Court Opinion

ID: 9959123
Source: CourtListenerOpinion
Date Created: 2024-04-10 19:01:53.897121+00
Date Added: 2024-06-11T08:18:31.040072
License: Public Domain

United States Tax Court

                              T.C. Memo. 2024-42

  ESTATE OF ROMAN J. FINNEGAN, DECEASED, KEVIN C.
TANKERSLEY, PERSONAL REPRESENTATIVE, AND LYNNETTE
                 FINNEGAN, ET AL., 1
                      Petitioners

                                         v.

              COMMISSIONER OF INTERNAL REVENUE,
                          Respondent

                                    __________

Docket Nos. 26869-21, 26872-21,                              Filed April 10, 2024.
            26874-21, 26877-21.

                                    __________

Alan J. Irvin and Peter H. Donahoe, for petitioners.

Timothy A. Lohrstorfer, Andrew Yamanaka Belter, Nathan M. Swingley,
and William M. Rowe, for respondent in Docket Nos. 26869-21 and
26872-21.

Timothy A. Lohrstorfer, Andrew Yamanaka Belter, and Nathan M.
Swingley, for respondent in Docket Nos. 26874-21 and 26877-21.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       NEGA, Judge: These consolidated cases concern Notices of
Deficiency issued to petitioners in 2021 for tax year 2017. The issue for
decision is whether settlement proceeds petitioners received should be

        1 Cases of the following petitioners are consolidated herewith: Christopher J.

Ramsbey and Katelynn G. Ramsbey, Docket No. 26872-21; Johnathon P. Abair and
Tiffany D. Abair, Docket No. 26874-21; and James R. Riffey and Tabitha Riffey, Docket
No. 26877-21.

                                Served 04/10/24
                                             2

[*2] excluded from their gross incomes under section 104(a)(2), 2 which
shields damages received “on account of personal physical injuries or
physical sickness.” We hold for respondent.

                               FINDINGS OF FACT

       Some of the facts have been stipulated and are so found. The
stipulated facts are incorporated in our findings by this reference.

I.      Background

       Roman J. Finnegan (Roman) was a resident of Indiana when he
died. Kevin C. Tankersley, the personal representative of Roman’s
estate, and Lynnette Finnegan (Lynnette) resided in Indiana when they
filed the Petition in this matter.

      Petitioners Christopher J. Ramsbey and Katelynn G. Ramsbey
(Katelynn) resided in Tennessee when they filed the Petition in their
case.

      Petitioners Johnathon P. Abair (Johnathon) and Tiffany D. Abair
resided in Indiana when they filed the Petition in their case.

       Petitioners James R. Riffey and Tabitha Riffey (Tabitha) resided
in Indiana when they filed the Petition in their case.

        Lynnette is the mother of Katelynn, Johnathon, and Tabitha.

        Roman was the stepfather of Katelynn, Johnathon, and Tabitha.

        Roman and Lynnette married in May 2004.

     On December 20, 2005, a sixth member of the family, J.S., 3
daughter of Lynnette, died at the age of 14.

        2 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulation references are
to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times,
and Rule references are to the Tax Court Rules of Practice and Procedure.
        3 Because J.S. was a minor child when she died, her name has been redacted

in accordance with Rule 27(a)(3).
                                   3

[*3] At the time of her death, J.S. suffered from several medical issues
and lived with Roman, Lynnette, and her three siblings, Katelynn,
Johnathon, and Tabitha.

       After J.S.’s death, the Pulaski County Department of Child
Services, Indiana Department of Child Services (DCS), and Indiana
State Police (ISP) accused Roman and Lynnette of neglect and abuse of
J.S. and opened investigations into J.S.’s cause of death.

     As a result of the investigations, ISP arrested Roman and
Lynnette for medical neglect relating to the death of J.S.

       The criminal charges filed against Roman and Lynnette were
later dismissed with prejudice, and neither Roman nor Lynnette was
convicted for any criminal wrongdoing relating to J.S.’s death.

      Nine months after J.S.’s death, DCS removed Tabitha and
Katelynn from the marital home of Roman and Lynnette and placed
both girls into foster care. Tabitha and Katelynn were eventually
returned home, but DCS continued with its investigation.

       Pursuant to Ind. Code § 31-39-8-4 (2005), Roman and Lynnette
requested the Pulaski Circuit Court to invalidate the following
substantiations by DCS against them: (1) a December 5, 2005,
substantiation of medical neglect for J.S. based on the postponement of
a cardiology checkup; (2) a March 23, 2007, substantiation that J.S.’s
death was caused by physical abuse; and (3) a March 23, 2007,
substantiation that Johnathon, Tabitha, and Katelynn were in a
life/health endangering environment.

      After a hearing on the evidence, on January 28, 2010, the Pulaski
Circuit Court ordered DCS to immediately unsubstantiate the
December 5, 2005, and March 23, 2007, substantiations and to remove
Roman and Lynnette from Indiana’s child protection index.

      Roman, Lynnette, Tabitha, and Katelynn (collectively, with
Johnathon, plaintiffs) sued various individuals employed by the State of
Indiana for their actions occurring after J.S.’s death by filing a
complaint in the U.S. District Court, Northern District of Indiana, on
October 29, 2008.

       Petitioners Christopher J. Ramsbey, Tiffany D. Abair, and James
R. Riffey were not plaintiffs in the district court case.
                                     4

[*4] II.    Plaintiffs’ Original Complaint

        Plaintiffs (excepting Johnathon, who was later added to the
litigation by a First Amended Complaint) sued the following defendants,
all of whom were employees of the State of Indiana: (1) Laurel Myers,
Director of Pulaski County DCS (Myers); (2) Regina McAninch,
investigator and case worker for Pulaski County DCS (McAninch);
(3) Tracy Salyers, caseworker for Pulaski County DCS; (4) Reba James,
Regional Manager for Indiana DCS (James); (5) James Payne, Director
of Indiana DCS (Payne); (6) Jennifer McDonald, ISP detective
(McDonald); (7) Antoinette Laskey, a pediatrician employed by the
Indiana University School of Medicine, Methodist Hospital (Laskey);
and (8) John Does 1–20 (collectively, defendants).

        Paragraph 1 of the complaint states that plaintiffs brought the
action under 42 U.S.C. § 1983 to seek redress for the violation of their
civil rights under state law, federal law, and the First, Fourth, Sixth,
and Fourteenth Amendments to the U.S. Constitution.

       In paragraph 13, plaintiffs alleged that defendants acted
individually and jointly under color of state law to deprive plaintiffs of
their civil rights.

       Plaintiffs alleged facts supporting their position that defendants
had violated their civil rights. Plaintiffs did not allege as a fact that any
plaintiffs had developed post-traumatic stress disorder (PTSD) or that
any plaintiff had developed or incurred a physical injury or sickness as
a result of any defendant’s actions.

       In Count 1, plaintiffs alleged that defendants violated their First
Amendment right to petition the government for redress of grievances
by retaliating against the Finnegan family because Roman wrote a letter
to a legislator in which he raised complaints concerning McAninch’s
behavior.

       Further, plaintiffs alleged that, because of Roman’s letter,
McAninch, Myers, and Payne retaliated against the Finnegan family by
creating a false substantiation of medical neglect, followed by a
retaliatory investigation, illegal detention of the children, and findings
of abuse and neglect that were not supported by evidence.

      Count 2 alleged that the seizure of Tabitha and Katelynn by
defendants McAninch and Myers (and which plaintiffs claimed was
supported by Laskey and Payne) had no objectively reasonable basis and
                                     5

[*5] therefore violated the Finnegan family’s Fourth Amendment right
to be free from unreasonable seizure.

       Plaintiffs also claimed a violation of their Fourth Amendment
right to be free from unreasonable seizure relating to the exhumation of
J.S.’s body and search of the Finnegan family home. Plaintiffs further
claimed a violation of their Fourth Amendment rights relating to the
arrest of Roman and Lynnette.

      In Count 3, plaintiffs claimed defendants’ actions violated their
Sixth Amendment right to effective assistance of counsel.

       In Count 4, plaintiffs alleged that defendants’ actions violated
their Fourteenth Amendment right to procedural and substantive due
process.

