Indiana

Automobile Total Loss Thresholds

Total Loss Threshold (70%)

Cost to repair vehicle is greater than 70% of fair market value prior to damage or the insurer determines it is impractical to repair and makes total loss payment. I.C. § 9-22-3-3.

Deductible Reimbursement

Automobile and Property: No applicable statute, Administrative Code provision or case law exists. Indiana’s Department of Insurance orally indicates that the common practice is for insurer to reimburse insured on pro-rata basis based on percentage recovered.

Diminution of Value

First Party: Indiana Supreme Court has found that diminution in value may not be recovered by the insured of an auto policy, and noted that a policy may provide that the insurer may choose to pay either the actual cash value of the vehicle or the amount necessary to repair, not some combination of the two. Allgood v. Meridian Security Ins. Co., 836 N.E.2d 243 (Ind. 2005).

Third Party: A plaintiff in a third-party claim is entitled to recover both the cost of repair and inherent or “residual” diminished value. Evidence of the FMV of the vehicle after repairs is required. Shield Global Partners-G1, LLC v. Forster, 2020 WL 811645 (Ind. App. 2020).

Indiana courts have adopted the measure of damages as in the Restatement (Second) of Torts, stating that “the fundamental measure of damages in a situation where an item of personal property is damaged, but not destroyed, is the reduction in fair market value caused by the negligence of the tortfeasor.” Wiese-GMC, Inc. v. Wells, 626 N.E.2d 595 (Ind. Ct. App. 1993). This includes the residual diminished value remaining after a vehicle is repaired but still hasn’t been restored to its pre-accident fair market value due to the fact that the vehicle has been in an accident. Dado v. Jeeninga, 743 N.E.2d 291, 294 (Ind. App. 2001); Wiese–GMC, Inc. v. Wells, 626 N.E.2d 595 (Ind. App. 1993), trans. denied; Restatement (Second) of Torts § 928 (1977). In suit for DIV under UIM policy, court said that because UIM policy was paying on behalf of uninsured tortfeasor, it also owed DIV damages. Dunn v. Meridian Mut. Ins. Co., 836 N.E.2d 249 (Ind. 2005).

First Come, First Served: Subrogating Multiple Claims in Excess of Policy Limits

Indiana law encourages the use of an interpleader when a tortfeasor is faced with multiple claimants and multiple liabilities. Porter Dev., LLC v. First Nat. Bank of Valparaiso, 837 N.E.2d 558 (Ind. App. 2005) transfer granted, opinion vacated, 855 N.E.2d 1012 (Ind. 2006) and opinion aff’d in part, vacated in part, 866 N.E.2d 775 (Ind. 2007). The purpose of an interpleader action is to permit a neutral stakeholder to seek a judicial determination of the rights to a specific fund of money where there are conflicting or disputed claims to that fund; the stakeholder is not required to make a determination as to the rights of the prospective claimants but, rather, may deposit the contested funds with the court to avoid acting at his own peril and exposing himself to liability. Id.

Funeral Procession Traffic Laws

Indiana law is identical to Illinois in its requirements except that the lead vehicle in the procession must have alternatively flashing red and blue lights. Ind. Code § 9-21-13-1 to -6.

Imputing Contributory Negligence of Driver to Vehicle Owner

Imputed Contributory Negligence Law:  Negligence of minor driver not imputed to owner father in father’s action for recovery of damages to vehicle, unless there was evidence of negligent entrustment. Wenisch v. Hoffmeister, 342 N.E.2d 665 (Ind. App. 1976).

Vicarious Liability/Family Purpose Doctrine:  No Vicarious Liability Statute.

No Family Purpose Doctrine. Wimp v. Anthis, 396. N.E.2d 918 (Ind. App.1979).

Indiana is one of three states with guest statute (See Ala. & Ill.). Driver is not liable for injury to parent, spouse, child, step-child, brother, sister, or hitchhiker. I.C. § 34-30-11-1.

Sponsor Liability for Minor’s Driving:  I.C. §9-24-9-4(a): Person who signs an application for a permit or driver’s license is jointly and severally liable with the minor for damages resulting from the minor’s operation of a motor vehicle.

Laws Regarding using Cell Phones/Headphones/Texting While Driving

Cell Phone/Texting:  No driver may “hold or use” a cell phone to send, receive, or read text messages, unless it is done so hands-free.  It can only be used with hands-free or voice-operated technology. I.C. § 9-21-8-59(a). No driver under the age of 21 may operate a motor vehicle while using a telecommunications device, unless it is being used to make a 911 call.  I.C. § 9-24-11-3.7.

Other Prohibitions:  No Applicable Laws.

Loss Of Use

Loss of Use: Yes. Loss of use is calculated by a vehicle’s rental value – if the property does not have a rental value, loss of use is calculated by the value of its use to the injured party for the time he was deprived of its use. Weddle v. I.R.C. & D Warehouse Corp., 85 N.E.2d 501 (Ind. App. 1949). No case law requiring that a vehicle actually be rented in order to determine the rental value of a replacement. Weddle v. I.R.C. & D. Warehouse Corp., supra. When reviewing for loss of use damages, courts see no distinction between repairable or unrepairable damage, as the property owners in both cases have lost the same thing, use of the property. However, owners must make an attempt to mitigate their damages and recovery will be limited to the reasonable time necessary to replace the property. New York Cent. R. Co. v. Churchill, 218 N.E.2d 372 (Ind. App. 1966).

Lost Profits: There is no authority to apply the measure of lost profits to loss of use in the automobile arena. However, generally, “[w]here loss of use of real property involves a known and established business the value of such loss of use of property may be determined from loss of profits, if profits can be shown with reasonable certainty.” Maddox v. Yocum, 52 N.E.2d 636 (Ind. App. 1944).

Comments: Loss of use damages are recoverable for a commercial vehicle even if totally destroyed. New York Cent. R. Co. v. Churchill, supra.

Med Pay/PIP Subrogation

Med Pay: An insurer may not sue independently to enforce a personal injury claim arising out of subrogation prior to resolution of its insured’s claims absent an agreement with its insured granting explicit and unequivocal authority to initiate a lawsuit or settlement that governs the forum for resolution of both the insured’s and insurer’s claims. Erie Ins. Co. v. George, 658 N.E.2d 950 (Ind. App. 1996), op. vacated, 681 N.E.2d 983 (Ind. 1997); seeI.C. § 34-53-1-1 (Subrogation Rights and Lien) and I.C. § 34-53-1-2 (Common Fund Costs and Fees) and I.C. § 34-4-41-1 with regard to sharing attorney’s fees and costs.

PIP: Coverage not applicable.

Made Whole: Can be overridden with Plan language. George, supra.

Statute of Limitations: The two (2) year personal injury statute of limitations runs from date of insured’s accident. I.C. § 34-11-2-4 (1998).

No Pay, No Play Laws

Rule:  Prohibits certain uninsured motorists from collecting non-economic damages against the at-fault motorist and his or her insurance carrier. The individual must be uninsured at the time of the accident and have had a prior violation of the financial responsibility laws. A previous violation is defined as:

1. An individual who owns a motor vehicle that is involved in an accident and for which financial responsibility is not in effect as required by I.C. § 9-25-4; and
2. During the 5 years immediately preceding, the individual has been required to provide proof of future financial responsibility under I.C. § 9-25-8-6(b).

Authority:  I.C. § 27-7-5.1; I.C. § 34-30-29.2

Owner Liability For Stolen Vehicles

Key In The Ignition Statutes: N/A

Common Law Rule: Vehicle owner has no duty to protect others from the action of a thief who steals his vehicle and causes injury to third party. Cates v. Long, 117 Ind. App. 444, 72 N.E.2d 233 (1947), Kiste v. Red Cab, 122 Ind. App. 587, 106 N.E.2d 395 (1952).

Payment of Sales Tax After Vehicle Total Loss

First-Party Claims:  Insurer must pay sales tax in addition to the fair market value of the totaled vehicle. This is necessary for the insured to be “made whole” for the loss. Sales tax must be paid at the time of compensating the insured for the loss of the vehicle. Indiana Insurance Bulletin 82, 2/25/94. In 2014, Indiana Dept. of Ins. General Counsel Tina Korty explained that, “The Department views payment of sales tax to be a necessary component of a fair and equitable settlement.” 1/9/15 e-mail to Gary Wickert.

