Kyong S. THOMAS, Appellant, v. CUSTER STATE HOSPITAL, and State of South Dakota, Appellees, 511 N.W.2d 576

WUEST, Justice. Kyong S. Thomas (Thomas) appeals from the circuit court’s judgment reversing a part of the Department of Labor decision awarding Thomas a cash advance on a lump sum worker’s compensation award. We affirm. FACTS The facts basic to this appeal are undisputed. Thomas was employed by Custer State Hospital when she sustained a back injury while lifting a patient. As a result, she was found to be totally and permanently disabled, and entitled to compensation at the rate of $136.00 per week, for life.

As of July 1,1992, the present value of Thomas’ future permanent total disability benefits was $124,173.00 after application of the proper discount factor. Thomas petitioned the Department of Labor (Department) requesting a lump sum distribution of the weekly benefits. She owed approved attorney’s fees, costs, and taxes totalling $46,350.81. Thus, the net lump sum worker’s compensation benefit would amount to $77,882.19.

Of that net lump sum, however, Thomas requested a cash advance of $17,822.19, the intended purpose being personal travel and related expenses for Thomas and her family to visit Korea, her country of origin to see her mother and other family members. The Department was presented with two lump sum plans by Thomas, both providing for the requested cash advance, and investing the remaining $60,000. Under the first proposal, $60,000 would be invested in a twenty year certain plus life guarantee annuity, providing a monthly annuity payment of approximately $368.41.

Thomas’ second proposal was to invest the $60,000 in an irrevocable trust with spendthrift provisions. This method of investment would result in tax consequences to Thomas, and would provide a monthly payment of approximately $343.22. The State proposed to self-fund an annuity, investing $77,822.19 in a twenty year certain plus life guarantee annuity, which would provide monthly annuity payments to Thomas of approximately $477.85. The Department found that Thomas did not have any other resources for a trip to Korea, and that “it would put [Thomas’] mind at ease” to be able to visit her family.

The Department also found that the self-funded annuity to be provided by the State and funded with the entire $77,822.19 “would best maximize a continuous stream of disposable income” for Thomas and would provide “greater security to [Thomas] for future benefit payments.” The Department stated that “From the financial aspect, State’s proposal is the plan that best protects this claimant’s future.” However, the Department found that consideration of Thomas’ “emotional well-being is also of significant importance.” Based on this consideration, the Department ordered the lump sum distribution, and allowed the cash advance of $17,822.19 to Thomas for the Korea travel, leaving $60,-000.00 for the self-funded annuity provided by the State, and $46,350.81 for payment of Thomas’ attorney fees.

From the Department’s order, the State appealed to the circuit court. In its findings of fact, the court noted that granting Thomas’ request for the cash advance would reduce her monthly stream of income by approximately $109.00 per month. The court also found that, “In order to live, Thomas and her family spend basically everything she and her husband make in terms of income.

The cash advance which she sought in order to fund the family trip to Korea was approximately equal to one year’s family income.” Additionally, the court found that the cash advance request was not reasonable under the circumstances; that it was inconsistent with and not in Thomas’ best interest since the entire amount “would be spent on non-income producing assets and investments, and would have the effect of reducing the future stream of income available to the claimant from any lump summing of benefits to which she is entitled.” Therefore, the court concluded that while a lump sum distribution of Thomas’ permanent total disability benefits was in her best interests, that distribution should be allocated to payment of attorney’s fees and the remaining $77,822.19 to the self-funded annuity provided by the State.

Specifically, the court’s conclusions of law stated in part that: 7. [Thomas’] request for a cash disbursement of $17,822.19 does not meet the purpose of the South Dakota Worker’s Compensation Act, and in particular does not furnish a fund payable in installments, similar to, and in lieu of, the weekly pay check and recompense in part for the loss of earnings of the wage earner to the greatest extent possible. 8. Granting [Thomas’] request for the $17,822.19 disbursement would allow too easy access to future benefits and would subvert the purpose of the South Dakota worker’s compensation system. 9.

The purpose of the South Dakota Worker’s Compensation Act is not furthered by providing cash advances for personal travel such as the request made by claimant in this case. * * * * * * 12. The conclusion of the Department of Labor that it was in [Thomas’] best interest to award $17,822.19 in cash to fund [the] planned trip to Korea ... was erroneous and constituted an error of law. Thus, the circuit court reversed the Department’s award of the cash advance to Thomas. It is from this decision that Thomas appeals. STANDARD OF REVIEW The standard of review is governed by SDCL 1-26-36 and -37.

