer, and material spreader. Mudlin was assigned to a crew that was working on a road construction project near Faith, approximately 125 miles from Rapid City.

[¶ 3.] At approximately 5:30 a.m. on Monday, June 7, 1999, Mudlin arrived at Hills’ headquarters, which was located at its quarry in Rapid City. After discovering that her work crew had already departed, Mudlin set-off for Faith in her personal vehicle. During the trip, Mud-lin was involved in a one-vehicle accident between Newell and Faith. Mudlin admits that she fell asleep at the wheel and as a result her car left the road and rolled twice. Mudlin was found lying 30 feet from her vehicle with injuries to her head, abdomen, and left leg. Mudlin was taken to the emergency room at Lookout Memorial Hospital in Spearfish and then transferred to Rapid City where she was hospitalized for several weeks following the accident.

[¶ 4.] Mudlin brought a claim for workers’ compensation benefits against Hills and its insurer, Liberty Mutual Insurance Company. After an administrative hearing on the matter, the South Dakota Department of Labor ruled in favor of Mud-lin. Hills appealed the agency’s decision to the circuit court. The circuit court affirmed the Department of Labor’s ruling. Hills appeals to this Court, raising the following issues:

1. Whether the trial court erred in holding that Mudlin’s injuries arose out of and in the course of her employment.
2. Whether the trial court erred in holding that Mudlin gave timely and proper notice of her injuries.
3. Whether the trial court erred in holding that Mudlin’s claim was not barred by willful misconduct.

Standard of Review

[¶ 5.] “In a worker’s compensation case, we review the agency’s decision in the same manner as the circuit court.” Norton v. Deuel School District, 2004 SD 6, ¶ 5, 674 N.W.2d 518, 520 (citing Sopko v. C & R Transfer Co., Inc., 2003 SD 69, ¶ 7, 665 N.W.2d 94, 96). Neither the agency’s decision nor the circuit court’s decision is presumed correct. Id. (citing Grauel v. South Dakota School of Mines and Technology, 2000 SD 145, ¶ 7, 619 N.W.2d 260, 262). Great weight is given to the agency’s findings of fact and to the inferences drawn from the facts. Id. Our standard of review on factual issues is clearly erroneous, meaning we will reverse only if we are “definitely and firmly convinced a mistake has been committed.” Id. However, “we review findings based on deposition testimony and documentary evidence under a de novo standard of review.” Grauel, 2000 SD 145, ¶ 7, 619 N.W.2d at 262 (quoting Wagaman v. Sioux Falls Construction, 1998 SD 27, ¶ 12, 576 N.W.2d 237, 240). Questions of law are also reviewed under the de novo standard. Norton, 2004 SD 6, ¶ 5, 674 N.W.2d at 520.

[¶ 6.] 1. Whether the trial court erred in holding that Mudlin’s injuries arose out of and in the course of her employment.

[¶ 7.] Generally, employees injured while going to and coming from work are not covered under workers’ compensation. South Dakota Public Entity Pool For Liability v. Winger, 1997 SD 77, ¶ 19, 566 N.W.2d 125, 131 (stating the “going and coming” rule). To recover under workers’ compensation, a claimant must prove by a preponderance of the evidence that she sustained an injury “arising out of and in the course of the employment.” SDCL 62-1-1(7); Norton, 2004 SD 6, ¶ 7, 674 N.W.2d at 520. The claimant must prove that “the employment or employment-related activities are a major contributing cause of the condition complained of.” SDCL 62 — 1—1 (7)(a).

[¶ 8.] We construe the phrase “arising out of and in the course of employment” liberally. Norton, 2004 SD 6, ¶ 10, 674 N.W.2d at 521. Therefore, application of the workers’ compensation statutes is not limited solely to the times when the employee is engaged in the work that he was hired to perform. Id.

[¶ 9.] Both factors of the analysis, “arising out of’ employment and “in the course of employment,” must be present in all claims for workers’ compensation. Id. ¶ 11. However, while each factor must be analyzed independently, they are part of the general inquiry of whether the injury or condition complained of is connected to the employment. Id. Therefore, the factors are prone to some interplay and “deficiencies in the strength of one factor are sometimes allowed to be made up by strength in the other.” Id. (quoting 2 Arthur Larson, Larson’s Workers’ Compensation Law, § 29, 29-1 (1999)).