Third-Party Claims:  The Indiana Dept. of Ins. General Counsel says the position of the Department is that of Indiana Insurance Bulletin 82. Indiana law requires insurers to effectuate prompt, fair, and equitable settlement of claims. I.C. § 27-4-1-4.5. The Department views payment of sales tax to be a necessary component of a fair and equitable settlement. No case law to support, however.

Pedestrian and Crosswalk Laws

Statute:

I.C. § 9-21-8-36: Vehicles must yield to pedestrians in crosswalk.

I.C. § 9-21-17-5: Pedestrians must not leave curb in front of vehicles when vehicles are too close to stop.

I.C. § 9-21-17-7: Pedestrians crossing outside crosswalk must yield to vehicles.

Summary: Crossing street in middle of block during rainy foggy night with impaired vision is contributory negligence as a matter of law. Jones v. Gleim, 468 N.E.2d 205 (Ind. 1984).

Rental Car Company Physical Damage and Loss of Use Claims

Recovery From Renter: Physical damage recovery limited by statute to (1) estimated cost of parts less discounts, (2) estimated cost of labor less all discounts, (3) estimated cost of labor, limited to the product of the rate for labor usually paid by the rental company to repair vehicle parts of the type that were damaged and the estimated time for repair, and (4) actual charges for towing and storage. Ind. Code § 24-4-14(a). Loss of use is recoverable in an amount equal to the daily rental rate of the vehicle (excluding all optional charges) multiplied by the total estimated days for repair. However, loss of use claims may not exceed a sum equal to 80% of the daily rental rate multiplied by the number of days from the date of the accident to the date the vehicle is ready to return to service. The daily rate in all weekly and monthly rentals should be stated in the rental agreement. A vehicle rental company may not demand payment for damage to a vehicle until the costs and the liability are agreed to by the renter or are determined by a court. Ind. Code § 24-4-9-13. Attorney’s fees are not recoverable even if called for in rental agreement. Harbour v. Arelco, Inc., 678 N.E.2d 381 (Ind. 1997). But in 2003, statute amended to allow for attorneys’ fees if agreed to in contract. Ind. Code § 24-4-9-13.

Recovery From Third-Party: Case law allows for owner of commercial truck (tractor-trailer) to recover loss of use. Nothing specifically for rental cars. Loss of use is often measured by the reasonable rental value of a replacement vehicle. Persinger v. Lucas, 512 N.E.2d 865 (Ind. App. 1987). Loss of use also may be measured by lost profits when they are sufficiently ascertainable. Ashland Pipeline Co. v. Indiana Bell Telephone Co., 505 N.E.2d 483, 490 (Ind. App. 1987) (telephone company awarded lost profits where underground telephone cable was negligently severed). The damage is its rental value, if it has a rental value, but, if not, then the value of its use to the injured party for the time he was deprived of its use is the measure of damages. Fisher v. Carey, 119 N.E. 376 (Ind. App. 1918). Lost profits may be used to determine the loss of use value of tractor-trailer damages in accident. New York Cent. R. Co. v. Churchill, 218 N.E.2d 372 (Ind. App. 1966).

Rental Car Company’s Liability Insurance Primary or Excess

Summary: The renter’s policy is primary. Ind. Stat. § 27-8-9-9. In a case where the renter agreed to have his insurance be primary by consenting to a rental contract which provided that lessor’s liability insurance was excess over any other liability insurance coverage available from the lessee, applicable after coverage under such other available insurance. However, if the renter’s personal policy excludes coverage for rented cars, the rental company’s liability policy may be primary. Safe Auto Insurance v. Enterprise, 889 N.E.2d 392 (Ind. App. 2008).

Slower Traffic Keep Right

Statute: I.C. § 9-21-8-2(a) and (b), I.C. § 9-21-5-9 and I.C. § 9-21-8-12.

Summary: Indiana requires motorists to drive in the right lane, except when overtaking and passing another vehicle proceeding in the same direction; when the right half of the roadway is closed due to construction or repair; when the roadway is divided into three marked lanes for traffic; or when the roadway is restricted to one-way traffic. Slower traffic must keep right. Section 9-21-8-12 deals with trucks, truck tractors, road tractors, trailers, semitrailers, or pole trailers. They must use far right lane (or two right lanes if three or more lanes available) on interstate highways except to pass, enter or exit a highway, or avoid special hazard. A vehicle proceeding at less than the normal speed of traffic shall be driven in the right-hand lane except when overtaking and passing another vehicle proceeding in the same direction or when preparing for a left turn. Indiana requires vehicles traveling slower than the speed limit to travel in the right lane to provide for better flow of traffic on the interstate.

Sudden Medical Emergencies While Driving

Sudden Emergency Doctrine. A driver’s asserted loss of consciousness, in order to effectively excuse her failure to control the vehicle, must have been shown by a preponderance of the evidence to have occurred without fair warning or under such circumstances as to preclude her from taking reasonable precautions. Holcomb v. Miller, 269 N.E.2d 885 (Ind. 1971).

The Sudden Emergency Doctrine is viable in tort actions under the Comparative Fault Act. Compton v. Pletch, 580 N.E.2d 664 (Ind. 1991).

Suspension of Drivers’ Licenses

Administrative Suspension: If a driver is convicted of driving without insurance, their license can be suspended. I.C. § 9-25-8-2. If the motorist does not have insurance in effect at the time of a crash the driving privilege may be suspended for ninety (90) days. I.C. § 9-25-8-2.

Judgment: The Bureau will suspend a person’s driver’s license upon receiving a verified report he has failed for a period of up to ninety (90) days to satisfy a judgment. I.C. § 9-25-6-4. Suspension remains in effect until the judgment is satisfied. I.C. § 9-25-6-7.

Contact Information: State of Indiana, Indiana Bureau of Motor Vehicles, 100 N. Senate Ave., Room 402, Indianapolis, IN 46204, (888) 692-6841, https://www.in.gov/bmv/

Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles

Authority: I.C § 27-4-1-4.5; I.C. § 27-4-1.5-8 to 12.

Summary: An insurer may not direct a body shop to repair a vehicle until after the insured is given written notice that the insured has a right to choose between OEM and non-OEM parts. This right only applies to the first five years after the model year of the auto.

Municipal/County/Local Governmental Immunity and Tort Liability

Legal Authority:

Indiana Tort Claims Act:  “Governmental entity” under ITCA includes “political subdivisions” which in turn includes county, township, city, town, etc. I.C. § 34-6-2-110; I.C. § 34-6-2-49.  Political subdivision liable for tortious conduct or conduct of their employees acting within the scope of employment, unless the conduct is within an immunity granted by statute. I.C. § 34-13-3-3 (1973).  Water utility is not “political subdivision” for immunity purposes. Harrison v. Veolia Water Indianapolis, LLC, 929 N.E.2d 247 (Ind. App. 2010).

Notice Deadlines:  Notice of a claim against a political subdivision must be filed with:  (1) Governing body of that political subdivision; or (2) Indiana political subdivision risk mgmt. commission created under § 27-1-29.  Must file within 180 days after the loss occurs. I.C. § 34-13-3-8(a).

Claims/Actions Allowed:  The defense of sovereign immunity is not available to a political subdivision for the negligent operation of its vehicles.  State v. Turner, 286 N.E.2d 697(1972); 3A Ind. Law Encyc. Automobiles and Motor Vehicles § 123.  “Public duty doctrine” means no liability on fire department if duty to plaintiff is not different from duty to other citizens and its efforts are made in response to general duty to protect safety and welfare of public.  City of Hammond v. Cataldi, 449 N.E.2d 1184 (Ind. App. 1983).

Comments/Exceptions:  There are several exceptions to waiver of immunity including:  (1) discretionary functions (involve discretion to determine whether or not to perform act, and if so, in what particular way); (2) the adoption and enforcement of or failure to adopt and enforce a law; and (3) the act or omission of anyone other than the governmental entity or their employee. See I.C. § 34-13-3-3 for more exceptions.  Early approach was to distinguish actions as either ministerial or discretionary, the former not immune.  Today, “planning/operational test” is used. Immunity only if function “can be properly characterized as policy decisions that have resulted from a conscious balancing of risks and benefits and/or weighing of priorities.” Peavler v. Bd. of Comm’rs of Monroe Cty., 528 N.E.2d 40 (Ind. 1988).