       Plaintiffs specifically alleged that their Fourteenth Amendment
right to procedural and substantive due process was violated by
defendants by (1) failure to produce any witnesses or evidence to support
the claim that J.S. died due to physical abuse; (2) failure to provide
exculpatory evidence or evidence subpoenaed by plaintiffs, omission of
exculpatory information and inclusion of false information in reports,
and action without reasonable or probable cause with deliberate
indifference to plaintiffs’ rights; and (3) deprivation of plaintiffs’ equal
protection and due process rights through refusal to comply with the
applicable state and federal Child In Need of Services (CHINS) laws and
regulations; violation of Indiana’s Coroner’s Code, Ind. Code § 36-2-14,
which places responsibility for determining the cause and manner of
death on the Coroner; and failure to provide appropriate
accommodations to Lynnette.

      Count 5 alleged that all defendants engaged in a conspiracy under
42 U.S.C. § 1983, which encompassed violations of state and federal
CHINS laws, basic constitutional requirements, the Coroner’s Code, and
the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12101–12213.

       Plaintiffs did not assert a claim that any plaintiff developed PTSD
as a result of any action by any defendant. Likewise, plaintiffs did not
assert in their request for relief a claim related to personal physical
injury or physical sickness caused by any defendant.
                                    6

[*6] III.   Interrogatories

       A.    Roman

      As a part of the district court litigation, Roman answered
defendants’ first set of interrogatories.

       Interrogatory 1 asked Roman to “[d]escribe in detail each and
every item of damage, including medical expenses, which you contend
resulted from [d]efendants’ conduct as set forth in your complaint.”

      Roman’s answer consisted of 53 separate paragraphs of narrative
statements. Paragraph 41 contains the sole mention of PTSD.

       In paragraph 41 of Roman’s response to Interrogatory 1, Roman
answered as follows: “When I first went back to work, there were days
that I could not get out of bed. I had attacks in which I couldn’t breathe.
I thought they were heart attacks but they were diagnosed as post-
traumatic stress syndrome.”

       On June 14, 2010, Roman signed the first set of interrogatories
under penalty of perjury and attested that the factual statements set
forth in his responses were true and correct.

       B.    Lynnette

      As part of the district court litigation, Lynnette answered
defendants’ first set of interrogatories.

       Interrogatory 1 asked Lynnette to “describe in detail each and
every item of damage, including medical expenses, which you contend
resulted from [d]efendants[’] conduct as set forth in your complaint.”

      Lynnette’s answer to Interrogatory 1 consisted of 38 separate
narrative statements.

      Lynnette’s answer to Interrogatory 1 did not assert that
defendants’ conduct resulted in her receiving a diagnosis of or suffering
from PTSD.

      Lynnette’s answer to Interrogatory 1 did not assert any damages
stemming from physical injury or physical sickness resulting from
defendants’ conduct.
                                   7

[*7] On June 14, 2010, Lynnette signed the first set of interrogatories
under penalty of perjury and attested that the factual statements set
forth in her responses were true and correct.

      C.     Katelynn

      As part of the district court litigation, Katelynn answered
defendants’ first set of interrogatories.

       Interrogatory 1 asked Katelynn to “[d]escribe in detail each and
every item of damage, including medical expenses, which you contend
resulted from [d]efendants[’] conduct as set forth in your complaint.”

     Katelynn’s answer to Interrogatory 1 consisted of four separate,
unnumbered paragraphs of narrative statements.

      Katelynn’s answer to Interrogatory 1 did not assert that
defendants’ conduct resulted in her receiving a diagnosis of or suffering
from PTSD.

      Katelynn’s answer to Interrogatory 1 did not assert any damages
stemming from physical injury or physical sickness resulting from
defendants’ conduct.

       On June 14, 2010, Katelynn signed the first set of interrogatories
under penalty of perjury and attested that the factual statements set
forth in her responses were true and correct.

      D.     Tabitha

      As part of the district court litigation, Tabitha answered
defendants’ first set of interrogatories.

       Interrogatory 1 asked Tabitha to “describe in detail each and
every item of damage, including medical expenses, which you contend
resulted from [d]efendants[’] conduct as set forth in your complaint.”

      Tabitha’s answer to Interrogatory 1 consisted of 21 separate
paragraphs of narrative statements.

      Tabitha’s answer to Interrogatory 1 did not assert that
defendants’ conduct resulted in her receiving a diagnosis of or suffering
from PTSD.
                                   8

[*8] Tabitha’s answer to Interrogatory 1 did not assert any damages
stemming from physical injury or physical sickness resulting from
defendants’ conduct.

       On June 15, 2010, Tabitha signed the first set of interrogatories
under penalty of perjury and attested that the factual statements set
forth in her responses were true and correct.

IV.   Depositions

      A.       Roman

      On July 30, 2010, Roman was deposed in the district court case.

      During the deposition on July 30, 2010, the attorney and Roman
had the following exchange of questions and answers:

      Q. Are you claiming any physical injuries as a result of
      the—or illnesses as a result of any actions of the DCS or
      the state police?

      A. I was diagnosed with post-traumatic stress.

      Q. Who gave you that diagnosis?

      A. Dr. James [Kenny] from Rensselaer.

      Q. Are you getting any treatment for that?

      A. No.

      Q. How did you end up seeing Dr. [Kenny]?

      A. I was having some problems at work.

      Q. What kind of problems?

      A. As he described it, it was like anxiety attacks.

      Q. Are you taking any medication for that?

      A. No.

     During his deposition, concerning his treatment for PTSD,
Roman answered the following:
                                   9

[*9]   Q. Has Dr. [Kenny] recommended any treatment?

       A. Well, I’ve seen Dr. [Kenny] for a while, and he was
       recommending different things. But being on the critical
       incident stress management team, the recommendations
       he gave me are the recommendations I would give
       somebody else, so I just kind of manage myself.

        Also during his deposition, Roman provided the following
clarification:

       Q. And did Dr. [Kenny] specifically use the words post-
       traumatic—

       A. Yes.

       Q. —stress disorder?

       A. Yes.

       Q. Has any other doctor told you that?

       A. No.

       B.       Other Plaintiffs

      Lynnette, Katelynn, Johnathon, and Tabitha were also deposed
as part of the district court proceedings.

      During their depositions, Lynnette, Katelynn, Johnathon, and
Tabitha did not testify that they had PTSD diagnoses.

      During their depositions, Katelynn, Johnathon, and Tabitha did
not identify any personal physical injuries or physical sicknesses
incurred as a result of defendants’ actions.

       During her deposition, when asked about any physical illnesses
or injuries connected to the district court case, Lynnette answered that
stress was exacerbating a pre-existing seizure disorder.

V.     First Amended Complaint

      On May 13, 2012, plaintiffs filed a first amended complaint, which
added Johnathon as a plaintiff and added three new defendants: Sheryl
Pherson (Pherson); Michael Boonstra (Boonstra); and John Cavanaugh
                                   10

[*10] (Cavanaugh) (collectively, additional defendants, and, from
May 13, 2012, forward, collectively with the seven original defendants,
defendants).

      In the first amended complaint, plaintiffs realleged their legal
claims of Counts 1 through 5 from the original complaint. The first
amended complaint also added new causes of action, listed as Counts 6
through 11, related to the additional defendants.

      Count 6 alleged that Pherson and Boonstra violated plaintiffs’
Fourth Amendment right to freedom from unreasonable search and
seizure.

      Count 7 alleged that Pherson and Boonstra violated plaintiffs’
Sixth Amendment right to effective assistance of counsel.

       Count 8 alleged that Pherson and Boontra’s actions violated
plaintiffs’ Fourteenth Amendment right to procedural and substantive
due process.

    Count 9 alleged that Cavanaugh violated plaintiffs’ Fourteenth
Amendment right to procedural and substantive due process.

      Count 10 alleged that the additional defendants participated in a
conspiracy to violate plaintiffs’ civil rights.

       Count 11 alleged that defendants’ actions violated Johnathon’s
First Amendment right to petition the government, Fourth Amendment
right to freedom from unreasonable search and seizure, and Fourteenth
Amendment right to procedural and substantive due process and
constituted a broad-based conspiracy to violate his civil rights.

       In the first amended complaint, plaintiffs did not assert a claim
that any plaintiff developed PTSD as a result of any action by any
defendant. Likewise, plaintiffs did not assert in their request for relief
a claim related to personal physical injury or physical sickness caused
by any defendant.