In re North western Bell Tel. Co., 382 N.W.2d 413, 415-16 (S.D.1986); Caldwell v. John Morrell & Co., 489 N.W.2d 353, 357 (S.D.1992). Under SDCL 1-26-36, a question of law — like that presented in the present case — is fully reviewable, with no deference given to the agency’s conclusions of law. Caldwell, 489 N.W.2d at 357; Permann v. Dep’t of Labor, Unemp. Ins. Div., 411 N.W.2d 113, 117 (S.D.1987). “[I]t is well within our province to interpret statutes without any assistance from the administrative agency.” Permann, 411 N.W.2d at 117.

We make the same review of the administrative agency’s decision as did the circuit court, unaided by any presumption that the circuit court’s decision was correct. In re Templeton, 403 N.W.2d 398, 399 (S.D.1987) (citing Northwestern Bell, 382 N.W.2d at 415-16; Raml v. Jenkins Methodist Home, 381 N.W.2d 241, 242-43 (S.D.1986)). DISCUSSION DO THE “BEST INTERESTS OF THE EMPLOYEE” ALLOW CONSIDERATION OF THE CLAIMANT’S PURELY PERSONAL INTERESTS WHEN CONSIDERING A REQUEST FOR A CASH ADVANCE AS PART OF A LUMP SUM DISTRIBUTION UNDER SDCL 62-7-6?

It is the public policy of this state that worker’s compensation statutes be liberally construed in favor of injured employees, and to effectuate the purpose of the workers’ compensation system. Wilcox v. City of Winner, 446 N.W.2d 772, 775 (S.D.1989) (citations omitted); Mills v. Spink Elec. Coop., 442 N.W.2d 243, 246 (S.D.1989) (citations omitted); Schwan v. Premack, 70 S.D. 371, 374, 17 N.W.2d 911, 912 (1945).

The overall purpose of the worker’s compensation act is to compensate an employee and dependents for the loss of income-earning ability where the loss is caused by injury, disability or death due to an employment-related accident, casualty or disease. Caldwell, 489 N.W.2d at 362. When compensation is made in lieu of a pay check, such payment on an installment basis allows less chance that the funds could be lost through “unwise investments” or “squandering” of the money. See generally Wulff v. Swanson, 69 S.D. 539, 543, 12 N.W.2d 553, 554-55 (1944).

We have previously considered the propriety of a lump-sum payment, noting that: It may be stated generally that the allowance of a lump-sum award is the exception and not the general rule. We believe, as a matter of public policy, that the welfare of the [claimant and any dependents] is best served by the payment of the compensar tion in regular fixed installments as wages are paid [.] Wulff, 69 S.D. at 543, 12 N.W.2d at 555 (emphasis added) (citations omitted).

Noting that the excessive use of lump-sum payments undermines the “real purposes of the compensation system,” Professor Larson likewise states in his treatise that, “Since compensation is a segment of a total income insurance system, it ordinarily does its share of the job only if it can be depended on to supply periodic income benefits replacing a portion of lost earnings.” 3 ArthuR LaRSON, The Law op Workmen’s Compensation § 82.71, at 15-1243 (1993) [hereinafter Larson, Workmen’s Compensation]. SDCL 62-7-6 allows for a lump sum distribution of workers’ compensation benefits under certain circumstances.

The statute provides in pertinent part: An employer or employee who desires to have any unpaid compensation paid in a lump sum may petition the department of labor asking that the compensation be paid in that manner. If, upon proper notice to interested parties and proper showing before the department, it appears in the best interests of the employee that the compensation be paid in a lump sum, the secretary of labor may order the commutation of the compensation to an equivalent lump-sum amount. ...

If there is an admission or adjudication of permanent total disability, the secretary may order payment of all or part of the unpaid compensation in a lump sum under the following circumstances:

(1) If the employee has exceptional financial need that arose as a result of reduced income due to the injury; or

(2) If necessary to pay the attorney’s fees, costs and expenses approved by the department under § 62-7-36. SDCL 62-7-6 (emphasis added). Professor Larson notes that, “The beginning point of any consideration of the justifiability of lump-summing in a particular case is the standard set by the statute.” 3 Larson, Workmen’s Compensation, § 82.-72(a), at 15-1245. Our statute authorizing a lump-sum payment clearly sets out the circumstances under which such a payment can be made.

First, it must be in the “best interests of the employee.” Our prior decisions confirm that the primary emphasis must be placed on providing an injured worker with a reliable stream of income to replace lost wages and benefits. See Caldwell, 489 N.W.2d 353; and Wulff, 69 S.D. 539, 12 N.W.2d 553. Second, in the case of a worker who has been permanently and totally disabled (like Thomas), a lump sum may be ordered if the worker has an “exceptional financial need that arose as a result of reduced income due to the injury.” SDCL 62-7-6(1).

