The Supreme Court of Pennsylvania recently split down the middle, 3-3, in the appeal of Lipsky v. State Farm, leading to the affirmance of the Superior Court’s ruling that a claim for negligent infliction of emotional distress (NIED) constitutes an independent claim of bodily injury such that was covered under an automobile insurance policy.

On October 7, 2006, a drunk driver, White, was driving his wife’s car with permission when he struck and killed Lipsky, a minor male pedestrian, in the immediate presence of Lipsky’s father and two brothers. The Whites were covered by a policy issued by State Farm that provided for liability limits of $100,000 each person/$300,000 each accident. Lipsky’s estate filed suit against the Whites, seeking damages pursuant to the Pennsylvania Wrongful Death and Survival Acts. In addition, Lipsky’s father and brothers (“the family”) each made claims of NIED from witnessing the fatal accident. As part of the settlement, the estate received the $100,000 “each person” limit under the policy and it was stipulated that the family would file a declaratory judgment as to the NIED claim as State Farm had denied coverage for the claims.

State Farm denied coverage asserting that the NIED claims of the family did not constitute “bodily injury” under the policy and/or were “derivative” claims resulting from the original injury and death of Lipsky such that the payment of limits to the estate exhausted the “each person” limit and there was nothing left for the family’s NIED claims. The trial court decided the case on cross motions for summary judgment in favor of the family, determining that the phrase “bodily injury” was ambiguous and thus had to be interpreted in favor of the family. State Farm appealed to the Superior Court. In an unpublished opinion, the Superior Court reaffirmedthe lower court, but on slightly different grounds.

First, the Superior Court reaffirmed that physical impact is not necessary to maintain a claim “bodily injury to a person” under an automobile insurance policy. The court then went on to decide that “bodily injury to a person” as set forth in the policy should be defined by the jurisprudence surrounding claims of NIED, which provide physical manifestations including, “knots” in the stomach, nightmares, loss of sleep, headaches, low self-esteem, susceptibility to fright, and major depression were sufficient to support claims of “physical injury” and “bodily harm.” These physical manifestations of emotional injury were sufficient to support claims of NIED and were sufficient to place NIED claims within the broad definition of “bodily injury” under the policy.

After having determined that the NIED claims of the family fit within the definition of bodily injury under the policy, the Superior Court rejected State Farm’s assertion that the claims were derivative. The court cited long-standing case law, holding that a claim of a bystander who had witnessed the death of a close relative was an “original injury” and separate cause of action. Although the court did not discount that a policy could be written to interpret bystander NIED claims differently than its common law definition, the State Farm policy did not do so. Thus, the court rejected any argument that the family’s NIED claims were “derivative” and each individual family member could recover the maximum “each person” limit subject to the aggregate policy limit.

What It Means to You

The failure of the Supreme Court to reach consensus on this issue operates to affirm the Superior Court’s holding. Expect that claimants and their counsel will use this decision to continue to push the boundaries for recovery on “emotional” injury claims not only for automobile coverage, but for other general liability claims, as well.