[¶ 10.] Hills argues that because Mud-lin’s injuries resulted from a traffic accident that occurred miles from her job site and before her work day had begun, they did not “arise out of’ and “in the course of’ her employment.

“Arising out of’ the Employment

[¶ 11.] In order for an injury to “arise out of’ the employment, the employee must show that there is a “causal connection between the injury and the employment.” Id. ¶ 8 (quoting Canal Insurance Co. v. Abraham, 1999 SD 90, ¶ 12, 598 N.W.2d 512, 516). The employment need not be the direct or the proximate cause of the injury, rather it is sufficient if “the accident had its origin in the hazard to which the employment exposed the employee while doing [her] work.” Id. (quoting Canal Insurance Co., 1999 SD 90, ¶ 12, 598 N.W.2d at 516). The injury “arose out of’ the employment if: 1) the employment contributes to causing the injury; 2) the activity is one in which the employee might reasonably engage; or 3) the activity brings about the disability upon which compensation is based. Id. (citing Grauel, 2000 SD 145, ¶ 12, 619 N.W.2d at 263).

[¶ 12.] Hills had a specific policy that required employees to use their personal vehicles to get to and from the job site when company vehicles were not available. A memo was issued by Hills’ President, Lynn Kading, to all supervisors and crew leaders on January 4, 1999, clarifying the company’s policy regarding travel pay. In regard to the use of personal vehicles, the memo provides in pertinent part:

If no company vehicle is used to transport employees, employees are expected to furnish personal transportation to the jobsite.

Furthermore, the memo specifies that employees will be partially reimbursed for travel expenses when their job requires travel beyond one-half hour of their base location.

[¶ 13.] On the day of the accident, Mudlin was conducting herself in accordance with established company practice and its travel policy. She first went to the quarry, as dictated by company practice. When she discovered that her crew had already left, Mudlin used her personal vehicle to transport herself to the job site, as required by the company’s travel policy. Furthermore, Mudlin had used her personal vehicle for transportation to and from the job site on a number of occasions prior to the accident. In fact, her supervisor testified that 90% of the time Mudlin would drive her own vehicle to the job site and the record indicates that she had been compensated in accordance with the company’s travel pay policy for those previous trips. Nothing in the record suggests that Hills would not have expected Mudlin to use her personal vehicle to travel to the job site on June 7, 1999 and compensate her for the trip.

[¶ 14.] Given the above, the act of traveling to the job site in her personal vehicle on the day of the accident was an activity “in which the employee might reasonably engage.” As such, there is a causal connection between the injuries that Mudlin sustained while traveling to the job site and her employment. Therefore, Mudlin’s injuries “arose out of’ her employment. See generally id.

“In the Course of Employment”

[¶ 15.] “This Court has made it clear that the words ‘in the course of employment’ refer to the time, place and circumstances of the injury.” Bearshield v. City of Gregory, 278 N.W.2d 166, 168 (S.D.1979). “An employee is considered within his course of employment if he is doing something that is either naturally or incidentally related to his employment or which he is either expressly or impliedly authorized to do by the contract or nature of the employment.” Id. See also Norton, 2004 SD 6, ¶ 9, 674 N.W.2d at 521; Steinberg v. South Dakota Dept. of Military and Veterans Affairs, 2000 SD 36, ¶ 21, 607 N.W.2d 596, 603.

[¶ 16.] Here, Mudlin’s crew was performing road construction at a remote job site which was 125 miles from the company’s base location. Because employees were required to travel from the company’s base location to the job site in order to perform their individual job duties, it can be said that the journey between the base location and the job site was naturally related to the employment.

[¶ 17.] Additionally, Hills has a specific policy governing travel from its base location in Rapid City to remote job sites. This policy expressly requires employees “to furnish personal transportation to the jobsite” when company vehicles are unavailable and establishes partial reimbursement for travel expenses. As indicated, prior to the day of the accident Mudlin had used her personal vehicle to travel to the job site on a number of occasions and Hills had provided partial reimbursement for her travel expenses. Therefore, Mudlin’s journey to Faith on the date of the accident was impliedly authorized by Hills and, as such, was “in the course of employment.”

[¶ 18.] At the time of the accident, Mudlin was traveling from her employer’s base location to a remote job site. Pursuant to company policy, this was a trip Mudlin was required to make for which she was to be partially reimbursed. In summary, the controlling factors here are travel pay, custom and usage, and company policy. Mudlin’s travel extended beyond an employee’s normal commute to or from work, and falls outside of the “going and coming” rule.