PURE CONTRIBUTORY NEGLIGENCE: The Comparative Fault Act does not apply “to tort claims against governmental entities or public employees.” Pure contributory negligence applies to any tort claims against government entities or public employees, which means that if the plaintiff is 1% at fault or more, recovery is prohibited. I.C. § 34-51-2-2.

Damage Caps:  No punitive damages against the State. I.C. § 34-13-3-4.  Indiana shall not be liable for more than $300,000 to a single claimant (if before 1/1/06) or $500,000 (if after 1/1/06 and before 1/1/08) or $700,000 (if after 1/1/08) and for a single occurrence, liability shall not exceed $5,000,000. I.C. § 34-13-3-4.

State Sovereign Immunity And Tort Liability

Tort Claims Act: Indiana Tort Claims Act.

Governmental entity can be subjected to liability for their own tortious conduct or conduct of their employees acting within the scope of employment, unless the conduct is within an immunity granted by statute. I.C. § 34-13-3-3 (1973).

Notice Deadlines:  Claims against the State are barred unless Tort Claims Notice is filed with attorney general or state agency involved within 270 days after the loss occurs. I.C. § 34-13-3-6. Suit based on breach of express or implied contract must be filed within 10 years. Usual statutes of limitation otherwise apply. I.C. § 34-13-1-1.

Claims/Actions Allowed:  The defense of sovereign immunity is not available to the State for the negligent operation of its vehicles. State v. Turner, 286 N.E.2d 697(1972); 3A Ind. Law Encyc. Automobiles and Motor Vehicles § 123.

Comments/Exceptions:  There are several exceptions to Indiana’s waiver of immunity including:

(1) discretionary functions*;

(2) the adoption and enforcement of or failure to adopt and enforce a law; and

(3) the act or omission of anyone other than the governmental entity or their employee.

See I.C. § 34-13-3-3 for more exceptions.

*“Planning/operational test” is used. Immunity only if function characterized as “policy decisions that have resulted from a conscious balancing of risks and benefits and/or weighing of priorities.” Peavler v. Bd. of Comm’rs of Monroe Cty., 528 N.E.2d 40 (Ind. 1988).

PURE CONTRIBUTORY NEGLIGENCE APPLIES: The Comparative Fault Act does not apply “to tort claims against governmental entities or public employees.” Pure contributory negligence applies to any tort claims against government entities or public employees, which means that if the plaintiff is 1% at fault or more, recovery is prohibited. I.C. § 34-51-2-2.

Damage Caps:  No punitive damages against the State. I.C. § 34-13-3-4.

Indiana shall not be liable for more than $300,000 to a single claimant (if before 1/1/06) or $500,000 (if after 1/1/06 and before 1/1/08) or $700,000 (if after 1/1/08) and for a single occurrence, liability shall not exceed $5,000,000. I.C. § 34-13-3-4.

Anti-Indemnity Statutes

Prohibits Broad Indemnity. Applies to Construction Contracts. Ind. Code § 26-2-5.

Not applicable to “highway contracts”, and statute has “dangerous instrumentality exception”.

Contribution Actions

Pure Several Liability. Several liability, except for claims of medical malpractice. I.C. § 34-51-2-8; Control Techniques, Inc. v. Johnson, 762 N.E.2d 104 (Ind. 2002).

Both the common law of Indiana and the Comparative Fault Act prohibit contribution among joint tortfeasors. I.C. § 34-51-2-12; Mullen v. Cogdell, 643 N.E.2d 390 (Ind. App. 1994).

Contributory Negligence/Comparative Fault

Modified Comparative Fault: 51% Bar. Plaintiff will be barred from recovery if he is more than 50% at fault – under 50% will reduce pro-rata damages. I.C. § 34-51-2-6.

Pure Contributory Negligence if Government Entity Involved: 1% Bar. Section 34-51-2-2 provides that the Comparative Fault Act does not apply “to tort claims against governmental entities or public employees.” Pure contributory negligence applies to any tort claims against government entities or public employees, which means that if the plaintiff is 1% at fault or more, recovery is prohibited. I.C. § 34-51-2-2.

Dog Bite Laws

Previous case law held that a dog owner was liable under negligence principles if the owner knows or had reason to know that the dog, or dog breed, has dangerous propensities.

In 2008, the Indiana legislature passed § 15–20–1–3, which provides that if a dog bites somebody, without provocation, and that person is acting peaceably and is in a location where he is required to be to discharge a duty imposed by the laws of Indiana, the United States, or the U.S. Postal Service, the owner is liable even if the dog has never bitten anyone and has no vicious propensity. Poznanski v. Horvath, 788 N.E.2d 1255, 1259 (Ind. 2003); Ross v. Lowe, 605 N.E.2d 786, 788 (Ind. App. 1992).

Economic Loss Doctrine

Majority Rule (but also doesn’t allow recovery for damage to product even if there is injury or damage to other property). The ELD provides that “a defendant is not liable under a tort theory for any purely economic loss caused by its negligence (including, in the case of a defective product or service, damage to the product or service itself) – but that a defendant is liable under a tort theory for a plaintiff’s losses if a defective product or services causes personal injury or damage to property other than the product or service itself.” Indianapolis–Marion County Public Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722, 729 (Ind. 2010) (hereinafter “IMCPL”). Economic losses are not recoverable for product’s failure to perform, unless personal injury or damage to other property is present. Bamberger & Feibleman v. Indianapolis Power & Light Co., 665 N.E.2d 933 (Ind. App. 1996). However, Indiana defines “economic loss” as “the loss of profits because the product is inferior in quality and does not work for the general purposes for which it was manufactured and sold, and includes such incidental and consequential losses as lost profits, rental expense and lost time.” This is also true under Indiana’s Strict Products Liability Act. Ind. Code § 34-20-2-1. Therefore, Indiana does not allow for recovery of damage to the product itself, even when accompanied by personal injury or damage to other property. Fleetwood Enterprises, Inc. v. Progressive Northern Ins. Co., 749 N.E.2d 492 (Ind. 2001). However, the Indiana Product Liability Act defines “physical harm” as:

(a)”Physical harm”, for purposes of IC 34-20, means bodily injury, death, loss of services, and rights arising from any such injuries, as well as sudden, major damage to property. (b) The term does not include gradually evolving damage to property or economic losses from such damage.

Despite this language, Indiana courts have held that even if damage to the product is “sudden” and “major”, the legislature did not provide for recovery of damages to the product alone. Progressive Ins. Co. v. General Motors, 749 N.E.2d 484 (Ind. 2001). The ELD does not bar recovery in tort for damage that a separately acquired defective product or service causes to other portions of a larger product into which the former has been incorporated. Gunkel v. Renovations, Inc., 822 N.E.2d 150 (Ind. 2005). In Gunkel, the plaintiff contracted for the purchase of a new home with a general contractor and separately entered into a contract with a stonemason to add a stone façade to the house. The stonemason allegedly improperly constructed and sealed the façade, allowing water to seep behind the stone, damaging not only the stone façade but also the interior walls and flooring of the home. The Indiana Supreme Court concluded that, under the Economic Loss Rule, the plaintiff could not sue the stonemason in tort for the damage to the façade.

With regard to the “other property” exception, a home is considered “other property” from the stone façade put on a house at the time of its construction if the façade was built by a separate company from the home builder who dealt with the homeowners separately. Id. The ELD does not bar recovery in tort for damage that a separately acquired defective product or service causes to other portions of a larger product into which the former has been incorporated. Id. The Indiana Supreme Court again addressed the “other property” aspect of the rule in IMCPL. In IMCPL, the Public Library in the City of Indianapolis brought suit against engineering subcontractors alleging that they provided defective design and inspection services during construction of an underground parking garage built as part of a renovation project of the entire library facility. The IMCPL Court held that the dispositive question was what “product” the plaintiff had contracted to purchase, because, under the rationale set forth in Gunkel, only the supplier furnishing the defective property or service is in a position to bargain with the purchaser for allocation of the risk that the product or service will not perform as expected. If a component is sold to the first user as part of the finished product, the consequence of its failure are fully within the rationale of the ELD and is not considered to be “other property.” IMCPL, 929 N.E.2d at 731 (quoting Gunkel, 822 N.E.2d at 155).