VI.   Defendants’ Motion to Dismiss First Amended Complaint and
      Plaintiffs’ Response Thereto

       On September 6, 2012, defendants filed a Motion to Dismiss First
Amended Complaint (defendants’ motion to dismiss) in the district
court.
                                     11

[*11] On October 4, 2012, plaintiffs responded to defendants’ motion to
dismiss (plaintiffs’ response).

       In their response, plaintiffs provided a summary of facts. In this
summary of facts, plaintiffs did not allege that any plaintiff developed
PTSD due to any defendant’s actions or that any defendant caused any
plaintiff physical injury or physical sickness.

       In plaintiffs’ legal discussion in support of plaintiffs’ response,
plaintiffs did not allege that any plaintiff developed PTSD resulting
from any defendant’s actions or that any defendant’s actions caused any
plaintiff physical injury or physical sickness.

       Plaintiffs’ response withdrew plaintiffs’ claim that defendants
violated plaintiffs’ Sixth Amendment right to counsel.

      Attached to plaintiffs’ response were a number of exhibits: (1) a
Pulaski Circuit Court order dated January 28, 2010; (2) three notices of
emergency detention (one each corresponding to Tabitha, Johnathon,
and Katelynn), signed by McAninch and issued to Lynnette; (3) a
Pulaski Circuit Court chronological case summary; and (4) documents
from a proceeding before Jasper Superior Court. None of the attached
documents established that any plaintiff suffered from PTSD or that any
defendant caused any plaintiff physical injury or physical sickness.

VII.   Defendants’ Motion to Strike

       On October 22, 2012, defendants filed State Defendants’ Motion
to Strike (defendants’ motion to strike) in the district court litigation. In
defendants’ motion to strike, defendants requested that the district
court strike from plaintiffs’ response all information not contained in the
complaint.

        By opinion and order, issued June 5, 2013, the district court
addressed defendants’ motion to dismiss and defendants’ motion to
strike.

      The district court granted defendants’ motion to dismiss as to
Katelynn’s, Johnathon’s, and Tabitha’s First Amendment violation
claims in Count 1, Count 3 (Sixth Amendment), and Count 4 (equal
protection and ADA claims); denied defendants’ motion to dismiss as to
the remaining claims; and denied defendants’ motion to strike.
                                     12

[*12] The district court addressed the factual assertions at issue in
defendants’ motion to strike (none of which assert that any plaintiff
suffered from PTSD nor any defendant’s actions caused physical injury
or physical sickness) and found them to be consistent with the first
amended complaint and merely illustrative for the court.

VIII. Agreed Jury Instructions

       On August 17, 2015, the parties filed agreed jury instructions in
the district court litigation, consisting of 31 instructions. Instruction 27
stated, in pertinent part, that “the issue is whether the [d]efendant or
[d]efendants violated the [p]laintiffs’ civil rights.” The agreed jury
instructions did not include an instruction addressing PTSD of any
plaintiff or an instruction addressing physical injury or physical
sickness of any plaintiff caused by any defendant’s actions.

IX.    Voir Dire Questions

       On August 17, 2015, the parties filed agreed proposed voir dire
questions. Subsequently, also on August 17, 2015, the parties filed a
corrected version of the questions.

       Question 21 of the corrected version stated, in part: “This case is
about alleged violations of civil rights and appropriate compensation.”
Question 21 further stated that plaintiffs were seeking compensation
from defendants “for alleged violations of the Plaintiffs’ civil rights
under the First, Fourth, and Fourteenth Amendments to the United
States Constitution.” Question 21, subparagraph a, posed the following
question: “Do you have an opinion as to whether citizens should be able
to recover compensation in a lawsuit for damages they have suffered
when their constitutional rights are violated?”

       Question 22 of the corrected version stated: “At the conclusion of
this lawsuit, you may be asked to award compensation for mental and
emotional suffering. Although there is no obvious way to put a dollar
amount on mental suffering, if selected as a juror would you be able and
willing to do this if the evidence and the law supported it?”

      The corrected version included no questions addressing PTSD
and no questions addressing physical injury or physical sickness.

       Also on August 17, 2015, plaintiffs filed plaintiffs’ proposed voir
dire questions in the district court litigation, setting forth five additional
questions to which defendants had not agreed.
                                   13

[*13] Question 1 of plaintiffs’ proposed voir dire questions asked:
“Do you have an opinion as to whether individual citizens should be
protected from unreasonable searches and seizures as required by the
Fourth Amendment?”

      Question 2 of plaintiffs’ proposed voir dire questions asked:
“Do you have an opinion as to whether individual citizens should be
protected from arrest without probable cause as also required by the
Fourth Amendment?”

      Question 3 of plaintiffs’ proposed voir dire questions asked:
“Do you have an opinion as to whether due process, as required by the
Fourteenth Amendment, should be followed before government
employees take[] certain actions like seizing children or arresting
parents?”

       Question 4 of plaintiffs’ proposed voir dire questions asked:
“Do you have an opinion as to whether a citizen should be able to
exercise his First Amendment rights to free speech and to petition the
government by writing a letter complaining about conduct of a state
agency without being subjected to retaliation by employees of the state
agency?”

       Plaintiffs’ proposed voir dire questions did not include an
instruction addressing PTSD or physical injury or physical sickness of
any of the plaintiffs caused by any defendant’s actions.

X.    Plaintiffs’ Proposed Preliminary Statement

       On August 31, 2015, plaintiffs filed plaintiffs’ proposed
preliminary statement in the district court litigation. Plaintiffs’
proposed preliminary statement contends that defendants violated
plaintiffs’ civil rights protected by the First, Fourth, and Fourteenth
Amendments.

XI.   District Court Trial

      The district court trial occurred from September 16 through
October 6, 2015.

      At the start of the trial and before the parties’ respective opening
statements, the district court judge summarized to the jury the issues
presented in the case. In this introduction, the district court judge
summarized the district court case as follows:
                                   14

[*14] Plaintiffs’ Complaint alleges that, following [J.S.]’s death
      [d]efendants engaged in conduct which violated their civil
      rights protected by the United States Constitution.
      Specifically, [p]laintiffs allege that the [d]efendants acted
      unreasonably, recklessly, and knowingly, in violation of
      [p]laintiffs’ 1st Amendment right to petition the
      government, their 4th Amendment right to freedom from
      unreasonable search and seizure, and their 14th
      Amendment right to substantive and procedural due
      process.

      The district court judge further summarized:

      The [d]efendants deny that they violated the civil rights of
      the [p]laintiffs and further contend that they did not act
      recklessly or knowingly to violate the [p]laintiffs’ civil
      rights. Rather, [d]efendants contend that they acted
      reasonably under the circumstances. Defendants deny
      liability for any claims asserted by any of the [p]laintiffs.

      Counsel for plaintiffs, Ronald J. Waicukauski, gave an opening
statement as part of the district court trial.

       Describing plaintiffs’ claims, Mr. Waicukauski stated the
following:

      [W]e’ve asserted civil rights claims. We’ve asserted civil
      rights claims under the First Amendment . . . .

             We’ve asserted claims here under the Fourth
      Amendment that says searches have to be reasonable, they
      have to be based on evidence and fact. And the searches
      that were conducted here and the seizures that were
      conducted here, the seizure of the arrest, the false arrest,
      the seizure of the detention of the girls that extended for
      nine months, the detention even on the day of the event,
      the exhumation of [J.S.]’s body, they all violated the Fourth
      Amendment’s prohibition against unreasonable searches
      and seizures.

      Mr. Waicukauski further stated:

            Maybe most important[] is the claim under the
      Fourteenth Amendment. That’s the claim that says every
                                   15

[*15] parent and every child has a fundamental interest in the
      companions and society of the other in these familial
      relationships, and they cannot be separated by
      government, other than in emergent situations or to
      protect the child against imminent danger.

            This substantive due process, the evidence will
      show, establishes that is violated by the seizing of Tabitha
      and Katelynn without probable cause to believe that they
      were in any danger, detaining them for nine months for
      purposes of investigative therapy, for providing false
      reports and concealing exculpatory evidence in order to
      continue this detention, to tell Johnathon and his sisters
      that their mother had murdered their sister and to tell
      Johnathon in particular that his mother was accusing him
      of killing his sister, and thereby deliberately and
      systematically destroying family ties and relationships.