[¶ 19.] Based on the above, it has not been shown that the trial court erred in holding that the injuries Mudlin sustained “arose out of and in the course of the employment.” We affirm Issue 1.

[¶ 20.] 2. Whether the trial court erred in holding that Mudlin gave timely and proper notice of her injuries.

[¶ 21.] SDCL 62-7-10 requires that an employee who claims compensation for an injury shall provide written notice to the employer within three business days of the occurrence of the injury. However, when an employer had “actual knowledge” of the injury, the failure to provide notice does not bar the claim. SDCL 62-7-10(1). “In South Dakota, a person seeking worker’s compensation benefits has the burden of proving that she provided timely notice of the injury or that her employer had actual knowledge of the injury.” Gordon v. St Mary’s Healthcare Center, 2000 SD 130, ¶ 20, 617 N.W.2d 151, 157. Additionally, the claimant must prove that her employer had notice of the work-related nature of the injury. Id.

[¶ 22.] Mudlin failed to provide written notice of her injuries within three business days of the accident because she was in a coma for two weeks. However, Mudlin’s supervisor was informed on the day of the accident that she had been injured while traveling to the job site and had been taken to the hospital.

[¶ 23.] Hills asserts that there was no actual knowledge of Mudlin’s claim because they were not made aware of the compensable nature of the injury. They argue that since it did not appear to them that Mudlin sustained injuries in the course of employment, they did not believe that her injuries were compensable. However, this argument is not persuasive because Hills knew or could have known on the day of the accident that Mudlin was injured while traveling from the company’s base location to the job site in her personal vehicle as required by the company.

[¶24.] In addition to the statutory record keeping and filing requirements imposed on the employer, one of the purposes of the notice statutes is to allow the employer the opportunity to investigate the cause and nature of the injury at the time when the facts are readily accessible. Although Hills did not comply in this instance, under state law, employers are required to keep records of all injuries sustained by their employees, report all serious injuries to either the Department of Labor or the employer’s insurer, and employers, or their insurers, are-, required to file a copy of the injury report with the Department of Labor. In fact, the investigatory purpose behind these statutory requirements is stated in SDCL 62-6-3, which provides in part:

The insurer or, if the employer is self-insured, the employer, shall make an investigation of the claim and shall notify the injured employee and the department, in writing, within twenty days from its receipt of the report, if it denies coverage in whole or in part.

(emphasis added).

[¶ 25.] Under Hills’ argument, injured employees who failed to file notice of their claim within three business days of the injury would have to convince their employers of the compensable nature of their injuries prior to filing a workers’ compensation claim. Furthermore, employers and their insurers would not be required to document, report, or investigate any employee injuries or deaths when, at first glance, the employer does not consider the injuries or deaths to be compensable under the workers’ compensation statutes. See Helmbolt v. LeMars Mutual Insurance Co., Inc., 404 N.W.2d 55, 59 (S.D.1987) (stating “we should not presume the legislature intended an absurd result”).

[¶ 26.] Based on the above, it has not been shown that the trial court erred in holding that Hills had actual knowledge of Mudlin’s injuries. We affirm Issue 2.

[¶ 27.] 3. Whether the trial court erred in holding that Mudlin’s claim was not barred by willful misconduct.

[¶ 28.] SDCL 62-4-37 provides:

No compensation shall be allowed for any injury or death due to the employee’s willful misconduct, including intentional self-inflicted injury, intoxication, illegal use of any schedule I or schedule II drug, or willful failure or refusal to use a safety appliance furnished by the employer, or to perform a duty required by statute. The burden of proof under this section shall be on the defendant employer.

This Court has stated:

The term “willful misconduct” has long been defined in this state as “something more than ordinary negligence but less than deliberate or intentional conduct. Conduct is gross, willful, wanton, or reckless when a person acts or fails to act, with a conscious realization that injury is a probable, as distinguished from a possible (ordinary negligence), result of such conduct.”

Fenner v. Trimac Transportation, Inc., 1996 SD 121, ¶ 9, 554 N.W.2d 485, 487 (citing VerBouwens v. Hamm Wood Products, 334 N.W.2d 874, 876 (S.D.1983)) (emphasis in the original). Black’s Law Dictionary defines willful misconduct as follows:

Under workers’ compensation acts, precluding compensation, [willful misconduct] means more than mere negligence, and contemplates the intentional doing of something with knowledge that it is likely to result in serious injuries, or with reckless disregard of its probable consequences.