Third, a lump sum may be ordered, in the case of a permanent total disability, when necessary to pay the attorney’s fees, costs and expenses. SDCL 62-7-6(2); SDCL 62-7-36. In Thomas’ case, a lump sum order was appropriate and necessary to pay her attorney’s fees, costs, and taxes of $46,350.81. As the circuit court held, such a disbursement is in Thomas’ best interest to pay her just and due debt.

After such a disbursement, it is in accordance with the purposes of the workers’ compensation act and Thomas’ best interests to utilize the remainder of the lump sum in such a way that will maximize future wage replacement via a reliable mechanism such as the annuity proposed by the State. Consideration of Thomas’ purely personal desire to visit her family is not within the statutory directives; nor may we consider her financial inability to take this trip absent a cash advance. Thomas’ lack of funds to travel to Korea is not an “exceptional financial need” that arose because of her work-related injury.

See SDCL 62-7-6(1). Few courts have set out specific factors to be utilized in the analysis of an employee’s best interest. Thomas urges reliance on factors set out in a decision of the Iowa Supreme Court. Dameron v. Neumann Bros., 339 N.W.2d 160, 164 (Iowa 1983). In Dameron, the court listed four factors to be analyzed when considering whether a worker should receive lump sum compensation: 1. The worker’s age, education, mental and physical condition, and actual life expectancy (as contrasted with information provided by actuarial tables). 2.

The worker’s family circumstances, living arrangements, and responsibilities to dependents. 3. The worker’s financial condition, including all sources of income, debts and living expenses. 4. The reasonableness of the worker’s plan for investing the lump sum proceeds and the worker’s ability to manage invested funds or arrangement for management by others (for example, by a trustee or conservator). Id. In fact, examination of these factors supports our view that the focus of an employee’s best interest must have a primarily financial perspective geared toward wage replacement.

Likewise, decisions from our neighboring state of Montana, when considering lump sum payments under a statute that authorizes such payments when in the employee’s best interest, allows lump sum payments to clear a claimant’s past debts or to satisfy “pressing needs.” Daniels v. Kalispell Regional Hosp., 230 Mont. 407, 750 P.2d 455, 458 (1988) (citations omitted).

We note that the Department, in allowing the cash advance to Thomas’ for the Korea travel, stated that this would put Thomas’ “mind at ease” and that “the consideration of [Thomas’] emotional well-being is also of significant importance.” We reject these statements as appropriate considerations when viewing lump-sum award proposals, or requests for cash advances under such proposals. Examination of a case cited by Thomas to urge consideration of “peace of mind” supports our conclusion. Prigosin v. Indus. Comm’n, 113 Ariz. 87, 90, 546 P.2d 823, 826 (1976).

In Prigosin, the Arizona Supreme Court states that while peace of mind “could be considered as a factor,” it further notes that this is “not the vital factor.” Id. “Were peace of mind the vital factor, it would dictate [lump sum awards] in almost every instance.” Id. We agree, and refuse to start down that road. In

summary, the purpose of the workers’ compensation act directs that any awards of lump sum payments must be made in accordance with the goal of preserving future wage replacement benefits. The Department’s award of a cash advance to satisfy Thomas’ personal desire to visit her family in Korea subverts the intention of workers’ compensation, and the circuit court properly reversed that award. The judgment is affirmed. MILLER, C.J., and SABERS and AMUNDSON, JJ., concur. HENDERSON, J., concurs specially. .

Those travelling to Korea would include Thomas, her husband, their two children, and two unrelated foster children who had been in her home since February 1992. The entire amount would be expended on travel to and from Korea, subsistence while in Korea, plus payment of past debts and normal monthly debts incurred at home. . This type of annuity guarantees that the payments would be made to Thomas for life; or to her estate for 20 years. .

Although the trust would preserve the principal to Thomas and her survivors, the trust would also be subject to fees and expenses of the administrator, as well as the tax consequences to Thomas. . We note that utilization of the annuity program proposed by Thomas would reduce the monthly annuity payment by approximately 23% when compared to the annuity proposed by the State. . SDCL 1-26-36 provides: The court shall give great weight to the findings made and inferences drawn by an agency on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings.

The court' may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Affected by other error of law;

(5) Clearly erroneous in light of the entire evidence in the Record; or

(6) Arbitrary and capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. A court shall enter its own findings of fact and conclusions of law or may affirm the findings and conclusions entered by the agency as part of its judgment. The circuit court may award costs in the amount and manner specified in

chapter 15-17. . SDCL 62-7-36 states in part that, "Attorneys' fees and costs may be paid in a lump suta on the present value of the settlement or adjudicated amount.”