       In his opening statement, Mr. Waicukauski did not describe any
of the plaintiffs as having developed PTSD as a result of any defendant’s
action, nor did he describe any of the plaintiffs as having incurred a
physical injury or physical sickness as a result of any defendant’s
actions.

      A.     Trial Testimony

      Roman testified during the district court trial.

       In support of plaintiffs’ First Amendment claims under Count 1
of the original and first amended complaints, Roman testified regarding
his interactions with DCS, which had led him to send a letter of
complaint to his state legislator before J.S.’s death and the ISP
investigation.

       In support of plaintiffs’ Fourth Amendment claims under Count 2
of the original and first amended complaints, Roman testified
concerning the removal of Tabitha and Katelynn after DCS’s
investigation into J.S.’s death.

      In support of plaintiffs’ claims of violation of their Fourteenth
Amendment rights, Roman testified regarding his efforts to obtain
exculpatory evidence to explain J.S.’s death by prescription error and
the State of Indiana’s refusal to consider the evidence.
                                  16

[*16] In support of Roman and Lynnette’s Fourth Amendment violation
claim resulting from their false arrest, Roman testified regarding his
and Lynnette’s arrests related to their alleged medical neglect of J.S.

       In support of plaintiffs’ Fourth Amendment violation claim
resulting from the continued detention of Tabitha and Katelynn, Roman
provided testimony on Tabitha’s and Katelynn’s removal from the
marital home.

     During the four-week trial, Roman testified that Dr. James A.
Kenny treated him for PTSD as follows:

      Q. When you sought counseling from Dr. Kenny, did he
      treat you for any specific condition?

      A. The condition he called is post traumatic stress. It’s
      typical. It’s the same diagnosis as people in the military
      are getting. It’s kind of currently in the news. But that
      was the—that was his diagnosis.

      This singular reference constitutes the entirety of Roman’s
testimony before the district court regarding any PTSD diagnosis.

       Numerous witnesses testified on plaintiffs’ behalf during the
district court case, including: (1) Dr. James A. Kenny, Ph.D.;
(2) Dr. Randall Krupsaw, clinical psychologist; (3) Lynnette;
(4) Johnathon; (5) Tabitha; (6) Katelynn; (7) Tim Brown; (8) John
Majchrzak; (9) Gloria Jean Majchrzak; (10) Pam Graham Liston;
(11) David Geisler; (12) Bonnie Schmidt; (13) Tom Rausch; and
(14) Dr. Gordon Klockhow.

       Dr. Krupsaw reviewed counseling and case notes with respect to
Tabitha’s and Katelynn’s removal from the marital home and placement
in foster care. From his review of these documents, Dr. Krupsaw opined
that DCS’s actions could “lead to something as severe as post-traumatic
stress disorder type of symptoms in one or both girls.” Dr. Krupsaw was
not Tabitha’s or Katelynn’s treating psychologist.

       Dr. Kenny testified that he “treated Roman for anxiety disorder
and post-traumatic stress disorder in 2007 and ‘08.” None of the other
14 aforementioned witnesses, including Dr. Krupsaw, identified any
plaintiff as suffering or having suffered from PTSD, nor did any witness
describe any personal physical injury or physical sickness of any
plaintiff resulting from any defendant’s actions.
                                    17

[*17] B.     Defendants’ Motion for Judgment as a Matter of Law

        At the conclusion of plaintiffs’ case in chief in the district court
trial, defendants orally made a motion for Judgment as a Matter of Law
(JMOL motion) pursuant to Rule 50 of the Federal Rules of Civil
Procedure.

      In addressing the JMOL motion, defendants (excluding Laskey)
stated that plaintiffs had “brought multiple claims,” then addressed
each in turn.

       Defendants first addressed plaintiffs’ First Amendment claim and
provided argument as to why defendants believed that they were
entitled to judgment as a matter of law.

       Defendants next addressed plaintiffs’ substantive due process
claim “regarding the Fourteenth Amendment regarding familial
relations.”    Defendants contended that Katelynn, Tabitha, and
Johnathon did not have a Fourteenth Amendment claim but rather a
Fourth Amendment claim and that defendants were therefore entitled
to judgment as a matter of law. Defendants asserted that Roman and
Lynnette’s claims under the Fourteenth Amendment were likewise
legally insufficient.

       Defendants then argued that plaintiffs’ procedural due process
claim failed because plaintiffs were afforded the process that was due to
them.

       Defendants next turned to plaintiffs’ Fourth Amendment claims
and contended that these claims too failed and that defendants were
entitled to judgment as a matter of law because “many” of the searches
were conducted pursuant to court orders.

       Defendants then argued that plaintiffs failed to present sufficient
evidence to support their conspiracy claim and that defendants were
entitled to judgment as a matter of law.

      Laskey joined the JMOL motion as to the Fourth and Fourteenth
Amendment claims (i.e., the claims concerning rights that plaintiffs
contended that Laskey violated).

      Plaintiffs responded with their arguments as to why the JMOL
motion should be denied.
                                   18

[*18] As part of their response, plaintiffs stated as follows: “But there
is more than sufficient evidence here for a reasonable jury to rely upon,
both direct and circumstantial, in order to determine that these
[d]efendants knowingly violated the [p]laintiffs’ constitutional rights.”

       Plaintiffs argued that their Fourth Amendment claims were
sufficiently supported by evidence.

      Plaintiffs then argued that their Fourteenth Amendment
substantive due process claim was also sufficiently supported by
evidence.

      Plaintiffs next argued that “plenty of evidence” supported their
claim that defendants were engaged in a conspiracy.

       Finally, plaintiffs argued that “plenty of evidence” also supported
their First Amendment claim.

      The district court took the JMOL motion under advisement.

      C.     Closing Arguments

       In the district court case, both plaintiffs and defendants made
closing arguments to the jury. Beforehand, the district court reminded
the jury that “what [the attorneys] say is not evidence, and you will
disregard what they say unless supported by the evidence.”

             1.     Plaintiffs’ Closing Argument

       Mr. Waicukauski gave the closing argument on behalf of
plaintiffs.

      Mr. Waicukauski argued to the jury that it should hold
defendants liable for the actions taken by defendant’s after J.S.’s death
when defendants

      falsely accused Roman and Lynnette Finnegan of killing
      [J.S.], when they took Tabitha and Katelynn and put them
      in foster care for nine months, when they exhumed [J.S.]’s
      body for a second autopsy, when they arrested and jailed
      Roman and Lynnette, and, when having failed on one
      charge, they brought another and another, and when the
      facts finally showed all their charges to be false, they
                                     19

[*19] reaffirmed them, and, finally, after more than four years, a
      Judge ordered them to stop.

      Mr. Waicukauski informed the jury that the verdict form would
be 22 pages long and would address eight claims. Mr. Waicukauski
explained that “[e]ach of these claims are ones we are asking you to
consider in determining whether these [d]efendants will be held
accountable for that course of conduct,” before outlining each in turn.

      Mr. Waicukauski described the first claim as arising “under the
First Amendment, and, specifically, the right to petition the
government.”

      Mr. Waicukauski described the next five claims as arising “under
the Fourth Amendment, and, specifically, the prohibition of
unreasonable searches and seizures.”

      Mr. Waicukauski described the final two claims as arising “under
the Fourteenth Amendment, claims for both procedural due process and
substantive due process.”

       Concerning plaintiffs’ First Amendment claim, Mr. Waicukauski
stated: “So you’ve got essentially the framework of the claim. So denial
of free speech, that Roman sent the letter on behalf of himself and
Lynnette, and the claim is [defendants] retaliated.”

       Mr. Waicukauski discussed plaintiffs’ Fourth Amendment claim
arising from the DCS pickup of Tabitha, Johnathon, and Katelynn on
December 20, 2005, and characterized McAninch as having “detained
them for several hours.” Mr. Waicukauski went on to “contend that that
detention is an unreasonable search.”

       Mr. Waicukauski then discussed plaintiffs’ Fourth Amendment
claim arising from the removal of Tabitha and Katelynn from the
marital home on November 1, 2006, which he characterized as “a very
significant seizure.”