Distinguishing the facts from those in Gunkel, the Court in IMCPL reasoned that, unlike the separate transactions in which the homeowner in Gunkel had engaged, the Library had “purchased a complete renovation and expansion of all the components of its facility as part of a single, highly-integrated transaction,” and that the service purchased from the defendants “was an integral part of the entire library construction project, not independent from it.” The IMPCL Court concluded that the product the Library purchased was “the renovated and expanded library facility itself,” and thus, that “any damages alleged to have resulted from the defendants’ negligence were to the ‘product’ the Library purchased, not to ‘other property.’ ”

In Citizens Ins. Co. of Am. v. Manville, 2013 WL 1438096 (S.D. Ind. 2013), Citizens filed a subrogation suit against Johns Manville supplied a roof system to a new building being built. Anderson University entered into a construction contract with Meyer Najem for the construction of the entire Flagship Enterprise Center building, including the roof system, the metal decking of the roof, the HVAC system, and the nailer boards attached to the top of the parapet walls. In order to perform under that overarching contract, Meyer Najem subcontracted the purchase and installation of the roofing system to Richmond Guttering who purchased certain materials to assemble the roofing system from Johns Manville. An inspection after construction revealed a parapet wall pulling away from the roof decking and moisture on the exterior walls. The facts in this case were distinguishable from Gunkel in that the University did not enter into a separate transaction with Johns Manville for an entirely independent service or product that was not integral to the overall construction project. Thus, based on the reasoning set forth by the Indiana Supreme Court in IMCPL, the court found that the “product” purchased by Anderson University was the entire building itself, and therefore, any damage to the building, including to its component parts, was to the product the University purchased, not to “other property.”

The ELD precludes tort liability for purely economic loss—that is, pecuniary loss unaccompanied by any property damage or personal injury (other than damage to the product or service itself. Indiana Farm Bureau v. CNH Indus. America, LLC, 130 N.E.3d 604 (Ind. App. 2019). When analyzing the “other property” exception, the question is what product was purchased by the plaintiff. In CNH Indus. America, LLC, the product was a Combine and Corn Head combination; which the court noted were “one product” because they were purchased to be used together, from the same seller, and one without the other wouldn’t function. The court held that the seller of a product could not be sued for negligent maintenance of the product where the purchase order disclaimed warranties and “a claim that a product or service did not perform as expected is best left to contract law remedies.” A subrogated carriers claims of negligent servicing were barred by the ELD.

Parental Responsibility

Property Damage/Personal Injury.  Parents liable for harm/damage to person/property intentionally, knowingly or recklessly caused by child. I.C. § 34-31-4-1.

The limit of liability is $5,000.00.  Child must be under 18-years-old living with parent.

Auto Liability. Person verifying driver’s license jointly and severally liable. I.C. § 9-24-9-4.

There are not limits of liability. Child must be under 18-years-old.

Spoliation

Tort of Spoliation: Spoliation of evidence consists of “‘[t]he intentional destruction, mutilation, alteration, or concealment of evidence, usually a document. If proved, spoliation may be used to establish that the evidence was unfavorable to the party responsible.” Cahoon v. Cummings, 734 N.E.2d 535, 545 (Ind. 2000). If an alleged tortfeasor negligently or intentionally destroys or discards evidence that is relevant to a tort action, the plaintiff in the tort action does not have an additional independent cognizable claim against the tortfeasor for spoliation of evidence. Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349, 355 (Ind. 2005). First-party spoliation refers to the spoliation of evidence by a party to the principal litigation. ”Howard Reg’l Health Sys. v. Gordon, 952 N.E.2d 182, 188 (Ind. 2011) (citing Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349, 350 (Ind. 2005)).

Third-Party Tort of Spoliation: “Third-party spoliation” refers to spoliation by a non-party. Gribben, supra. Negligent or intentional spoliation of evidence is actionable as a tort only if the party alleged to have lost or destroyed the evidence owed a duty to the person bringing the spoliation claim to have preserved it. Glotzbach, CPA v. Froman, 827 N.E.2d 105, 108 (Ind. App. 2005). To determine the existence of a duty Indiana courts balance three factors: (1) the relationship between the parties; (2) the reasonable foreseeability of harm to the person injured; and (3) public policy concerns. Id. This balancing test is to be used only in those instances where the element of duty has not already been declared or otherwise articulated. Id. Indiana Code § 35-44-3-4 provides that “a person who…alters, damages, or removes any record, document, or thing, with intent to prevent it from being produced or used as evidence in any official proceeding or investigation…commits obstruction of justice.” This is a class D felony.

In the state of Indiana, things have slowly changed with regard to spoliation causes of action. In 1991, Indiana declined to recognize a third-party spoliation claim. Murphy v. Target Prods., 580 N.E.2d 687 (Ind. App. 1991), trans. denied. Specifically, the court concluded that “in the absence of an independent tort, contract, agreement, or special relationship imposing a duty to the particular claimant, the claim of negligent or intentional interference with a person’s prospective or actual civil litigation by the spoliation of evidence is not and ought not be recognized in Indiana.”

In 1998, Indiana recognized a limited cause of action for third-party spoliation a case where a young child was mauled by a dog that had broken free of a cable that had been restraining the dog to its owners’ yard. Thompson ex rel. Thompson v. Owensby, 704 N.E.2d 134 (Ind. App. 1998), trans. denied. The child’s parents sought compensation from the dog owners and their landlords, but the landlords’ insurance company took possession of the restraining cable but subsequently lost it before it had been examined or tested. The court concluded that the insurance provider did have did not have an independent duty to the landlord, and therefore could not be sued.

In 2005, the Indiana Supreme Court declined to recognize a cause of action for first-party spoliation, concluding that the important considerations favoring the recognition of an independent tort of spoliation by parties to litigation were “minimized by existing remedies and outweighed by the attendant disadvantages.” Gribben v. Wal-Mart Stores, Inc., 824 N.E.2d 349, 355 (Ind. 2005). The plaintiff in such an action does not have an additional independent cognizable claim against the defendant/tortfeasor for spoliation of evidence but suggested that when evidence is destroyed or impaired by persons that are not parties to litigation and thus not subject to existing remedies and deterrence, such a cause of action should be considered.

In 2006, the Indiana Supreme Court considered the question of whether Indiana law recognized a tort claim for third-party spoliation, discussing both Murphy and Thompson. Glotzbach v. Froman, 854 N.E.2d 337 (Ind. 2006). In Glotzbach, the issue was whether an employee who had been injured on the job could bring a claim of third-party spoliation of evidence for the destruction of evidence. In concluding that the employee could not, the Court held that the disadvantages identified in first-party spoliation claims remain concerns as to third-party claims. Proving damages in a third-party spoliation claim becomes highly speculative and involves a lawsuit in which, much like in legal malpractice cases, the issue is the unknown outcome of another hypothetical lawsuit. The jury must somehow find all the elements of a product liability case, immediately determining whether a product defect caused the injury, as opposed to inadequate maintenance, or other intervening events. The jury would be asked to determine what the damages would have been had the evidence been produced and what the collectability of these damages would have been. The court described this as “guesswork.” Still, the court recognized that while evidentiary inferences are not available as a remedy for or deterrent to third-party spoliation, other remedies such as criminal sanction remain applicable.

In 2008, Indiana again rejected a claim for third-party spoliation of evidence in American National Property & Casualty Co. v. Wilmoth, 893 N.E.2d 1068 (Ind. Ct. App. 2008), trans. denied. Firefighters threw a couch and other items into the front yard, where they remained for approximately six weeks. Eventually, the owners of the home discarded the couch and other items. The fire department ultimately concluded that the fire had been accidental and had been caused by an electrical space heater. Other experts determined that the fire had started “because of electrical arcing from an air conditioner power cord in the area of the sofa.” The court noted that in the context of the loss of evidence by an insurance carrier, the relationship between the carrier and a third-part claimant may warrant recognition of a duty if the carrier knew or should have known of the likelihood of litigation and of the claimant’s need for the evidence in the litigation. However, the court once again concluded that “the duty to preserve evidence had limits.” The court noted that the insurance company never had possession, “much less exclusive possession,” of the evidence and it was unforeseeable that the loss of the evidence might interfere with a future claim as there was no indication that the evidence was in any way at fault for the fire. To find a duty in this case would require insurers to preserve any potentially relevant evidence available after any potentially covered event. Retention and safekeeping of that amount of physical evidence would be a practical impossibility in most situations.

In 2017, a patient sued a doctor who had lost or destroyed her medical records that “he knew or should have known” were relevant to her personal-injury claim relating to a car accident. In Shirey v. Flenar, 89 N.E.3d 1102 (Ind. App. 2017), the court noted that Dr. Flenar had an “important relationship with Shirey,” “was aware that Shirey wanted her medical records,” and “had good reason to believe that she would be harmed if she did not receive them.” It allowed a third-party cause of action under those limited circumstances.

