Such is illustrated in the August 2008 Supreme Court of Connecticut ruling in Taylor v. Mucci. The litigation involved the claim of bystander emotional distress by a mother who, after hearing a crash outside her home, went outside to find her 16-year-old son lying motionless and bleeding. The car operated by the insured defendant had struck the boy.

Although it was stipulated that the mother met the legal requirements for a bystander emotional distress claim, the opposing parties disagreed as to whether the insured's policy allowed for an additional recovery of that amount.

The key language of the policy, the supreme court decision stated, was that the each accident limit is the most the company “will pay for all damages, including … emotional distress … arising out of bodily injury sustained by two of more persons resulting from any one accident.”

The court concluded that the mother's claim of bystander emotional distress did not constitute a bodily injury because the policy defined the term as “any bodily injury, sickness, disease, or death sustained by any person.” Emotional distress, without accompanying physical harm, did not constitute a bodily injury. Thus, the mother could not recover damages under a separate per-person coverage limit. Only one bodily injury within the meaning of the policy occurred here — namely the injuries suffered by the plaintiff's son — so the plaintiff could not recover under the per-accident provision of the policy, which requires bodily injury to 'two or more persons.'”

Just a month before the Taylor verdict, the Montana Supreme Court in Allstate Insurance Co. v. Terry Wagner-Ellsworth and Tiffany Rusk held that bodily injury — within the realm of an insurance policy — included a mental or psychological injury accompanied by physical manifestations.

In Wagner-Ellsworth, a mother, acting on her own behalf and that of her son Brandon, asserted claims for emotional and physical injuries to both herself and to Brandon. They filed the action against the insured motorist who had struck her other son, Matthew. Brandon and Matthew had been walking together in front of their school when the insured's vehicle struck Matthew, severely injuring him.

The mother contended that both she and Brandon were traumatized and suffered injury as a result of seeing Matthew run over, as well as for enduring the ambulance ride to the hospital and the boy's recovery. It was alleged that Brandon became withdrawn, and that the mother suffered from stress, migraines, heart palpitations when she heard sirens, physical pain, and depression.

The court stated that the policy's general statement of coverage stipulated that the insurer would pay damages an insured person was legally obligated to pay “because of bodily injury sustained by any person …” Therefore, the insured's policy required payment for damages that an insured person was legally obligated to cover because of bodily injury sustained by any person in a covered accident, whether to the claimant directly or to another.

In this case, the court determined that the mother's and Brandon's damages were inflicted “because of” Matthew's bodily injury. As such, their damages would be covered, regardless of whether they suffered the bodily injury themselves. However, although the injuries were covered, they were subject to the “each person” limit. There were no additional funds available under the insured's policy because the limit applicable was exhausted in Matthew's settlement.

Of particular significance is the fact that the court overruled itself by finding “bodily injury” could be construed within an insurance policy to include psychological anguish accompanied by physical manifestations. Therefore, the mother's and Brandon's claims, to the extent they were based on physical manifestations of the emotional distress, fell within the “bodily injury” definition of the policy and could be asserted on that basis. For the claimants to do so would establish that there were two or more bodily injury claims in the accident, thus triggering the higher “each accident” monetary limits of the policy.

Conflicting Opinions

Recent decisions provide clarification as to whether a separate “each person” limit should apply to a bystander claim. This depends primarily on whether a court first determines that pure emotionally- or psychologically-rooted injuries are “bodily injury” as the terms are defined by a particular liability policy.

Yet, courts remain divided as to whether such emotional distress claims, in an insurance context, constitute “bodily injury.” Some courts take a more expansive approach to bystander claims than recently taken by the Connecticut and Montana high courts, holding instead that emotional harm does constitutes bodily injury, regardless of any accompanying physical manifestations. Other courts hold that emotional harm does not constitute a bodily injury, also regardless of the presence of any physical harm.

Over the past decade or so, there has been a marked shift by various courts, similar to Montana, requiring that at least some sort of physical cause for the claim be present. This may encompass physical symptoms displayed or at least an “impact” suffered that led to the alleged mental distress.

Requiring a physical display of psychological stress can be a short-sided solution, undoubtedly leaving bystanders who may be suffering very legitimate mental affliction but who are not experiencing (or are unable to demonstrate) accompanying physical symptoms — with no clear recourse.

As recognized in Wagner-Ellsworth, distinguishing between injuries with physical manifestations and those without them can be challenging. It has been stated that “every emotional disturbance has a physical aspect, and every physical disturbance has an emotional aspect.” Indeed, there is no litmus test for determining where to draw the line between emotional and physical injuries. For example, a dry throat, a rise in body temperature, and a knot in the stomach may be considered sufficient physical manifestations of emotional distress to constitute bodily injury in one instance. In a similar case, the loss of sleep and appetite simply may not make the cut.

No one approach to this complex claim is without its flaws. However, relaxing the requirement that claimants demonstrate any physical manifestations whatsoever can only lead to a flood of frivolous claims and an onslaught of related litigation. Clearly, this result would be more problematic than any solution it may offer.

Kelly Maheu is assistant editor of FC&S. She specializes in commercial liability coverage and has experience in insurance defense and research. She may be contacted at [email protected].