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Wednesday, December 20, 2006

Ind. Decisions - "Insurer Groups, State Trade File Joint Amicus with Supreme Court" [Updated]

State Farm Mutual Automobile Insurance Company v. Jakupko was decided by the Indiana Court of Appeals on November 17, 2006. Access the 14-page opinion by Judge Najam here. The ILB did not summarize the opinion at the time, but here is the conclusion:

The development of Indiana case law on the tort of negligent infliction of emotional distress has been brisk, beginning with our supreme court’s opinion in Shuamber. It may well be that State Farm’s automobile insurance policy was not drafted with negligent infliction of emotional distress claims in mind. But in construing the policy we must take into account the body of case law, which recognizes negligent infliction of emotional distress as an independent tort. See Ethyl Corp. v. Forcum-Lannom Assoc’s, Inc., 433 N.E.2d 1214, 1220 (Ind. Ct. App. 1982) (observing “it is well settled that, unless the contract provides otherwise, all applicable law in force at the time the agreement is made impliedly forms a part of the agreement without any statement to that effect.”).

We hold that the definition of bodily injury in the policy includes negligent infliction of emotional distress claims when accompanied by physical manifestations of that distress. And we also hold that the Jakupkos’ injuries were sustained as a result of their direct involvement in the accident. Thus, the Jakupkos’ negligent infliction of emotional distress claims are subject only to the “each accident” limit of liability. The trial court did not err when it entered summary judgment in favor of the Jakupkos. Affirmed.

Today the Insurance Journal reports:
The Insurance Institute of Indiana, the National Association of Mutual Insurance Companies (NAMIC), and the Property Casualty Insurers Association of America (PCI) have filed a joint amicus curiae brief on a case that the groups believe could set a dangerous precedent for future emotional distress claims.

The trade associations filed the brief with the Indiana Supreme Court in State Farm Mutual Automobile Insurance Company v. Jakupko.

In the case Richard Jakupko, his wife and two children were involved in a crash that resulted in spinal cord fractures and mental injuries to Jakupko. State Farm paid the plaintiffs $1 million under the umbrella policy and $100,000 under the automobile policy for under-insured motorist (UIM) coverage. The plaintiff's UIM limit was $100,000 per person and $300,000 per accident.

The plaintiffs brought action against State Farm for the additional $200,000 they believed was available under the UIM coverage, claiming Jakupko's family witnessed his injuries and suffered emotional distress that led to physical problems such as inability to sleep, loss of appetite, and fatigue. The court ruled that the physical manifestations of emotional distress constitute bodily injuries that are covered in the defendant's policy.

"While we certainly sympathize with the Jakupko family, the policy in question simply does not cover this kind of claim," Insurance Institute president Stephen Williams said. "We believe the court overreached in this instance."

"There is no precedent in Indiana for the appellate court's ruling," NAMIC's Regulatory Affairs Counsel Marsha Harrison stated. "This decision could open insurers up to lawsuits expanding the connection this court made."

PCI counsel Robert Hurns added, "The impact of this ruling is broader than this single case, as it has the potential to be damaging to insurers writing business in Indiana. This case could dramatically increase costs by expanding coverage beyond what the contract states."

The Indiana Supreme Court has not set a date for arguments in this case.

In fact, a check of the docket (29 A 02 - 0603 - CV - 00207) shows only:
11/17/06 ISSUED THE ENCLOSED OPINION:
11/17/06 2006 TERM
AFFIRMED----------NAJAM, J.
SHARPNACK, J. AND ROBB, J. CONCUR
14 PAGES KM
11/17/06 ****** ABOVE ENTRY MAILED ******
12/18/06 APPELLANT'S PETITION FOR TRANSFER (9) WORD COUNT CERTIFICATE(2)
PROOF OF SERVICE (2) MAIL YL
12/18/06 NOTICE OF APPEARANCE BY ROBERT B. CLEMENS, GEORGE T. PATTON AND
BRYAN H. BABB ATTORNEY'S FOR AMICUS CURIAE (2) PROOF OF SERVICE
(2) MAIL * INSURANCE INSTITUTE OF INDIANA, PROPERTY CASUALTY
INSURERS ASSOCIATION AND NATIONAL ASSC OF MUTUAL INSURANCE COMP*
YL
12/18/06 MOTION FOR LEAVE TO FILE BRIEF OF AMICUS CURIAE INSURANCE
INSTITUTE OF INDIANA, NATIONAL ASSOCIATION OF MUTUAL INSURANCE
AND PROPERTY CASUATY INSURERS ASSOC IN SUPPORT OF PETITION TO
TRANSFER(6)PROOF OF SERVICE(2) MAIL YL
12/18/06 ****RECEIVED: BRIEF OF AMICUS CURIAE. (9) YL
[Updated 12/21/06] Here is a story on the insurance industry effort, written by Charles Wilson of the AP. Some quotes:
Insurance industry trade groups are asking the Indiana Supreme Court to review an appeals court decision that awarded damages for emotional distress to the family of an injured man, saying it could set a costly precedent. * * *

State Farm paid $1 million under a personal umbrella policy and $100,000 under an underinsured motorist policy which had a limit of $100,000 per person or $300,000 per accident.

The family filed suit, seeking $200,000 more for family members' emotional distress that led to uncontrollable crying, sleeplessness, fatigue, loss of appetite and other physical problems.

A Hamilton Superior Court judge agreed that each family member should be covered and ruled in their favor. State Farm appealed, but the Indiana Court of Appeals last month upheld the lower court ruling.

The appeals court said that since the other family members were involved in the accident, their distress and suffering could not be treated as merely a result of Richard Jakupko's injuries.

"A claimant's direct involvement in the accident requires that a negligent infliction of emotional distress claim accompanied by physical manifestations be treated in the same manner as any other bodily injury claim," Judge Edward W. Najam Jr. wrote.

The ruling held that the $100,000 "each person" rule applied, subject to the $300,000 per accident limit, so the Jakupkos were entitled to the additional $200,000.

Marsha Harrison, regulatory affairs counsel for the National Association of Mutual Insurance Companies, said the ruling was without precedent in Indiana.

State Farm has appealed the ruling to the state Supreme Court, which has not yet decided whether to hear the case.

Posted by Marcia Oddi on December 20, 2006 05:15 PM
Posted to Ind. App.Ct. Decisions