In 2023, the Indiana Court of Appeals decided the case of Safeco Ins. Co. of Indiana v. Blue Sky Innovation Group, Inc., 211 N.E.3d 564 (Ind. App. 2023). Safeco Insurance Company of Indiana filed suit against Michaelis Corporation, alleging claims of third-party spoliation and negligence after Michaelis, a restoration company, discarded certain evidence relating to a fire at the home of one of Safeco’s insureds. Michaelis argued that third-party claims for spoliation of evidence are only available in narrow and limited circumstances and that Safeco’s negligence claim was barred by the Economic Loss Doctrine.

Smith owned a Cabela’s 12 Tray Pro Series Digital Dehydrator and after the fire Safeco conducted a preliminary scene examination, during which it determined that the fire likely originated on the kitchen countertop, to the left of the sink, where the dehydrator was located. Either Smith or Safeco retained Michaelis to perform restoration work at the Property. A representative for Michaelis was present at the preliminary scene examination, during which “the need to preserve the kitchen was verbally communicated” to Michaelis’s representative. The entrances to the kitchen area were taped off with ‘caution tape’ so that the area could be preserved pending notice to the potentially responsible parties and the scheduling of a joint scene exam. Michaelis then demolished the kitchen and discarded the dehydrator.  Safeco paid $510,861.46 and later filed a lawsuit alleging claims of negligence and strict products liability against the manufacturer and retailer of the dehydrator. Safeco also alleged claims of spoliation and negligence against Michaelis. The trial court dismissed the spoliation claim and Safeco appealed.

The Court of Appeals reversed the trial court and allowed the third-party tort of spoliation to go forward, because Michaelis was informed of the need to preserve the evidence and took steps to preserve it before ultimately discarding or destroying it. The court held that under these facts the plaintiff could pursue a claim of third-party spoliation.

Sanctions: Indiana courts may also sanction parties, but not third parties, for the spoliation of evidence through: (1) evidentiary inferences that the spoliated evidence was unfavorable to the responsible party; (2) sanctions for discovery violation under Indiana Trial Rule 37(B), which authorizes courts to respond with sanctions which include among others, ordering that designated facts be taken as established, prohibiting the introduction of evidence, dismissal of all or part of an action, rendering judgment by default against a disobedient party, and payment of reasonable expenses including attorneys’ fees; and (3) discipline for spoliating attorneys under Indiana Rules of Professional Conduct. In Passmore v. Barrett, 2015 WL 2412709 (N.D. Ind. 2015), the court held that the judge may allow an adverse inference jury instruction against a subrogee based on a non-party’s destruction of evidence, but ultimately not imposing one based on Rule 403 of the Federal Rules of Evidence. One of the purposes of an adverse inference jury instruction is to level the playing field by putting the prejudiced party in the same position it would have been if the evidence had not been lost.

Statute of Limitations

Personal Property2 YearsI.C. § 34-11-2-4

Personal Injury/Death2 YearsI.C. § 34-11-2-4

Breach of Contract/Written10 YearsI.C. § 34-11-2-4

Breach of Contract/Oral6 YearsI.C. § 34-11-2-7

Breach of Contract/Sale of Goods4 YearsI.C. § 554.2725

Statute of Repose/Products10 YearsI.C. § 34-20-3-1*

Statute of Repose/Real Property10/12 YearsI.C. § 32-30-1-5**

Breach of Warranty/U.C.C.4 YearsI.C. § 26-1-2-725

Workers’ Comp Third Party Case2 YearsI.C. § 22-3-2-13

Strict Product Liability2 YearsI.C. § 34-11-2-4

Statute of Limitations Exceptions

*10 Years after delivery unless accrues at least 8 Years, but less than 10 Years after delivery. I.C. § 34-20-3-1.

**Earlier of 10 years post substantial completion of improvement or 12 years post completion and submission of plans and specs. to owner if design defect. I.C. § 32-30-1-5. If injury in 9^th or 10^th year after substantial completion, two (2) years post injury, but no more than 12 years post substantial completion or 14 years post completion, submission of plans and specs. to owner if design defect.

Health and Disability Insurance

Statute of Limitations: 2 Years. I.C. § 34-11-2-4.

Subrogation of Medical and Disability Benefits are allowed. Erie Ins. Co. v. George, 681 N.E.2d 183 (Ind. 1997). Made Whole Doctrine does not apply. (Indiana’s Lien Reduction Statute applies. I.C. § 34-51-2-19 (1999)). Common Fund applies. I.C. § 34-53-1-1 (1999).

Admissibility of Expert Testimony

Admissibility Standards: Daubert

Case/Statutory Law:  Alsheik v. Guerrero, 956 N.E.2d 1115 (Ind. App. 2011).

Comments:  The court may consider the Daubert factors in determining reliability, there is no specific test or set of prongs which must be considered in order to satisfy I.R.E. 702(b); the court finds Daubert helpful, but not controlling when analyzing testimony under Rule 702(b).

Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims

Duty To Disclose: No.

Failure to Disclose A Basis For Bad Faith: No Information.

Recording Conversations

One-Party Consent: An individual has the right to record or disclose the contents of an electronic or telephonic communication that they are a party to or if one of the parties has given prior consent to the recording of said communications. Ind. Code Ann. § 35-31.5-2-176.

Product Liability Law

Statute of Limitations/Repose: 2 years for personal injury and wrongful death. I.C. § 34-20-3-1(b). Discovery Rule applies. Statute of Repose is 10 years. I.C. § 34-20-3-1(b)(2).

Liability Standards: Negligence, Strict Liability, Warranty.

Fault Allocations: Modified Comparative. I.C. § 34-51-2-7, 8, and 9.

Non-Economic Caps/Limits On Actual Damages: No.

Punitive Y/N and Limits: Yes (Limits).

Heeding Presumption?: Yes. Ortho Pharmaceutical Corp. v. Chapman, 388 N.E.2d 541, 555 (Ind. App. 1979).

Innocent Seller Statute: Yes. I.C. § 34-20-2-3.

Joint and Several Liability: No. I.C. § 34-51-2-8.

Available Defenses: Assumption of Risk; Misuse; Alteration; Learned Intermediary; State of the Art; Government Contractor Defense; Presumption; Compliance With Government Standards; Sophisticated User.

Restatement 2^nd or 3^rd?: Neither.

“Matching Regulations” And Laws Affecting Homeowners Property Claims

Statute/Regulation: None.

Caselaw: Insurer was required to match shingles on a roof where insured had an RCV policy and experts testified that mismatched shingles and siding lowered a property’s value. Erie Ins. Exch. v. Sams, 20 N.E.3d 182, 190 (Ind. Ct. App. 2014), transfer denied, 29 N.E.3d 124 (Ind. 2015).

Condominium/Co-Op Waiver of Subrogation Laws

Associations must have a general casualty policy and a liability policy that shall cover unit owners and those entitled to occupy units. The statute does not contain language regarding waiver of subrogation rights. I.C. § 32-25-8-9.

Damage to Property Without Market Value

Service Value:  “The market value, where there is one, is the proper criterion; but, if there is no market value at the time and place, resort must be had to the actual value at the time and place of delivery.” Pape v. Ferguson, 62 N.E. 712 (Ind. Ct. App. 1902).

Intrinsic Value:  Damages based upon evidence of an item’s actual value to a particular owner.

Sentimental Value:  “We see no difference in giving special consideration to items such as these and to the three USAC rings, awarded for three years of ‘blood, sweat and tears’ and thus having special sentimental meaning for Capels.” Campins v. Capels, 461 N.E.2d 712 (Ind. Ct. App. 1984).

General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims

Payment and Depreciation of GCOP/Sales Tax: No applicable case law, statutes, administrative rules, or other guidance with regard to the calculation and/or depreciation of GCOP.

Landlord/Tenant Subrogation

An Indiana Court of Appeals decision in LBM Realty, LLC v. Mannia, 19 N.E.3d 379 (Ind. App. 2014) changed the landscape of landlord/tenant subrogation in the Hoosier State. For years, Indiana allowed an insurer to bring a subrogation claim against a tenant. LBM Realty, LLC v. Mannia, 981 N.E.2d 569 (Ind. App. 2012) (first appeal before remand). A 1996 Court of Appeals decision appeared to announce that Indiana had avoided an inflexible application of the “Sutton Rule” and taken a more flexible case-by-case approach, holding that a tenant’s liability to the landlord’s insurer for negligently causing a claim depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. United Farm Bureau Mut. Ins. Co. v. Owen, 660 N.E.2d 616 (Ind. App. 1996).