       Mr. Waicukauski explained that a seizure is unreasonable
(1) “when you withhold material information”; (2) “if you make false
representations to the Court”; (3) if children are seized “for the purpose
of an investigation”; or (4) if there is failure “to follow procedural rules”
and “make reasonable efforts to keep the children in the home.”
                                  20

[*20] Mr. Waicukauski then explained plaintiffs’ Fourth Amendment
claim arising from the search of the marital home in January 2007,
which he characterized as “an unreasonable search.”

       Mr. Waicukauski described plaintiffs’ Fourth Amendment claim
arising from the exhumation of J.S.’s body, also in January 2007, which
he also explained as unreasonable.

      Mr. Waicukauski next described plaintiffs’ Fourth Amendment
claim arising from the arrest of Roman and Lynnette on April 24, 2007,
which he characterized as “a false arrest.”

    Mr. Waicukauski then described             plaintiffs’   Fourteenth
Amendment procedural due process claims.

       Mr. Waicukauski next discussed plaintiffs’ Fourteenth
Amendment substantive due process claim, stating: “Substantive due
process protects familial relations. It says that the State and State
employees, like we have here, are not allowed to unreasonably interfere
with familial relations.”

     Mr. Waicukauski made the following statement concerning
PTSD:

      As Dr. Krupsaw said, [Katelynn’s] avoidance of even the
      ability to talk about it is consistent with post-traumatic
      stress disorder, which certainly she suffered, and as Dr.
      Kenny testified, Roman suffered when he lost his job and
      all of his possessions and his home and was charged with a
      crime of causing his stepdaughter’s death.

However, Mr. Waicukauski’s conclusion is supported neither by
Dr. Krupsaw’s testimony nor by the evidence in the district court case.

      Mr. Waicukauski did not allege that the evidence supported a
PTSD diagnosis for Lynnette, Tabitha, or Johnathon. Likewise,
Mr. Waicukauski did not argue that any plaintiff had developed or
incurred a physical injury or physical sickness as a result of any
defendant’s actions.

      D.    Jury Instructions

      At the conclusion of closing arguments, the district court judge
read the final instructions to the jury.
                                    21

[*21] The district court instructed the jury:

      You have two duties as a jury. The first duty is to decide
      the facts from the evidence in this case. This is your job
      and yours alone. Your second duty is to apply the law that
      I give you to the facts.

       The district court further instructed that “[t]he evidence consists
of the testimony of witnesses, the exhibits admitted into evidence, and
stipulations” and that “the lawyers’ opening statements and closing
statements to you are not evidence.”

       The district court instructed the jury on the law and on plaintiffs’
claims that defendants violated plaintiffs’ First, Fourth, and Fourteenth
Amendment rights.

       The district court then instructed the jury that, if it found for any
plaintiff,

      [it] must determine what amount of money will fairly
      compensate for any injury that he or she may have
      sustained or is reasonably certain to sustain in the future
      as a direct result of the alleged violation of constitutional
      rights by a particular [d]efendant. These are called
      compensatory damages.

       The district court then instructed the jury that it should consider
the following types of compensatory damages and no others:

      One, physical or mental or emotional pain and suffering
      that [p]laintiff you are considering has experienced and is
      reasonably certain to experience in the future. No evidence
      of the dollar value or physical, mental, or emotional pain
      and suffering and loss of a normal life has been or needs to
      be introduced. There is no exact standard for setting the
      damages to be awarded on the amount of pain and
      suffering. You are to determine an amount that will fairly
      compensate the [p]laintiff for the injury he or she has
      suffered.

      The district court did not instruct the jury on any claims related
to PTSD.
                                   22

[*22] The district court did not instruct the jury on any claims related
to physical injury or physical sickness.

      On October 5, 2015, the case was submitted to the jury.

      E.     Jury Verdict

      On October 6, 2015, the district court jury reached a verdict.

       The jury form asked the jury (1) whether the jury found in favor
of plaintiffs (i.e., a particular plaintiff against a particular defendant
sued by plaintiffs in their complaint) and (2), if the jury found for
plaintiffs against a particular defendant for a particular claim, the
amount of compensatory damages that the jury awarded to that claim.

      The jury found in favor of Lynnette and Roman as to a violation
of each’s First Amendment right to petition the government against
Myers.

     The jury awarded Lynnette compensatory damages of $625,000
for her First Amendment claim.         The jury awarded Roman
compensatory damages of $625,000 for his First Amendment claim.

      The jury found in favor of plaintiffs as to a violation of each’s
Fourth Amendment right to freedom from unreasonable searches and
seizures, specific to December 20, 2005, against Myers and McAninch.

       The jury awarded Lynnette compensatory damages of $100,000
for her Fourth Amendment claim, specific to December 20, 2005. The
jury awarded Roman compensatory damages of $100,000 for his Fourth
Amendment claim, specific to December 20, 2005. The jury awarded
Johnathon compensatory damages of $150,000 for his Fourth
Amendment claim, specific to December 20, 2005. The jury awarded
Katelynn compensatory damages of $150,000 for her Fourth
Amendment claim, specific to December 20, 2005. The jury awarded
Tabitha compensatory damages of $150,000 for her Fourth Amendment
claim, specific to December 20, 2005.

      The jury found in favor of Lynnette, Roman, Tabitha, and
Katelynn as to a violation of each’s Fourth Amendment right to freedom
from unreasonable searches and seizures, specific to November 2006,
against Myers and McAninch.
                                  23

[*23] The jury awarded Lynnette compensatory damages of $1 million
for her Fourth Amendment claim, specific to November 2006. The jury
awarded Roman compensatory damages of $250,000 for his Fourth
Amendment claim, specific to November 2006. The jury awarded
Tabitha compensatory damages of $2 million for her Fourth Amendment
claim, specific to November 2006. The jury awarded Katelynn
compensatory damages of $2 million for her Fourth Amendment claim,
specific to November 2006.

      The jury did not find in favor of any plaintiff for their Fourth
Amendment claims related to the (1) January 2007 search of the
Finnegan marital home; (2) exhumation of J.S.’s body; and (3) April 24,
2007, arrest of Roman and Lynnette.

      As to plaintiffs’ Fourteenth Amendment procedural due process
claims, the jury found in favor of Lynnette and Roman against Myers,
McAninch, James, McDonald, and Laskey; in favor of Tabitha and
Katelynn against Myers and McAninch; and in favor of Johnathon
against Myers, McAninch, and McDonald.

       The jury awarded Lynnette compensatory damages of $3 million
for her Fourteenth Amendment procedural due process claim. The jury
awarded Roman compensatory damages of $5 million for his Fourteenth
Amendment procedural due process claim. The jury awarded Tabitha
compensatory damages of $100,000 for her Fourteenth Amendment
procedural due process claim.        The jury awarded Katelynn
compensatory damages of $50,000 for her Fourteenth Amendment
procedural due process claim.       The jury awarded Johnathon
compensatory damages of $50,000 for his Fourteenth Amendment
procedural due process claim.

      As to plaintiffs’ Fourteenth Amendment substantive due process
claims, the jury found in favor of Lynnette, Roman, Tabitha, and
Katelynn against Myers and in favor of Johnathon against Myers and
McDonald.

       The jury awarded Lynnette compensatory damages of $3 million
for her Fourteenth Amendment substantive due process claim. The jury
awarded Roman compensatory damages of $3 million for his Fourteenth
Amendment substantive due process claim. The jury awarded Tabitha
compensatory damages of $3 million for her Fourteenth Amendment
substantive due process claim.      The jury awarded Katelynn
compensatory damages of $3 million for her Fourteenth Amendment
                                   24

[*24] substantive due process claim. The jury awarded Johnathon
compensatory damages of $4 million for his Fourteenth Amendment
substantive due process claim.

       In total, the jury awarded plaintiffs compensatory damages
totaling $31.35 million.

      The jury did not find in favor of any plaintiff on the issue of
punitive damages.

      The jury form used by the jury to award damages did not state
that any damages were awarded to any plaintiff for (1) the development
of PTSD due to any defendant’s actions or (2) any personal physical
injury or physical sickness to any petitioner as a result of any
defendant’s actions.

      The district court entered judgment based on the jury verdict on
October 9, 2015.

XII.   Defendants’ Motion to Alter or Amend Judgment & Plaintiffs’
       Response Thereto

       On November 6, 2015, the State of Indiana, pursuant to Rule 59
of the Federal Rules of Civil Procedure, filed a motion to alter or amend
judgment by reducing damages (defendants’ motion to alter or amend).

