Insurers Seek Indiana High Court Review of Family’s Award

December 27, 2006

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.

The groups are joining the appeal regarding $200,000 a judge awarded to the family of a man whose injuries in a 2002 crash that left him quadriplegic and permanently reduced his mental capacity. The man’s insurer, State Farm Insurance Co., had already paid the family $1.1 million and argued it should not have to pay the additional amount.

The Insurance Institute of Indiana, the National Association of Mutual Insurance Companies, and the Property Casualty Insurers Association of America filed legal brief last week in the case between State Farm and the family of Richard Jakupko.

“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 in a statement. “We believe the court overreached in this instance.”

Jakupko’s wife, Patricia, and sons Nicholas and Matthew were passengers during the crash and were less seriously injured in the crash.

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.

Property Casualty Insurers counsel Robert Hurns said the case had importance beyond Indiana’s borders.

“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,” he said. “This case could dramatically increase costs by expanding coverage beyond what the contract states.”

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