Black’s Law Dictionary 1600 (6th ed. 1990).

[¶ 29.] Hills claims that at the time of the accident Mudlin was speeding, not wearing her seatbelt, under the influence of prescription medication, and she fell asleep at the wheel. Hills asserts that each of these activities equates to willful misconduct and bars Mudlin from compensation under SDCL 62-4-37.

Speeding

[¶ 30.] While Mudlin testified that she was driving “generally within the speed limit posted,” the law enforcement officer investigating the accident estimated that she was driving at a rate of 75 miles per hour, which is ten miles per hour over the posted speed limit. However, whether Mudlin was speeding or not, Hills fails to establish that her injuries were due to the fact that she was speeding. In fact, the only witness that Hills relies on pertaining to this matter is the emergency room physician that treated Mudlin, Dr. Jeff Anderson, and he testified that he could not say her injuries were due to traveling beyond the speed limit.

Failure to Wear Her Seat Belt

[¶ 31.] Mudlin admits that she was not wearing her seat belt at the time of the accident. Hills argues that this was a failure “to perform a duty required by statute” and constituted willful misconduct on Mudlin’s part. However, failure to use a seat belt in South Dakota is considered a secondary violation. SDCL 32-38-5. Moreover, failure to comply with the statutory seat belt use requirements “does not constitute contributory negligence, comparative negligence, or assumption of the risk” and “may not be introduced as evidence in any criminal litigation ... or in any civil litigation on the issue of injuries or on the issue of mitigation of damages.” SDCL 32-38-4 (emphasis added).

Under the Influence of Prescription Medication

[¶ 32.] Mudlin admits to taking a Valium pill from a “left-over” prescription at 6:00 p.m. the evening before her accident. However, the only witness to testify as to what effect the medication may have had on Mudlin at the time of the accident was Dr. Mike Evans, a Ph.D. toxicologist. In his report, Dr. Evans stated:

Valium is a controlled medication and contains the active drug Diazepam. When taken as described by Ms. Mudlin (approximately 1 mg dose at 6:00 PM the evening before the accident) it is my opinion that the ingest of Valium would not affect her driving performance at the time of the accident (approximately IS hours later).

(emphasis added).

[¶ 33.] Therefore, even if we accept Hills’ assertion that Mudlin’s ingestion of the left-over medication equates to willful misconduct, it has not been shown that the injuries were sustained “due to the employee’s willful misconduct.” See SDCL 62-4-37 (emphasis added).

Falling Asleep at the Wheel

[¶ 34.] Hills argues that Mudlin’s falling asleep at the wheel constitutes willful misconduct and bars her claim for workers’ compensation. As supporting authority, Hills relies on two cases.

[¶ 35.] In Fonder v. Workers’ Comp. Appeal Bd., a Pennsylvania Commonwealth Court affirmed the denial of an employee’s claim for workers’ compensation benefits resulting from injuries he received in a vehicle accident. 842 A.2d 512, 515 (Pa.Cmwth.Ct.2004). The employee was seriously injured while returning home from his fixed place of work when he fell asleep at the wheel and hit a tree. Id. at 513. This case is distinguishable in that the court did not bar the claim because of any willful misconduct on the part of the employee, rather the court concluded that, as a matter of law, the employee was not within the course and scope of employment at the time of the accident. Id. at 515.

[¶ 36.] Hills also cites to Lukens v. Zavadil as supporting authority for the proposition that Mudlin’s claim should be barred due to the fact that she fell asleep at the wheel. 281 N.W.2d 78 (S.D.1979). In Lukens, the plaintiff brought suit for damages incurred as a result of a vehicle accident covered under the guest statute. Id. at 79. The jury found for the plaintiff but the trial court granted the defendant’s motion for judgment notwithstanding the verdict. Id. at 80. This Court reversed and reinstated the jury verdict, holding that there was sufficient evidence for the jury to conclude that the defendant’s actions constituted willful and wanton misconduct. Id. at 81. Specifically, this Court held:

In reviewing plaintiffs evidence concerning defendant’s conduct, we find that defendant had limited driving experience; she knew the windshield wipers were not working properly when she left home; it was late at night; it was a strange road; defendant had been drinking; defendant was drowsy; it was raining; the windshield wipers were causing the window to streak and glare; defendant continued driving at approximately fifty miles per hour and finally ended up in the wrong lane of traffic and collided head on with an approaching automobile. Certainly a jury might find from those facts that the probability, as distinguished from the possibility, of an accident was present.