       Defendants filed a memorandum in support of defendants’ motion
to alter or amend. Therein, defendants argued that plaintiffs did not
present any evidence to show an actual compensable loss. Specifically,
defendants argued that, other than a “casual reference” to Roman’s loss
of salary, plaintiffs did not present any evidence of medical costs, lost
income, or other compensatory or special damages. Rather, defendants
contended that plaintiffs “relied entirely on a request for an award for
emotional pain and suffering.” Defendants also argued that, in addition
to the damages not reflecting the evidence presented to the jury, the
award was monstrously excessive and without a rational connection to
the evidence.

       On December 3, 2015, plaintiffs responded to defendants’ motion
to alter or amend. Plaintiffs noted that “juries are afforded substantial
discretion in assessing damages, especially damages for intangible
harms like those at issue here.” Plaintiffs also argued that
                                   25

[*25] [j]udicial deference is especially warranted in reviewing
      verdicts for non-economic intangible damages, such as for
      the deprivation of physical liberty and infliction of
      emotional harm where there is no set mathematical proof
      required, but which instead call for normative value
      judgments and evidentiary evaluations best left to the
      collective judgment of the jury.

Further, in response to defendants’ argument that the jury’s verdicts
were not rationally connected to the evidence, plaintiffs provided the
following summary:

      Defendants simply ignore the evidence of the significant
      harm they inflicted upon the plaintiffs. Nowhere in their
      brief do they acknowledge the substantial trial evidence of
      the emotional harm they inflicted upon Roman and
      Lynnette Finnegan by falsely accusing them of causing
      their daughter’s death and then illegally removing their
      surviving daughters from them.          Defendants fail to
      mention the harm they inflicted upon Tabitha and
      Katelynn by falsely telling them their mother killed their
      sister, then separating them from their parents and forcing
      them to undergo nine months of investigative therapy,
      whereby they were forced to repeatedly relive their sister’s
      death in an unethical, harmful and fruitless quest to
      uncover evidence of their parents’ guilt. Defendants ignore
      the harm they caused by falsely telling Johnathon that his
      mother was blaming him for his sister’s death, thereby
      alienating him from his family.

      In their argument that the jury verdicts were rationally
connected to the evidence, plaintiffs did not cite (1) PTSD as having been
caused by defendants’ actions or (2) any personal physical injury or
physical sickness.

       Plaintiffs then outlined the evidence that supported each of their
constitutional claims for which the jury awarded compensatory
damages.

       Plaintiffs argued that the following evidence supported the jury’s
award of damages for their First Amendment claims: (1) Myers
retaliated against Roman and Lynnette by the December 5, 2005,
substantiation of the allegation that Roman and Lynnette medically
                                   26

[*26] neglected J.S.; (2) this substantiation resulted in Roman and
Lynnette’s placement on Indiana’s child abuse index for over four years;
and (3) these actions damaged Roman and Lynnette’s reputations and
triggered subsequent further substantiations of abuse and neglect.

      Plaintiffs argued that the following evidence supported the jury’s
award of damages for their Fourth Amendment claims, specific to
December 20, 2005: (1) defendants’ actions prevented the family from
reuniting and mourning together on the date of J.S.’s death; (2) the
surviving children were unlawfully held by DCS for five hours; and
(3) DCS’s action was a seizure that deprived the children of their liberty
while being subjected to interrogations.

       Plaintiffs argued that the following evidence supported the jury’s
award of damages for their Fourth Amendment claims, specific to
November 2006: (1) defendants’ removal of Tabitha and Katelynn was
unlawful; (2) the emotional trauma inflicted by defendants’ removal was
compounded by McAninch’s statement that Lynnette killed J.S.; and
(3) defendants’ removal emotionally traumatized Lynnette and Roman.

        Plaintiffs argued that the following evidence supported the jury’s
award of damages for their Fourteenth Amendment procedural due
process claim: (1) false accusations that Roman and Lynnette had
caused J.S.’s death; (2) the falsification of the Child Fatality Review
documents to state that the coroner had ruled J.S.’s death a homicide;
(3) falsification of a forensic pathologist’s 311 report; (4) refusal to
permit Tabitha to testify at the detention hearings regarding feeling
safe in the marital home, that Roman and Lynnette did not kill J.S., and
her desire to return home; (5) false testimony that Tabitha and Katelynn
were doing well and adjusting at their foster home; and (6) arbitrary
substantiation of the false charges of neglect and abuse.

        Plaintiffs argued that the following evidence supported the jury’s
award of damages for their Fourteenth Amendment substantive due
process claims: (1) trauma from the family’s separation and alienation
from each other, including Roman’s diagnosis of “Post-Traumatic Stress
Disorder (PTSD) and Anxiety/Panic Disorder;” (2) Tabitha and
Katelynn’s deprivation of their physical liberty; (3) stress; and
(4) McDonald’s lie to Johnathan that Lynnette accused him of causing
J.S.’s death.
                                    27

[*27] XIII. District Court Opinion and Order

      On September 30, 2016, by opinion and order, the district court
denied defendants’ motion to alter or amend.

      In summarizing the jury award, the district court stated:

             The Seventh Circuit has recognized that “[t]he
      required ‘rational connection’ between the evidence and the
      award does not imply mathematical exactitude, especially
      where the compensatory damages are for pain and
      suffering.”

Finnegan v. Myers, No. 3:08-cv-503, slip op. at 5 (N.D. Ind. Sept. 30,
2016) (quoting Hendrickson v. Cooper, 589 F.3d 887, 892–93 (7th Cir.
2009)).

       The district court further explained that “a verdict premised on
‘nonpecuniary loss can be supported in certain circumstances, solely by
a plaintiff’s testimony about his or her emotional distress.’” Id. (quoting
Deloughery v. City of Chicago, 422 F.3d 611, 619–20 (7th Cir 2005)).

       The district court noted that the jury repeatedly heard claims
from multiple sources of the following: (1) Roman and Lynnette were
falsely accused of causing J.S.’s death and had their surviving daughters
removed from the family home during a time of grief; (2) Tabitha and
Katelynn were told that their mother had killed J.S.; (3) Tabitha and
Katelynn were separated from their parents and underwent months of
“investigative” therapy; and (4) Johnathon was told, falsely, that his
mother was blaming him for his sister’s death.

      The district court found “that it is more likely the jury believed
the actions of [defendants] compounded that loss [(J.S.’s death)] and
caused [p]laintiffs significant additional trauma at a time when they
were most vulnerable and fragile.” Id. at 8–9.

       The district court additionally found “that it was rational for the
jury to conclude that great emotional harm arose from [defendants’]
actions that was separate and apart from the trauma of [J.S.’s] death
and to award them in kind for those injuries.” Id. at 9.

      In the September 30, 2016, opinion and order upholding the jury
award, the district court did not cite PTSD, personal physical injury, or
physical sickness.
                                    28

[*28] XIV. Settlement Agreement and Release and Settlement of Claim

      On October 28, 2016, defendants appealed the district court
verdict to the U.S. Court of Appeals for the Seventh Circuit.

       After the Seventh Circuit appeal, on April 4, 2017, the parties
settled the district court litigation by executing a Settlement
Agreement.

       The preamble of the Settlement Agreement entered between
plaintiffs and defendants states that the settlement was

      in full settlement and satisfaction of any and all of
      [p]laintiffs’ claims against [defendants] for alleged
      violations of federal laws, civil rights, state law,
      constitutional rights, and any other claims arising from
      court proceedings in the United States District Court for
      the Northern District of Indiana and the United States
      Court of Appeals for the Seventh Circuit, and any
      connection thereto, up to and including the date of this
      Settlement Agreement.

      Plaintiffs settled their claims against defendants for the sum of
$25 million.

      In the Settlement Agreement, plaintiffs agreed to execute a
written document fully releasing defendants (and the State of Indiana,
DCS, ISP, and their officers, agents, employees, and successors, known
and unknown) from liability

      for any injuries or costs allegedly incurred by [p]laintiffs as
      a result of or related to any violation of [p]laintiffs’ rights
      under state or federal law or under the United States
      Constitution by State Defendants which may exist or might
      be claimed to exist at or prior to the date of the Release,
      and any and all claims and causes of action of any nature
      whatsoever related to the court proceedings in the United
      States District Court for the Northern District of Indiana
      and the United States Court of Appeals for the Seventh
      Circuit which may exist or might be claimed to exist at or
      prior to the date of the Release.