In 2012, that same Court of Appeals in LBM Realty, LLC v. Mannia, 981 N.E.2d 569 (Ind. App. 2012) (first appeal before remand), had clarified that while Indiana law does not preclude a subrogation action by a landlord’s insurer against a tenant, the Court in Owen did not adopt a case-by-case approach. Rather, Owen merely affirmed a trial court’s entry of summary judgment in favor of a tenant and against an insurer who sought subrogation for a claim it paid to its insured (who was the tenant’s landlord) because the specific language of a lease provision at issue released the tenant from property damage liability to the landlord, thereby precluding the insurer – who steps into the shoes of its insured – from raising a subrogation claim. Mannia, supra. The Mannia decision was reviewing a trial court order which declared that Indiana had adopted the “no subrogation” approach and noted, that in Owen, the Court of Appeals did not discuss or adopt any of the three subrogation approaches, and the question of whether Indiana would adopt a rule regarding subrogation claims by a landlord’s insurer against a negligent tenant was never raised. The Mannia decision also noted that question had not been raised in other cases where an insurer brought a subrogation claim against an insured’s tenant for property damage. Cincinnati Ins. Co. v. Davis, 860 N.E.2d 915 (Ind. App. 2007); St. Paul Fire & Marine Ins. Co. v. Pearson Construction Co., 547 N.E.2d 853 (Ind. App. 1989), trans. denied.

On October 28, 2014, Indiana for the first time officially announced that whether subrogation could be brought by a landlord’s insurer against a negligent tenant was to be determined by a case-by-case approach based on the reasonable expectations of the parties as reflected in the lease agreement. LBM Realty, LLC v. Mannia, 19 N.E.3d 379 (Ind. App. 2014). The court held that whether a landlord’s insurer may bring a subrogation action against a negligent tenant for damage to tenant’s leased premises is determined under the case-by-case approach; a finding that a tenant’s liability to the insurer for damage-causing negligence depends on the reasonable expectations of the parties to the lease as ascertained from the lease as a whole and any other admissible evidence. In determining the expectations of the parties as articulated in the lease, courts should look for evidence indicating which party agreed to bear the risk of loss for a particular type of damage in question.

In July 2010, a fire caused $743,402.86 in damages at the Summer Place Apartments in Granger, Indiana, owned by LBM. Mannia was a tenant in the Apartments, having signed a one-year lease in March 2010. Included within the lease were several relevant lease provisions, condensed and paraphrased as follows:

• A provision titled “Insurance,” which is silent as to LBM’s obligation to maintain property insurance, but states in bold type: “Owner recommends the Resident obtain renter’s insurance.” This provision also states that in the event the leased premises are totally destroyed by some cause beyond the owner’s control, the lease will terminate as of that date (and to the extent that the premises are only partially destroyed, there will be an abatement in rent).
• A provision titled “Rules,” which incorporates an attached list of “Rules and Regulations” into the lease, the most relevant of which reads as follows: (7) Resident must pay repair costs for all damages to Resident’s Apartment, Apartment Community facilities, and common areas caused by Resident or members of Resident’s household or guests …
• A “Save Harmless Clause,” which states: “Resident shall indemnify and save harmless Owner from and against any and all claims or actions for damages to persons or property,” including claims in which it is asserted that Owner has been negligent.
• A provision stating that “‘Premises’ shall mean only that portion of Owner’s property contained within the interior walls of the dwelling unit described herein …”
• Within “Miscellaneous Provisions”: At the end of the term, Resident shall return the Leased Premises to Owner in the same good condition, reasonable wear and tear excepted. Resident is and shall be responsible and liable for any injury or damage done to the Leased Premises, common areas or any property of Owner caused by [R]esident, any occupant, or any other person whom Resident permits to be in or about the Leased Premises. This section also states, “Resident shall permit no waste of the Leased Premises nor allow the same to be done, but Resident shall take good care of the same …”

After the fire at the Apartments, the insurer filed a subrogation action in LBM’s name against Mannia, alleging in its complaint that Mannia breached her contract with LBM in “one or more of the following ways”:

1. Carelessly and improperly disposed of smoking materials by placing same in a plastic bottle and in close proximity to the vinyl siding on the balcony patio wall of the leased premises; and/or
2. Carelessly and improperly allowed guests to dispose of smoking materials by placing same in a plastic bottle and in close proximity to the vinyl siding on the balcony patio wall of the leased premises; and/or
3. Otherwise failed to comply with her obligation to return the premises in the same condition as when she moved in, reasonable wear and tear excepted.

In regard to its negligence claim, LBM repeated (1) and (2) above and also alleged that Mannia had “otherwise acted carelessly and negligently.” Mannia filed a motion to dismiss LBM’s complaint, discussing the three different approaches used by courts around the country to address subrogation claims of landlord’s insurers against negligent tenants, including:

1. The no-subrogation (or implied co-insured) approach (i.e., the “Sutton Rule”), in which, absent an express agreement to the contrary, a landlord’s insurer is precluded from filing a subrogation claim against a negligent tenant because the tenant is presumed to be a co-insured under the landlord’s insurance policy;
2. The pro-subrogation approach, in which, absent an express term to the contrary, a landlord’s insurer is allowed to bring a subrogation claim against a negligent tenant; and
3. The case-by-case approach, in which courts determine the availability of subrogation based on the reasonable expectations of the parties under the facts of each case.

Mannia convinced the trial court to apply approach number one, dismissing the case because Mannia was an “additional insured” under LBM’s insurance policy. LBM appealed and, in 2012, the Court of Appeals reversed and remanded because the trial court did not test the complaint against the backdrop of the law that existed. Further discovery occurred, and it was agreed and stipulated that:

1. The money received from rent (including Mannia’s rent from March 25, 2010 to July 3, 2010) was used to pay LBM’s operating expenses, including, but not limited to, procurement and maintenance of insurance covering the apartment complex at 825 Summer Place Lane, Granger, IN 46530 and all units included therein. However, LBM’s property insurance did not provide coverage to any of the belongings owned by Mannia.
2. Furthermore, pursuant to the terms of the insurance policy that LBM obtained, LBM’s insurer has asserted a right of subrogation as to the claims asserted by LBM against Mannia based upon the insurer’s payment to LBM for damages resulting from the fire that occurred on July 3, 2010, which is the subject of this lawsuit.

In 2013, Mannia filed a Motion for Summary Judgment, which the trial court granted, and LBM appealed again. This time, the Court of Appeals rejected the legal fiction of the Sutton Rule and specifically adopted the “middle-ground” case-by-case approach, which eschews presumptions that a tenant is or is not a co-insured of the landlord, and requires an examination of the lease as a whole to determine the parties’ reasonable expectations as to who should bear the risk of loss when a tenant negligently damages the leased premises. Although it provides less predictability than either the pro- or no-subrogation approaches, the Court of Appeals found that this approach best effectuates the intent of the parties by simply enforcing the terms of their lease. It reversed the trial court again, allowing subrogation against Mannia, specifically because the lease in question permitted subrogation.

In 2018, the Court of Appeals said that if a lease obligates a tenant to procure insurance covering a particular type of loss, such a provision will provide evidence that the parties reasonably anticipated that the tenant would be liable for that particular loss, which would allow an insurer who pays the loss to bring a subrogation action against the tenant. Hoosier Ins. Co. v. Riggs, 92 N.E.3d 685 (Ind. App. 2018).