Id. at 80-81. This guest statute case is not on point because the issue was not whether a claim for workers’ compensation benefits should be barred due to an employee’s alleged willful misconduct. In addition, the defendant’s willful misconduct involved more than just falling asleep at the wheel.

[¶ 37.] However, the case of Keil v. Nelson is directly on point and is more persuasive authority. 355 N.W.2d 525 (S.D.1984). In Keil, a truck driver was en route to his destination when he fell asleep at the wheel and was subsequently injured. The truck driver sought compensation from his employer for his injuries. This Court upheld the circuit court’s ruling that the employee “was injured in the pursuit of his employment” and that “[h]is employment is not exempt from worker’s compensation.” Id. at 528. Furthermore, this Court upheld the circuit court’s ruling that there was no merit to the employer’s assertion that the claim should be barred because the act of falling asleep at the wheel constituted willful misconduct on the part of the employee. Id. at 530.

[¶ 38.] Hills also argues that the speeding, failure to wear a seatbelt, Valium, and falling asleep collectively constitutes willful misconduct. We have considered the conduct individually and collectively and do not agree that it constitutes willful misconduct under the workers’ compensation laws.

[¶ 39.] Based on the above, it has not been shown that the trial court erred in holding that Mudlin’s claim was not barred by willful misconduct. We affirm Issue 3.

[¶ 40.] GILBERTSON, Chief Justice, and KONENKAMP, ZINTER and MEIERHENRY, Justices, concur.

      . Whenever travel to remote work sites was required. Hills employees typically would meet at the quarry before tire journey in order to coordinate travel arrangements.

      . Sylvester Pacheco, who was Mudlin’s supervisor at the time, testified it was typical for Hills' employees to drive their personal vehicles to remote job sites. While meeting beforehand at the quarry was a common company practice, it was not required. Ultimately, the employees were required to show up at the job site at a certain time regardless of their method of transportation.

      . In its appellate brief, Hills attempts to draw a distinction between reimbursement for travel expenses and a payment made to the employee as added compensation. Hills argues that unless a payment reimburses an employee for all or substantially all of the total travel expenses involved, it should only be considered as added compensation and not as evidence that the journey was within the employee's scope of employment. As authority, Hills relies heavily on Professor Larson’s treatise on workers' compensation, which provides in part:
      [Payment for travel expenses,] which is often lumped together with payment for time of travel, is not quite the same.

      It should be apparent that, in some cases at least, the transportation allowance is merely a form of added compensation.

      A common difficulty in this class of cases is that of determining whether the added compensation is indeed specifically intended for travel expenses.
      2 Arthur Larson, Larson's Workers' Compensation Law, § 14.07, 14-20 to 14-22 (1999). As additional authority for this position, Hills cites to Ricciardi v. Aniero Concrete Co., Inc., 64 N.J. 60, 312 A.2d 139, 141 (1973), which held that "the rationale of the exception to the going and coming rule under discussion can be sustained only in those situations where, if the employee travels by car, the employer reimburses him for all or substantially all of the total expense involved.” (emphasis added). In Ricciardi, the New Jersey Supreme Court determined that an employee who was reimbursed for 40% of his traveling expenses was not entitled to workers' compensation benefits for injuries sustained while going home from work. Id.

      Hills argues that the $9 payment that Mud-lin was to receive for her journey to the job site on the day of the accident, pursuant to the company's travel pay policy, was not a "substantial payment” and therefore should be considered as additional compensation rather than reimbursement for her travel expenses. However, Hills’ argument is flawed in that there is no question that the $9 payment was "specifically intended for travel expenses.” See 2 Arthur Larson, Larson's Workers' Compensation Law, § 14.07[3], 14-22 (1999). In the memo clarifying the company’s travel pay policy, Hills' President, Lynn Kading, states:
      The travel pay policy is to reimburse employees travel expenses when their job dictates travel beyond ½ hour of their base location.
      (emphasis added).
      Furthermore, Ricciardi is readily distinguished in regard to the nature of the travel involved in each case. In Ricciardi, the employer made a special arrangement with an employee to partially reimburse him for the tolls he incurred during his one-hour commute from his home located in West Keans-burg, N.J., to a job site in Hackensack, NJ., which was the employer's base location. Ricciardi, 312 A.2d at 140. In contrast, Mudlin was not being reimbursed for her commute from her home to Hills' base location in Rapid City, but she was being partially reimbursed for the expenses she incurred while traveling from the company’s base location to a remote job site, located 125 miles away.