      Paragraph 5 of the Settlement Agreement stated as follows:
                                   29

[*29] Plaintiffs agree to hold [defendants] harmless from any
      and all actions, claims, and demands whatsoever which
      may now or hereafter exist on account of [defendants] not
      withholding taxes from any amounts paid in this
      agreement and to indemnify [defendants] and the State of
      Indiana from any and all loss, expense, penalty, or interest,
      including but not limited to, attorney’s fees they may be
      required to pay or incur as a result of any action, claim or
      demand on account of [defendants] not withholding taxes
      provided that [defendants] complied with all applicable
      laws and regulations.

      Paragraph 6 of the Settlement Agreement stated as follows:

      Plaintiffs agree and understand that they are fully
      responsible for the reporting of income received under this
      Agreement, to the appropriate federal, state and local
      taxing authorities; that [p]laintiffs are responsible for
      paying taxes due on said income; and that the [defendants]
      and their representatives have made no promises or
      assurances, nor have they given any advice, regarding the
      tax treatment of said payments.

       Also on April 4, 2017, plaintiffs signed a Release and Settlement
of Claim.

       The first paragraph of the Release and Settlement of Claim
contained a release of liability of defendants. This release text stated
that plaintiffs

      do hereby release, acquit, and forever discharge the State
      of Indiana, [DCP], [ISP], [and defendants], and all their
      present and former agents, successors, and assigns, known
      and unknown, from any and all actions of any kind or
      nature whatsoever including lawsuits, causes of action,
      claims, demands, grievances, charges, liens, liabilities,
      damages, costs (including, but not limited to, all attorney
      fees and costs), interest, loss of services, expenses and
      compensation, including but not limited to, on account of,
      or in any way growing out of any and all known and
      unknown personal injuries, compensatory damages, losses,
      property damage and injuries to constitutional and/or
      statutory rights, resulting in or to result from the events,
                                    30

[*30] which is the subject of a civil action, Roman Finnegan, et
      al., v Laurel Myers, et al., now pending in the United States
      Court of Appeals for the Seventh Circuit, Case No. 16-3806,
      originating from the case in the United States District
      Court for the Northern District of Indiana, Cause No. 3:08-
      cv-00503-RL-MGG.

       The Settlement Agreement made no mention that plaintiffs were
settling their claims due to (1) PTSD caused by any defendant’s action
or (2) any personal physical injury or physical sickness caused by
defendants. Likewise, the Release and Settlement of Claim made no
specific mention that plaintiffs were waiving any compensatory claim
against defendants relating to any personal physical injury or a physical
sickness caused by defendants.

       A document styled “Settlement Authority Statement for Roman
Finnegan, Lynnette Finnegan, Katelynn Salyer, Johnathon Abair, and
Tabitha Abair v. Laurel Myers, Regina McAninch, Tracy Salyers, Reba
James, James Payne, Jennifer McDonald, Antoinette Laskey, John
Cavanaugh (terminated 9/8/15) and Unnamed John Does 1–19”
(Settlement Authority Statement) outlines the amounts of the
$25 million settlement that each plaintiff was to receive net of attorney’s
fees and/or reimbursement of any expenses.

       According to the Settlement Authority Statement, of the
$25 million settlement, Roman was to receive $3,563,351.24; Lynnette
was to receive $3,147,830.24; Tabitha was to receive $2,074,956.35;
Katelynn was to receive $2,053,897.09; and Johnathon was to receive,
net of expenses, $1,613,205.08.

     After plaintiffs signed the Settlement Authority Statement, on
May 24, 2017, the parties filed a Joint Motion to Dismiss Appeal.

XV.   Respondent’s Contacts with Petitioners

      On June 18, 2018, respondent initiated an examination of Roman
and Lynnette’s 2017 tax return.

      During this examination, respondent’s revenue agents (RAs)
maintained an Examining Officer’s Activity Record (activity record) in
which the RAs memorialized contacts with petitioners and with Roman
and Lynnette’s authorized representative (representative).
                                   31

[*31] On September 17, 2018, the assigned RA contacted the
representative and requested that the representative provide the Code
section(s) or research upon which petitioners were relying for their
claimed exclusion of the settlement proceeds from income. The activity
record notes that the representative “stated she did not have anything.
Except that their constitutional rights of the 1st & 4th & 14[th] are also
regarded as personal injury.” The September 17, 2018, record entry does
not reflect that the representative made any mention of PTSD or of any
physical injury or physical sickness of any petitioner.

       On October 23, 2018, respondent expanded the examination to
include Roman and Lynnette’s children by “picking up controls” over
their returns, with the scope limited to the “lawsuit issue only.”

       On November 1, 2018, the RA advised the representative that the
compensation received from the lawsuit was fully taxable for all
petitioners.

      On April 5, 2019, the RA’s notes reflect that Roman’s attorney
“suggested” that petitioners “suffer from post-traumatic stress
disorder.”

       On June 27, 2019, the RA received correspondence from Roman’s
attorney and noted that petitioners “are claiming the exemption under
104 through the theory or fact that post stress traumatic disorder [sic]
is a physical and not mental condition.”

       On November 1, 2019, the RA and RA Manager again advised
petitioners’ representative of respondent’s position that the settlement
proceeds received by petitioners were taxable.

XVI. Post-Settlement Evaluation of Petitioners

      On December 8, 2019, J. Douglas Bremner, M.D., completed his
preliminary expert report (preliminary report).

        In preparing the preliminary report, Dr. Bremner “reviewed court
documents and other reports” related to petitioners’ district court case.
As part of the preliminary report, Dr. Bremner provided a narrative
summary of the actions leading to the district court case, in which he
concluded that “[t]he traumatic events experienced by the family meet
the criteria of [Criterion] A of the DSM-5 criteria for PTSD of a threat
to life or self-integrity.” At trial before this Court, Dr. Bremner could
not identify with specificity the court documents and medical records
                                   32

[*32] upon which he relied in preparing the preliminary report. Also at
trial, Dr. Bremner did not recall reviewing the district court transcript
before preparing the preliminary report.

       On March 27, 2020, Dr. Bremner interviewed Katelynn,
Johnathon, and Roman. On March 30, 2020, Dr. Bremner interviewed
Tabitha and Lynnette. Each interview was conducted by Zoom, and
each lasted one to two hours. Dr. Bremner had not met any petitioner
before conducting his interviews.

       On March 31, 2020, Dr. Bremner completed his expert report
following his review of interview notes taken on March 27 and March 30,
2020. On the basis of this review, Dr. Bremner concluded that plaintiffs
each met “criteria for current PTSD” “based on the DSM-5.” The expert
report does not analyze with specificity how plaintiffs satisfied each
criterion.

                               OPINION

I.    Legal Background

      The Commissioner’s determinations in a notice of deficiency are
generally presumed correct, and the taxpayer bears the burden of
proving those determinations are erroneous. Rule 142(a)(1); Welch v.
Helvering, 290 U.S. 111, 115 (1933). Petitioners have not claimed or
shown that they meet the requirements of section 7491(a) to shift the
burden of proof to respondent as to any relevant factual issue.

      Section 61(a) defines gross income as “all income from whatever
source derived” unless excluded by a specific provision of the Code.
Inclusions in gross income under section 61 are construed broadly,
whereas exclusions from gross income are construed narrowly.
Commissioner v. Schleier, 515 U.S. 323, 327–28 (1995); Commissioner v.
Glenshaw Glass Co., 348 U.S. 426, 430 (1955). Taxpayers bear the
burden of showing that an income exclusion “falls squarely within the
requirements for the exclusion.” Forste v. Commissioner, T.C. Memo.
2003-103, 85 T.C.M. (CCH) 1146, 1151.