In Youell v. Cincinnati Ins. Co., 2018 WL 6816772 (Ind. App. 2018), a landlord and a tenant entered into a commercial lease that provided that the landlord would insure the building and the tenant would insure its personal property inside the building. When the property was later damaged by fire, the landlord’s insurance subrogated and the tenant argued that the landlord’s agreement to obtain property insurance was an agreement to provide both parties with the benefits of insurance and expressly allocated the risk of loss in case of fire to insurance, thereby barring a subrogation action. The Court of Appeals held that this case was distinguishable from LBM Realty, LLC v. Mannia. In LBM Realty, the lease did not require the landlord to maintain property insurance and only recommended that the tenant obtain renter’s insurance; as a result, the parties’ expectations with respect to liability for damage to the leased premises was unknown. In Youell, however, the lease unambiguously provided that the landlord would insure the building. Accordingly, the test set forth in LBM Realty (whether a landlord can subrogate depends on the case-by-case approach and a tenant’s liability depends on the reasonable expectations of the parties to the lease as ascertained from the lease as a whole). Instead, Morsches Lumber, Inc. v. Probst, 388 N.E.2d 284 (Ind. App. 1979) controlled (when lease requires that landlord will insure the building and tenant will insure its personal property, this was an agreement to provide both parties with the benefits of the insurance and expressly allocated the risk of loss in case of fire to insurance). The court in Youell reversed and remanded with instructions for the trial court to grant the tenant’s motion to dismiss.

Anti-Subrogation Rule

An insurer may not subrogate against its own insured. S. Tippecanoe School Bldg. Corp. v. Shambaugh & Son, Inc., 395 N.E.2d 320 (Ind. App. 1979). An insurer may be permitted to subrogate against a subcontractor if the subcontractor was not an intended insured under the policy. Indiana Erectors, Inc. v Trustees of Indiana University, 686 N.E.2d 878 (Ind. App. 1997). In Indiana Erectors Inc., a builder’s risk insurer brought a subrogation action in the insured landowner’s name to recover from the subcontractor for damage caused by a fire. The court held that the builder’s risk insurer could maintain a subrogation action against the subcontractor for the fire loss because the subcontractor was not an intended insured under the policy.

Criminal Restitution

Under Indiana statute, a court can order a defendant to make restitution to the “victim,” their estate, or a family member of a deceased victim. Amount of restitution can be comprised of property damages, medical costs, and lost earnings.

The court in Jaramillo v. State, 803 N.E.2d 243 (Ind. Ct. App. 2004), did not discuss the source of their authority to allow restitution to an insurance company as a “victim,” but did affirm an award of restitution to a life insurance company.

Made Whole Doctrine

Indiana recognizes the Made Whole Doctrine through case law and even applies a version of it by statute. Capps v. Klegs, 382 N.E.2d 947 (Ind. Ct. App. 1978); I.C. § 34-51-2-19 (1999). There is Indiana case law to the effect that the Made Whole Doctrine can be overridden by contract terms in a policy or Plan. Erie Ins. Co. v. George, 681 N.E.2d 183, 188 (Ind. 1997); Willard v. Auto Underwriters, Inc., 407 N.E.2d 1192 (Ind. App. 1980). Generally, the contract terms overriding the Made Whole Doctrine must be “clear, unequivocal and so certain as to admit no doubt on the question.” Capps, supra. To date, no case has clearly provided guidance or defined exactly what it is that this means. It is clear, however, that the standard subrogation language found in a policy is insufficient to accomplish this overriding of the Made Whole Doctrine. Id.; Willard, supra. It is important to also note that the language of the Plan’s subrogation provision will play a role in determining whether or not a Plan beneficiary has been made whole. For instance, where the subrogation clause of the Plan indicates the Plan is subrogated to all rights of recovery arising out of any claim or cause of action against a third party, this clause establishes the insurer’s right to subrogation against the proceeds of a settlement. Mut. Hosp. Ins., Inc. v. MacGregor, 368 N.E.2d 1376 (Ind. App. 1977). The settlement recovered by the beneficiary must also contain the elements of damage, which represent the payments made by the Plan. Id.

Indiana also has a Lien Reduction Statute in § 34-51-2-19 which for years has reduced insurance carriers’ subrogation interests among all lines of insurance. I.C. § 34-51-2-19 (1999). Plaintiffs and defendants now use this statute to urge the court to do the following when there is a subrogation interest: (1) determine the full value of the case based on the Movant’s assertion in its Petition; (2) determine the settlement amount; (3) calculate a percentage that the settlement amount bears to the plaintiffs prayer for damages in its Petition; and (4) reduce the subrogation interest by that percentage.

As you can see, by coupling this lien reduction scenario with alleged claims that the plaintiff had to settle for less than he would have liked to because of limited insurance or liability problems, the plaintiff will try to reduce or eliminate your lien. However, the Lien Reduction Statute should only come into play when the worker’s recovery is reduced because of comparative fault or uncollectibility. Barclay v. Universal Underwriters, 703 N.E.2d 169 (Ind. App. 1999); Allstate Ins. Co. v. Smith, 656 N.E.2d 1156 (Ind. App. 1995). Where comparative fault is not an issue in the plaintiff’s settlement and nothing indicates the plaintiff did not collect the full amount of the settlement upon which he and the tortfeasor had agreed, the Lien Reduction Statute will not apply. Barclay, supra; Smith v. Gary Public Transp. Corp., 893 N.E.2d 1137 (Ind. App. 2008).

Assuming your subrogation is in the amount of $10,000 or more, and the third party recovers only $25,000, it is easy to understand why there is a concerted effort to eliminate the carrier’s subrogation interest by all parties involved. The Indiana Lien Reduction Statute, like some similar statutes around the country, is being interpreted as a license to reduce the carrier’s $10,000 lien in the above scenario based on the comparative fault of the claimant. If the case is tried and the jury decides that the plaintiff is 40% at fault, it is argued that the lien should likewise be reduced by 40%. If the case settles and there is no finding by a judge or jury of comparative fault, the matter is submitted to the trial court for determination of exactly what percentage of fault the plaintiff is to bear for the accident. The problem with this is that once the matter has been settled, the plaintiff’s main interest would be to show himself as much at fault as possible, in order to reduce or eliminate the subrogation interest. “Falling on the sword” becomes common place in these situations.

Assume that, in the above scenario, the $25,000 recovery is a recovery of policy limits from the third-party tortfeasor, despite the fact that the claim has a value of $100,000. Under this scenario, all parties will argue that your lien should be reduced by 75% because the plaintiff’s claim was reduced by 75%. Again, the trial court will be called upon to determine the actual value of the claim in order to decide how much the lien should be reduced. Unfortunately, there is not much Indiana case law or case law anywhere throughout the country, interpreting these relatively new statutes and their effect on subrogation interests. Parties even attempt to argue that the “uncollectability of the full value of the claim” language also means that in addition to reducing your subrogation interest for comparative fault, the lien should be reduced further based on the fact that the plaintiff had to “settle for less” then he would have liked.

It is the exception rather than the rule for a state to apply these Lien Reduction Statutes to workers’ compensation scenarios. Your best line of defense is active and aggressive participation in third-party litigation and zealous representation of your subrogation interests therein. Usually, proceedings to reduce a subrogation lien often take the form of a declaratory judgment action, but they can also be litigated through motions ancillary to the underlying lawsuit. Principal Life Ins. Co. v. Meedler, 816 N.E.2d 499 (Ind. App. 2004); Guardianship of Wade, 711 N.E.2d 851 (Ind. App. 1999) (trial court can rule based on motion to reduce lien).

It should also be noted that the Lien Reduction Statute is found in Indiana’s Comparative Fault Act. Therefore, when Indiana law is applied to recoveries in other states via their conflict of laws rules, the Lien Reduction Statute doesn’t necessarily get applied as well. Lane v. Celadon Trucking, Inc., 543 F.3d 1005 (8^th Cir. 2007). There is some indication in Indiana that if an insured settles his claim with a tortfeasor and gives a release, he cannot later claim to not be made whole. Wirth v. American Family Mut. Ins. Co., 2011 WL 2150192 (Ind. App. 2011).

Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule

Collateral Source Rule: Statutory modified version of the CSR. Court will not admit evidence of collateral source benefit payments, including health insurance benefits. Evidence of the amount that plaintiff is required to repay in subrogation, including workers’ compensation benefits, because of collateral benefits received, will be admitted. I.C. §§ 34-44-1-1 through 34-44-1-3.

Recovery Of Medical Expenses Rule:

Private Insurance: A medical provider’s billed charges do not equate to cost, so the jury may hear the amount of the payments, amounts billed by medical service providers, and other relevant and admissible evidence to be able to determine the amount of reasonable medical expenses. Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009).

Medicare/Medicaid: Evidence of write-offs of medical bills is admissible to show the reasonable value of the bill, even payments made by government entities, such as the Healthy Indiana Plan (HIP), Medicare, and Medicaid. Patchett v. Lee, 60 N.E.3d 1025 (Ind. 2016).

