A recent decision by Kentucky’s highest court has left the law governing certain negligence cases in a state of transition. It is common for plaintiffs to assert a claim for emotional distress, such as anxiety or depression, to maximize their damages. Until very recently, Kentucky courts applied a strict rule known as the “impact rule” for such cases. Under this rule, an individual claiming emotional damages resulting from negligence could recover such damages only if the individual could prove that he was somehow physically contacted – essentially, no contact equaled no recovery. The impact rule was not perfect and certainly had its critics. However, the rule served a useful purpose to defendants, who could rely on the impact rule as a defense and avoid exposure and expense by disposing of emotional distress claims, which lacked physical impact, before proceeding far into litigation.

On December 20, 2012, the Kentucky Supreme Court issued its opinion in Osborne v. Keeny, and eliminated the impact rule. In Osborne, an individual sued after a pilot negligently crashed an airplane into her house. The plaintiff alleged, among other things, that she suffered emotional distress due to the crash. However, she was not physically contacted or injured.

The defendant attempted to rely on the impact rule, arguing that because the plaintiff had not been physically contacted she could not sue for mental damages. In an opinion that surprised the legal community, the Supreme Court rejected the defense. The Court explained that while the rule was intended to be a bright-line test, it often led to more confusion and other states had already abandoned the rule “in droves.”

In place of the impact rule, the Court enacted a new test requiring a plaintiff seeking emotional damages to prove that he suffered a “serious” or “severe” emotional injury. The Court further required a plaintiff claiming emotional distress to support any emotional damages with expert medical or scientific proof. The new rule applies to future lawsuits and all lawsuits pending as of December 20, 2012, including lawsuits being appealed to higher courts.

There is no question that the Court’s abrogation of the impact rule will substantially affect the litigation of “no-impact” negligence claims with an emotional distress element in Kentucky. Under the new rule, plaintiffs are now free to assert negligence claims where in the past such claims would not lie. Indeed, pedestrians who are "almost" struck by a speeding driver, or bystanders who witness some horrific accident, tort, or crime may now have a claim for emotional distress. Likewise, even friends or family members of tort victims can potentially recover for emotional distress under the new rule without regard to whether they actually observed the injury to their loved one. One can imagine how the potential liability can exponentially grow in instances of larger-scale events such as bus accidents, plane crashes, or environmental or toxic disasters.

While an increase in potential emotional distress claims is a distinct possibility under the Court’s new rule, the news is not all positive for plaintiffs. Plaintiffs are now burdened with the costs of hiring specialists to provide expert or scientific evidence of emotional distress. Unsurprisingly, these experts are very expensive.

In addition, plaintiffs must show that the degree of emotional distress was sufficiently severe - requiring evidence of treatment or extensive interference with daily life. These new requirements seem to apply across the board to all claims for negligence that seek damages for emotional distress. Thus, even in instances where emotional distress would have been unquestionably available under the old rule, such as cases where a plaintiff is permanently disfigured or handicapped in an automobile crash, plaintiffs will now have to present expert evidence and severe emotional distress to recover.

These costs will be transferred to defendants in various forms. Newly available emotional distress claims, and accompanying increased litigation costs, may command higher settlement demands from plaintiffs. The requirement of providing expert testimony is likely to have a ripple effect on defendants who may be inclined to hire their own rebuttal experts to challenge the conclusions of plaintiff's expert. Finally, defendants will face a much greater challenge obtaining early dismissal of dubious emotional distress claims. Increased costs may even trickle down to ordinary individuals who could ultimately face increased insurance premiums.

The precise ramifications of the Court's new rule will only be fully uncovered as courts apply it in practice to real claims. Overall, businesses and insurers should be aware of the changing legal landscape created by Osborne v. Keeney and the possibility of increased liability and greater litigation costs.