       Section 104(a)(2) excludes from gross income “the amount of any
damages . . . received (whether by suit or agreement and whether as
lump sums or as periodic payments) on account of personal physical
injuries or physical sickness.”
                                         33

[*33] For these purposes, “emotional distress shall not be treated as a
physical injury or physical sickness.” § 104(a) (flush language). 4 The
legislative history of section 104(a)(2) explains that “emotional distress
includes symptoms (e.g., insomnia, headaches, stomach disorders)
which may result from emotional distress.” H.R. Rep. No. 104-737,
at 301 n.56 (1996) (Conf. Rep.), reprinted in 1996-3 C.B. 741, 1041.
Treasury Regulation § 1.104-1(c)(1) further explains that “[e]motional
distress is not considered a physical injury or physical sickness” unless
it is “attributable to a physical injury or physical sickness.”

       Damages are on account of personal physical injuries or physical
sickness if there is a direct causal link between the action giving rise to
the damages and the physical injury or physical sickness. Blum v.
Commissioner, T.C. Memo. 2021-18, at *7–8 (citing Doyle v.
Commissioner, T.C. Memo 2019-8, at *11), aff’d, No. 21-71113, 2022 WL
1797334 (9th Cir. June 2, 2022); see also Rivera v. Baker W., Inc., 430
F.3d 1253, 1257 (9th Cir. 2005). Personal injuries alone are not enough;
Congress amended the gross income exclusion under section 104(a)(2) to
include only “physical” personal injuries. Small Business Job Protection
Act of 1996, Pub. L. No. 104-188, § 1605(a), 110 Stat. 1755, 1838.

      When damages are received pursuant to a settlement agreement,
the nature of the claim that gave rise to the settlement controls whether
the damages are excludable under section 104(a)(2). See United States
v. Burke, 504 U.S. 229, 237 (1992); see also Bagley v. Commissioner, 105
T.C. 396, 406 (1995) (“[T]he critical question is, in lieu of what was the
settlement amount paid[?]”), aff’d, 121 F.3d 393 (8th Cir. 1997). To
determine the nature of the claim, we look first to the terms of the
agreement and, if the terms are ambiguous, to the facts and
circumstances surrounding the settlement. Rivera, 430 F.3d at 1257.

II.    Plaintiffs’ Settlement Payment

      To resolve the previous litigation, plaintiffs and defendants
reached a Settlement Agreement, bringing the settlement payment
under the initial definition of “damages.” See Treas. Reg. § 1.104-1(c).
Thus, we turn to the terms of the Settlement Agreement, which provide
that payment to plaintiffs was

        4 The flush text of section 104(a) provides that the general rule against

exclusion of emotional distress damages does not apply to “the amount paid for medical
care” attributable to emotional distress. Petitioners neither raised this issue nor
introduced evidence regarding amounts paid for medical care.
                                         34

[*34] in full settlement and satisfaction of any and all of
      [p]laintiffs’ claims against [defendants] for alleged
      violations of federal laws, civil rights, state law,
      constitutional rights, and any other claims arising from
      court proceedings in the United States District Court for
      the Northern District of Indiana and the United States
      Court of Appeals for the Seventh Circuit, and any
      connection thereto, up to and including the date of this
      Settlement Agreement . . . .

       The terms of the Settlement Agreement also provide that
plaintiffs agreed to release defendants from liability

       for any injuries or costs allegedly incurred by [p]laintiffs as
       a result of or related to any violation of [p]laintiffs’ rights
       under state or federal law or under the United States
       Constitution by [defendants] which may exist or might be
       claimed to exist at or prior to the date of the Release, and
       any and all claims and causes of action of any nature
       whatsoever related to the court proceedings in the United
       States District Court for the Northern District of Indiana
       and the United States Court of Appeals for the Seventh
       Circuit which may exist or might be claimed to exist at or
       prior to the date of the Release.

       Petitioners urge us to find that the damages were awarded to
plaintiffs “on account of [plaintiffs]’ PTSD” and to further find that
PTSD is “a physical injury to the brain.” 5 However, the Settlement
Agreement makes no reference to PTSD specifically or to physical injury
or physical sickness more generally; thus, on the basis of the terms of
the Settlement Agreement, we cannot find in petitioners’ favor.

     Even if we were to expand our focus beyond the Settlement
Agreement, petitioners would fare no better.

       As an initial matter, plaintiffs’ original complaint against
defendants does not relate to compensation for PTSD or any physical
injury or physical sickness; rather, plaintiffs alleged violations of
plaintiffs’ First, Fourth, Sixth, and Fourteenth Amendment rights and
alleged that defendants engaged in a conspiracy under 42 U.S.C. § 1983.

       5 For purposes of this discussion, for the reasons set forth below, we need not

answer whether PTSD is, in fact, a physical injury or physical sickness.
                                   35

[*35] Likewise, plaintiffs’ first amended complaint realleged the claims
asserted in the original complaint, added three additional defendants,
and alleged additional violations of plaintiffs’ First, Fourth, Sixth, and
Fourteenth Amendment rights and civil rights more broadly. Like the
original complaint, the amended complaint is silent regarding PTSD or
any physical injury or physical sickness.

      Similarly, of 31 agreed jury instructions, not one mentions PTSD
or any physical injury or physical sickness.

      Further, the corrected agreed proposed voir dire questions
concerned alleged violations of plaintiffs’ “civil rights under the First,
Fourth, and Fourteenth Amendments to the United States
Constitution” and informed the potential jurors that the jury “may be
asked to award compensation for mental and emotional suffering.” As
with the original complaint, the amended complaint, and the jury
instructions, the corrected agreed proposed voir dire questions do not
address PTSD or any physical injury or physical sickness.

        Plaintiffs’ preliminary statement and the district court judge’s
summary of the issues presented likewise frame the district court
litigation as centering around whether defendants violated plaintiffs’
civil rights—specifically their rights under the First, Fourth, and
Fourteenth Amendments. Even plaintiffs’ counsel at trial described
plaintiffs’ case as “assert[ing] civil rights claims.”

       The jury awarded plaintiffs compensatory damages totaling
$31.5 million, with amounts specifically awarded for violations of each
plaintiff’s constitutional rights. The jury verdict did not mention PTSD
specifically or physical injury or physical sickness generally.

       Of the plaintiffs, only Roman had a known diagnosis of PTSD at
the time of the district court litigation and subsequent execution of the
Settlement Agreement, and, across 14 witnesses’ testimony, Roman’s
PTSD was referenced only once.

       The determination of the nature of the underlying claim is factual
and is made by considering the Settlement Agreement in the light of all
the facts and circumstances, including the claim’s characterization
under applicable state law, the evidence marshaled, the parties’
arguments, and the intent of the payor of the settlement. Green v.
Commissioner, 507 F.3d 857, 867–68 (5th Cir. 2007), aff’g T.C. Memo.
2005-250; Threlkeld v. Commissioner, 87 T.C. 1294, 1306 (1986), aff’d,
848 F.2d 81 (6th Cir. 1988).
                                        36

[*36] With the vast ocean of evidence before us concerning the district
court litigation, references to PTSD make barely a drop in the bucket.
Rather, the image that overwhelmingly emerges is that the damages
were paid not as compensation for PTSD but for violations of plaintiffs’
constitutional rights stemming from defendants’ conduct and the
emotional pain caused therefrom. 6

       Finally, we find Dr. Bremner’s 2019 observations likewise
insufficient to establish the direct causal link that section 104(a)(2)
requires, as these observations could not have influenced the parties’
intent in 2016. See, e.g., Green v. Commissioner, 507 F.3d at 868
(“Ultimately, the character of the payment hinges on the payor’s
dominant reason for making the payment.”); cf. Pipitone v. United
States, 180 F.3d 859, 864 (7th Cir. 1999) (“The existence of an agreement
that contains a release of undisclosed or potential claims is not sufficient
evidence standing on its own to demonstrate that the amounts paid
under the agreement are eligible for exclusion under § 104(a)(2).” (citing
Ball v. Commissioner, 163 F.3d 308, 309 (5th Cir. 1998), aff’g T.C. Memo.
1997-549)).

       Accordingly, we sustain respondent’s determination that the
settlement payment plaintiffs received is not excludable from
petitioners’ gross incomes under section 104(a)(2).

      We have considered all arguments made by the parties, and, to
the extent not addressed above, we conclude they are irrelevant, moot,
or meritless.

       To reflect the foregoing,

       Decisions will be entered for respondent.

      6 We also note that, even if petitioners had shown that some portion of the

damages was compensation for PTSD, petitioners have failed to quantify that amount.