Related Law/Comments: I.C. § 34-44-1-2 provides for the admissibility of all collateral source payments, except the following:

1. Life insurance or other death benefits;
2. Insurance benefits for which plaintiff or members of plaintiff’s family have paid for directly;
3. Or payments made by the United States or any agency thereof.

Also allowed is evidence that workers’ compensation benefits must be repaid.

Employee Leasing Laws

Indiana’s statute dictates that the employee leasing company is considered the employer of any employee leased to the client company. I.C. § 27-16-9-1. The employee leasing company is known in Indiana as a Professional Employer Organization (PEO). A professional employer agreement must specify the allocation of the responsibility of obtaining workers’ compensation coverage to either the client or the PEO. I.C. § 27-16-7-2. If this duty is met, a client and a PEO are both considered the employer of a covered employee for purposes of the Exclusive Remedy Rule. I.C. § 27-16-9-2.

Hospital Lien Laws

Statute: I.C. §§ 32-33-4-1 – 8. Hospital Liens.

Perfecting Lien: To perfect a lien in Indiana:

(1) The hospital must file for record in the office of the recorder of the county in which hospital is located, within 90 days after person is discharged or not later than the date of final settlement, compromise, or resolution of the cause of action, suit, or claim accruing to the patient, whichever occurs first, a verified statement in writing stating name and address of patient as it appears on records of hospital; name and address of the operator of hospital; dates of patient’s admission to and discharge from hospital; amount claimed to be due for hospital care;  and to the best of hospital’s knowledge, names and addresses of anyone claimed by the patient or patient’s legal representative to be liable for damages arising from patient’s illness or injury. § 32-33-4-4.

(2) Within 10 days after filing statement, the hospital shall send a copy by registered mail, postage prepaid: (a) to each person claimed to be liable because of the illness or injury at the address given in the statement; (b) to attorney representing patient if name of attorney is known or with reasonable diligence could be discovered by hospital;  and (c) to the department of insurance as notice to insurance companies doing business in Indiana. § 32-33-4-4.

(3) The filing of a claim under subsections (a) and (b) is notice to any person, firm, limited liability company, or corporation that may be liable because of illness or injury if the person, firm, limited liability company, or corporation: (1) receives notice under subsection (b); (2) resides or has offices in a county where the lien was perfected or in a county where the lien was filed in the recorder’s office as notice under this subsection;  or (3) is an insurance company authorized to do business in Indiana under I.C. §§ 27-1-3-20 and § 32-33-4-4.

(4) A lien: (1) is effective under this chapter on the date a hospital complies with subsections (a) and (b);  and (2) may not be made retroactive to any prior date. § 32-33-4-4.

Comments: The lien does not attach to any workers’ compensation benefits. § 32-33-4-1. A lien perfected under § 4 of this chapter is valid unless the lienholder executes a release of the lien under § 7 of this chapter. § 32-33-4-6. The release or settlement of a claim with a patient by a person claimed to be liable for the damages incurred by the patient: (1) after a lien has been perfected under § 4 of this chapter;  and (2) without obtaining a release of the lien; entitles the lienholder to damages for the reasonable cost of the hospital care, treatment, and maintenance. § 32-33-4-6. Satisfaction of a judgment rendered in favor of the lienholder under subsection (b) is satisfaction of the lien. An action by the lienholder must be brought in the court having jurisdiction of the amount of the lienholder’s claim and may be brought and maintained in the county of residence of the lienholder. § 32-33-4-6. A person desiring to contest a lien or the reasonableness of the charges claimed by the hospital may do so by filing a motion to quash or reduce claim in the circuit court, superior court, or probate court in which the lien was perfected, making all other parties of interest respondents. § 32-33-4-4.

OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases

OCIP Law: The Exclusive Remedy and Immunity are not applicable to OCIPs. An owner and a general contractor may not assert the exclusive remedy defense and that “to hold otherwise would allow an owner or general contractor to voluntarily take out insurance that the law does not require and thereby secure for itself freedom from liability from negligence. Wolf v. Kajima Int’l, Inc., 621 N.E.2d 1128 (Ind. App. 1993) opinion adopted, 629 N.E.2d 1237 (Ind. 1994).

Statutory Employer Law: General contractor generally not liable for injuries to employees of subcontractors unless it retains control. Lewis v. Lockard, 498 N.E.2d 1024 (Ind. App. 1986).

Comments: A general contractor does not have a statutory duty to secure worker’s compensation for each of its subcontractors. Rather, a general contractor has a statutory duty to require that each subcontractor obtain such coverage. An owner or general contractor may not alter its status concerning potential tort liability to employees of contractors or subcontractors by directly purchasing worker’s compensation insurance on behalf of subcontractors.

Which Workers’ Compensation “Benefits” Can Be Subrogated?

No statute, regulation, or case decision on point. Section 22-3-2-13 describes a workers’ compensation carrier’s subrogation interest as follows:

…the amount of compensation paid to the employee or dependents, plus the services and products and burial expenses paid by the employer or the employer’s compensation insurance carrier…

We are given no more guidance on this point, but most Indiana practitioners believe that nurse case management fees and similar allocated costs incurred by the workers’ compensation carriers are not properly included in the lien even though they help keep the cost of the lien down and thereby benefit everybody. A nurse case manager serves as a liaison between the medical provider, the employer and the employee. The nurse case manager is not an indispensable player in the worker’s compensation process and is not specifically governed or required by the Workers’ Compensation Act. However, the nurse case manager can be an integral part of coordinating medical treatment and the stay-at-work/return-to-work process.

As of January 1, 2019, Indiana requires compliance with ODG Guidelines. See the State of Kentucky and the Preamble above for an argument that the subrogated carrier can recover the “case manager’s” fee for development of a “treatment plan,” utilizing the ODG guidelines.

Workers’ Compensation Subrogation Waiver Endorsements

Subrogation Statute: I.C. § 22-3-2-13

Waiver Allowed? Nothing in the Indiana Workers’ Compensation Act or applicable case law prohibits the use or efficacy of a waiver of subrogation.

Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: A waiver of subrogation may bar the insurer from asserting any subrogation rights, including reimbursement from third parties responsible for the loss. The court interpreted the intent of the parties to be that all rights of recovery were waived through the subrogation waiver. South Tippecanoe School Building Corp. v. Shambaugh & Son, Inc. 395 N.E.2d 320 (Ind. App. 1979). However, an Illinois federal court decision indicates that Indiana treats workers’ compensation subrogation rights differently than workers’ compensation lien rights. McDermott v. ArcelorMittal U.S.A., LLC, 2021 WL 4306147 (N.D. Ill. 2021) (citing Schneider Nat. Carriers, Inc. v. Natl. Employee Care Sys., Inc., 469 F.3d 654 (7th Cir. 2006). In McDermott, the court did not have before it the full language of the waiver of subrogation—only a copy of the certificate of insurance indicating a waiver.

Other Applicable Law: None.

Workers’ Compensation

Statute of Limitations:  2 Years. I.C. § 22-3-2-13.

Can Carrier Sue Third Party Directly:  Yes, 1 year after the statute of limitations runs.

Right to Intervene:  Yes.

Recovery from UM/UIM Benefits:  The employer’s UM policy only, unless there is an exclusion.

Subrogation Against Medical Malpractice:  Yes.

Subrogation Against Legal Malpractice:  Undecided.

Recovery Allocation/Equitable Limitations:  The carrier is paid first, less fees. Lien Reduction Stat. § 34-51-2-19 may apply.

Employer Contribution/Negligence:  No.

Attorney’s Fees/Costs:  Pro-Rata – 25% and 1/3. Past and future benefits.

Future Credit:  Future obligations end with any third-party recovery.

Auto No-Fault:  No.

Workers’ Compensation Claims by Undocumented Employees

Y/N/U:  U*

Statute: The statute states “any person in the service of another under any contract of hire”. The statute is silent on “aliens” as well as “legal” and “illegal” aliens. Ind. Code Ann. § 22-3-6-1(b).

Case Law:  Undecided

Comments/Explanation/Other:  *A recent Indiana appellate decision denied a petition for rehearing in Escamilla v. Shiel Sexton Co., 62 N.E.3d 401 (Ind. Ct. App. 2016). Escamilla asked the Indiana Supreme Court for a transfer of the case and it was granted. The lower court held that illegal aliens cannot seek lost future earnings in a tort action, because they have no legal right to work in the U.S.