      Therefore, Hills’ argument that in this particular case a distinction should be made between reimbursement for travel expenses and additional compensation, and that the amount of compensation should also be a factor, is not controlling.

      .Circuit Court Judge Max Gors made the following additional findings of fact:
      4. As part of Claimant’s journey to the employer's Faith project, she first stopped at the employer’s quarry in Rapid City to determine if other employees needed a ride.
      5. The employer had specifically encouraged car pooling.
      6. The trip to the quarry by Claimant the morning of her accident was done at the request of the employer.

      7. Claimant was using a means of transportation as authorized by the employer.
      (emphasis added).

      . SDCL 62-7-10 provides:
      An employee who claims compensation for an injury shall immediately, or as soon thereafter as practical, notify the employer of the occurrence of the injury. Written notice of the injury shall be provided to the employer no later than three business days after its occurrence. The notice need not be in any particular form but must advise the employer of when, where, and how the injury occurred. Failure to give notice as required by this section prohibits a claim for compensation under this title unless the employee or the employee’s representative can show:
      (1) The employer or the employer’s representative had actual knowledge of the injury; or
      (2) The employer was given written notice after the date of the injury and the employee had good cause for failing to give written notice within the three business-day period, which determination shall be liberally construed in favor of the employee.

        . SDCL 62-6-1 provides:
      Every employer coming under the provisions of this title shall keep a record of all injuries, fatal or otherwise, sustained by the employer’s employees in the course of their employment. The record shall be completed within seven calendar days, not counting Sundays and legal holidays, after any employer has knowledge of the occurrence of an injury. The record shall be on a form approved by the Department of Labor. The employer shall preserve the record for a period of at least four years from the date of injury. The record shall be signed by the employer and a copy given to the injured employee. Any employer who fails to complete or maintain the injury records required by this section is guilty of a Class 2 misdemeanor.

      . SDCL 62-6-2 provides:
      An employer covered by the provisions of this title who has knowledge of an injury that requires medical treatment other than minor first aid or that incapacitates the employee for seven or more calendar days shall file a written report with:
      (1) The Department of Labor when the employer is self-insured under § 62-5-5; or
      (2) The employer’s insurer when the employer has insured the liability under § 62-5-2 or 62-5-3.
      The report shall be filed within seven calendar days, not counting Sundays and legal holidays, after the employer has knowledge of the injury, unless the employer had good cause for failing to file the written report within the seven-day period. The report shall be made on a form approved by the Department of Labor. Any employer who fails to file a report as required by this section is guilty of a Class 2 misdemeanor and is subject to an administrative fine of one hundred dollars payable to the Department of Labor.

      .SDCL 62-6-3 provides:
      The insurer shall file a copy of the report required by § 62-6-2 with the Department of Labor within ten days after receipt thereof.
      The insurer or, if the employer is self-insured, the employer, shall make an investigation of the claim and shall notify the injured employee and the department, in writing, within twenty days from its receipt of the report, if it denies coverage in whole or in part. This period may be extended not to exceed a total of thirty additional days by the department upon a proper showing that there is insufficient time to investigate the conditions surrounding the happening of the accident or the circumstances of coverage. If the insurer or self-insurer denies coverage in whole or in part, it shall state the reasons therefor and notify the claimant of the right to a hearing under § 62-7-12. The director of the Division of Insurance, or the secretary of labor if the employer is self-insured, may suspend, revoke, or refuse to renew the certificate of authority, or may suspend or revoke all certificates of authority granted under Title 58 to any company or employer which fails, refuses, or neglects to comply with the provisions of this section. A company or employer which fails, refuses, or neglects to comply with the provisions of this section is also subject to an administrative fine of one hundred dollars payable to the Department of Labor for each act of noncompliance, unless the company or employer had good cause for noncompliance.

      . SDCL 32-38-1 provides, in part, that "every operator and front seat passenger of a passenger vehicle operated on a public highway in this state shall wear a properly adjusted and fastened safety seat belt system.”