The Indiana Supreme Court says that insurance policy language “bodily injury” includes emotional distress subject to its own damage limits, but only if those making the claim are directly involved in the underlying accident or incident.
A trio of anticipated rulings came late afternoon on Feb. 28 from the state’s highest court, with Justice Frank Sullivan authoring all three as they involve similar cases regarding insurance policy coverage of emotional distress. The cases are: State Farm Mutual Automobile Insurance Co. v. Patricia Jakupko, et al., No. 29S02-0704-CV-140, Austin J. Elliott, b/n/f William K. Elliott, et al. v. Allstate Insurance Co., No. 49S02-0704-CV-143, and State Farm Insurance Co. v. D.L.B., No. 89S05-0802-CV-102.
The 13-page unanimous ruling in Jakupko is the meat of the bunch, but the five-page D.L.B. decision clinches the decisions involving this complex area of insurance law.
Attorneys on both sides of the aisle in these cases credit the court for taking a considerate and reasonable approach.
“They are being sensitive to emotional distress claims getting out of hand,” said Indianapolis attorney Scott Montross, who represented the Jakupko family. “They want to make it clear that there has to be a strong connection with the incident. That makes sure we don’t lower the bar and let this get abused.”
On the insurance industry’s side, Bose McKinney & Evans attorney Brian Babb, who represented national and state trade groups as amicus parties, had a similar take.
“This is really a masterful stroke, what they did here,” he said. “They’ve struck a reasonable compromise and swept away all the language that had broadened common law claims of emotional distress without any limitation.”
To be clear: Babb lost.
“Although we’re disappointed, these three decisions taken together represent a reasonable compromise,” he said. “This is going to have an impact on the insurance industry, but it’s reasonable and manageable.”
Last May, the court heard consolidated arguments in Jakupko and Elliott, and recently agreed to accept D.L.B. as it involves an identical issue, with a twist.
Both in Jakupko and Elliott involve passengers in auto accidents who claimed they suffered negligent infliction of emotional distress, with and without physical manifestations, after being injured themselves and witnessing severe injury to a family member. The family-member passengers of the insurance policyholders sought coverage under uninsured and underinsured provisions of their contracts, arguing that each should be able to recover on their own claims subject to their own liability caps – $100,000 in Jakupko and $25,000 in Elliott, rather than having each person lumped into one policyholder’s claim. Each would still be subject to a total accident cap in each case.
Circumstances are slightly different in D.L.B., though, as the case involves a bike-riding 6-year-old boy who witnessed his cousin get struck and killed by a car in July 2000 and suffered post-traumatic stress disorder as a result.
Following the Court of Appeals decisions on these cases, the insurance industry had concerns that the common law had been expanded to the point where there was no limitation, Babb said. Those concerns are gone now.
In the Supreme Court decisions, justices agreed with their appellate colleagues in that the term “bodily injury” covers emotional distress and is subject to its own “per person limit” as long as the claim arises from “bodily touching” – meaning that the person claiming emotional distress had to have been directly involved, not a third-party.
The Jakupko and Elliott decisions reach the same conclusion, though one trial court was affirmed and the other reversed based on those initial judgments.
Justices relied on multiple cases from across the country, but most specifically on Wayne Township Board of School Commissioners v. Indiana Insurance Co., 650 N.E.2d 1205 (Ind. Ct. App. 1995) that held “sickness” included emotional distress when there was physical injury and each claim is a distinct “bodily injury.” Part of that ruling also determined that emotional-distress damage wasn’t included unless it arose from “bodily touching,” or physical contact of someone directly involved.
The court also relied on that 1995 ruling in D.L.B., using the “bodily touching” definition to determine that the cousin couldn’t recover for emotional distress because the car that struck and killed his cousin didn’t directly injure him.
Chief Justice Randall T. Shepard wrote a separate, concurring opinion that steps back to offer a point of clarity to the court’s decision in Jakupko.
“I do not read my colleagues’ embrace of (caselaw) to suggest that a person who walks away from an accident without any damage to life or limb, not so much as a bruise, has suffered ‘bodily injury’ because he or she is ‘distressed,'” he wrote, tying that decision to the others.
He also wrote that Richard Jakupko and his family should be covered for pain and suffering customary to tort damages.
Justices Brent E. Dickson and Robert D. Rucker dissented in the third decision, opining that whether a separate physical impact occurred was irrelevant to the court’s construction of insurance policy language saying “bodily injury to a person and sickness, disease or death which results from it.”
Karl Mulvaney, who represented State Farm in the Jakupko case, said he was disappointed in the ruling but that he understands why the court decided the way it did. He said it’s too early to tell if a rehearing will be requested.
Indianapolis attorney John Townsend III, who also represented the Jakupkos along with Montross, praised the court’s decisions.
“This protects the traveling public from attempts by the insurance industry to whittle away at coverage beyond what the legislature requires and consumers have a right to expect,” he said.