Pennsylvania Supreme Court Split on Whether Physical Manifestations of Emotional Distress Qualifies as Bodily Injury for Insurance Purposes

/ 05.Mar, 2014
Pennsylvania Supreme Court Split on Whether Physical Manifestations of Emotional Distress Qualifies as Bodily Injury for Insurance Purposes Whether a claimant’s physical symptoms associated with an emotional injury qualifies as a “bodily injury” is critical to determining available insurance policy limits for indemnification or, in some cases, whether a policyholder is entitled to a legal defense under a commercial general liability policy. The Pennsylvania Supreme Court deferred answering this question in Lipsky v. State Farm Mut. Auto Ins. Co., No. 24 EAP 2012, 2014 Pa. LEXIS 215 (Pa. Jan. 21, 2014), where an equally divided court rendered an Order which affirmed the lower court’s decision without an opinion. The Pennsylvania Superior Court in a 2011 unpublished panel decision had held in Lipsky that a negligent infliction of emotional distress (“NIED”) claim brought by a family bystander triggered a separate “bodily injury” liability limit from that applicable to the wrongful death and survival action. Lipsky, 34 A. 3d 213 (Pa. Super. 2011). The panel reasoned that the emotional distress claim was not simply derivative of the injury sustained by the decedent and that for purposes of a family bystander NIED claim, physical manifestations of distress including stomach ailments, nightmares, loss of sleep, depression, etc. qualified as a “bodily injury” under the State Farm policy. Some commentators have suggested that the Pennsylvania Supreme Court’s affirmance by reason of the divided Court effectively establishes the rule that emotional distress accompanied by physical manifestation of symptoms qualifies as a “bodily injury”. This is a debatable proposition for several reasons. First, the decision of an equally divided Pennsylvania Supreme Court does not have precedential value. Com. v. Minarik, 493 Pa. 573, 583 427 A. 2d 623 (1981), citing Neil v. Biggers, 409 U.S. 188 (1972). See also Com. v. Jones, 493 Pa. 545, 547 427 A. 2d 148 (Pa. 1981) (“although it may be true that when a judgment of sentence is affirmed by an equally divided court there has been no adjudication that would be binding on others, the adjudication is certainly binding on appellant”). Therefore, while the Pennsylvania Supreme Court’s affirmance of the lower court adjudicated the dispute as between the parties, it does not constitute binding precedent governing other parties on this important issue. Secondly, the Pennsylvania Superior Court decision in Lipsky was a non-precedential memorandum opinion governed by the Superior Court Internal Operating Procedure 65.37. That procedural rule states that an unpublished memorandum decision shall not be relied upon or cited by a Court or a party in any other action or proceeding except in matters affecting the litigants, such as involving issues of res judicata and the like. The Pennsylvania Superior Court has held that this rule declares that memorandum decisions bind no party or court and that it prohibits parties or courts from citing the memorandum decision. Schaaf v. Kaufman, 850 A. 2d 655 (Pa. Super. 2004). In Schaaf, the Superior Court held that the trial court appropriately admonished a litigant from citing a Superior Court unpublished memorandum opinion. Therefore, what we are left with is a non-precedential affirmance of a non-precedential opinion on admittedly a significant insurance coverage question. While it can be anticipated that these decisions will be cited as supposedly persuasive authority, even if not binding, the Schaaf decision supports the position that the Lipsky decision cannot be cited even for informational purposes. Nonetheless, the decisions point the way to the likelihood that the issue will re-surface and will pose problematic decision-making for claims professionals. Many jurisdictions subscribe to the standard that physical manifestations of emotional injury meet the definition of a “bodily injury”. While Pennsylvania has heretofore required proof of physical impact causing bodily injury or disease or death, e.g., Zerr v. Erie Insurance Exchange, 667 A. 2d 1075 (Pa. Super. 1996); Jackson v. Travelers Ins. Co., 606 A. 2d 1384 (Pa. Super. 1992), the trend favors a broader reading of the meaning of a “bodily injury”. Even if Lipsky is not precedential, and the Zerr holding controls, it signals the likelihood that other appellate panels may issue decisions aligned with Lipsky. This could extend beyond a NIED claim to other emotional distress claims. Therefore, insurers that intend to circumscribe the insured risk to only physical injuries (or emotional harm caused by the injured person’s physical injury) would be well advised to draft or adopt endorsements to state that contractual intent. William T. Salzer Attorney at Law 50 S. 16th Street, 28th Floor Two Liberty Place Philadelphia, PA 19102 Main: (215) 564-5190 Direct: (215) 299-4346 Fax: (215) 299-4301