Federal Court Finds No Coverage for Worker’s Psychological Harm

By Don R. Sampen, published, Chicago Daily Law Bulletin, October 21, 2025

The U.S. District Court for the Northern District of Illinois recently held that a commercial general liability policy issued to a McDonald’s franchisee covering “bodily injury” did not provide coverage for an employee’s emotional distress caused by viewing other persons’ bodily injuries.

The case is McDonald’s Corporation v. Homeland Insurance Company of New York, No. 23 C 16297, 2025 U.S. Dist. Lexis 176661 (N.D. Ill. Sept. 10, 2025). McDonald’s was represented by the Law Offices of Bradley Block of Chicago. Kaufman Dolowich LLP of Chicago represented the insurer, Homeland.

The claimant, Sonia Acuna, had been an employee working at a McDonald’s franchisee located on West Madison Street in Chicago. She brought suit against the franchisee in state court in 2019 making generalized allegations of harm and also instances where she witnessed crime, violence and bodily injury inflicted on others. She claimed to have suffered from psychological injury.

The Homeland policy issued to McDonald’s provided coverage for, among other things, “bodily injury” defined as “bodily injury, sickness or disease sustained by a person.” McDonald’s sought a defense by Homeland to Acuna’s allegations, but Homeland denied coverage because Acuna had not alleged any actual bodily injury to herself during the policy period.

McDonald’s then brought this diversity action in federal court asserting claims for breach of contract and bad faith. Following discovery the parties filed cross-motions for summary judgment.

Analysis

In an opinion by Judge LaShonda A. Hunt, the court granted Homeland’s motion and denied that of McDonald’s. She initially addressed the allegations to be considered in deciding whether Homeland had a duty to defend.

McDonald’s wanted to include in the analysis several versions of Acuna’s complaint from the underlying case, while Homeland sought to focus only on the latest effective pleading, Acuna’s third amended complaint.

Hunt agreed that only the third amended complaint was relevant because, under Illinois law, prior versions of a complaint are regarded as having been effectively abandoned or withdrawn for most purposes.

McDonald’s also sought to rely on generalized allegations of harm in the third amended complaint. Hunt observed, however, that while an insurer’s duty to defend is a broad one, only explicit factual allegations that potentially fall within policy coverage could be considered.

With respect to what specific factual allegations gave rise to coverage, McDonald’s relied on Acuna’s claims that she had been exposed to violent and criminal behavior by customers; she faced a continuing risk of violence due to McDonald’s negligence; she witnessed acts of violence at the restaurant, and customers threw coffee on co-workers once a month.

Hunt characterized Acuna’s claims as her having had to witness bodily injury being inflicted on others, resulting in psychological harm to Acuna. Illinois law, however, according to Hunt, restricted the definition of “bodily injury” to “actual physical injury” not including emotional or psychological injuries such as fear and anxiety.

She also distinguished a 7th U.S. Circuit Court of Appeals case, Cincinnati Insurance Co. v. H.D. Smith LLC, 829 F.3d 771 (2014), where the court found a duty to defend a suit brought by a plaintiff seeking to recover money paid to care for third parties injured by the defendant. Hunt wrote that the potential coverage in the Cincinnati case was tethered to the specific facts of that case where the policy included recovery of injuries to third parties.

She further rejected a pepper spray incident reflected in the underlying complaint as giving rise to coverage, because that incident took place outside the Homeland policy period.

Ultimately, Hunt concluded that second-hand injuries such as fear and emotional distress caused by viewing other persons’ bodily injuries were simply not covered under the policy.

The court therefore entered judgment in favor of Homeland.

Key Point

Coverage for bodily injury under commercial general liability policies does not extend to psychological or emotional distress.