On June 26, 2002, about 1915 eastern daylight time, a Hughes 369D, N40AP, operated by the Jefferson County Police Fiscal Court, was substantially damaged during a hover taxi simulated engine failure near Jeffersontown, Kentucky. The certificated flight instructor and the certificated private pilot were not injured. Visual meteorological conditions prevailed. No flight plan had been filed for the local flight, which originated at the Jefferson County Police Heliport, Louisville, Kentucky. The instructional flight was conducted under 14 CFR Part 91. According to the flight instructor, the flight departed the police heliport about 1845. The private pilot, who was only rated in single engine land airplanes, initially practiced hovering and autorotations from a hover in a small field behind the heliport. He then flew the helicopter to another field about 4 miles to the east, and performed a running landing. After the running landing was completed, the flight instructor took control of the helicopter, and advised the private pilot that he would demonstrate a simulated power failure "while hover taxiing or prior to takeoff." The flight instructor began the maneuver from a 4-foot hover. About 15 knots, as the helicopter was passing through translational lift, the flight instructor rolled the power to ground idle and performed a running landing. Shortly after ground contact, the flight instructor's left foot slipped off the rudder pedal, the helicopter slid to the left, and the left skid dug into the ground. The helicopter then rolled to the left, and came to rest on its side. The flight instructor further stated that he thought the helicopter had run over a rut during the running landing, which caused his foot to come off the rudder pedal.