The Toffees defender was stretchered off in the first half of their draw at the King Power Stadium with replays showing his knee twisting as he went for a 50-50 ball with Boubakary Soumare.
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Play was immediately called to a halt as the Republic of Ireland international received treatment from medics.
He was later taken off on a stretcher but was seen applauding the travelling Everton fans at the King Power Stadium as well as handing out instructions to teammates as he left the field of play.
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It remains to be seen how long the 34-year-old will be out for, who suffered a fractured leg in March 2017, but Dyche fears it could be as bad as it looked.
"We're waiting on news about Seamus," Dyche told talkSPORT. "It doesn't look great but we're waiting on the clarity on that…
"The medics are thinking it's probably going to be more serious than not."
The injury hit home with talkSPORT's Jason Cundy, whose playing career was cut short by a knee injury himself.
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And the former Chelsea man was very critical of Sky Sports for showing multiple replays of what could prove to be a very severe injury.
"I was absolutely and utterly appalled at whoever the director was at Sky showing constant replays of that injury.
"Have some respect for someone's career, he has been an unbelievable servant to Everton."
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"Talking as someone that had their career ended through a knee injury, nothing like that, it was horrendous and someone somewhere has got to have the know-how not to show different replays from different angles. We don't want to see that.
"I found it incredibly upsetting to watch that, to watch a stalwart of English football and one of the legends of Everton Football Club to be put through the humiliation of having that knee injury, that challenge…
"Every time it seems to get worse. They've got to have some respect for that player. It was terrible.
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"I doubt I'll be the only person that says this, shocking decision from Sky."
Coleman's injury came towards the end of a very eventful first half which saw Everton surrender an early lead in sloppy fashion.
After Dominic Calvert-Lewin put the visitors ahead with a penalty Leicester hit back through Caglar Soyuncu's strike.
Jamie Vardy then put the Foxes in front after being played through by James Maddison, who intercepted Alex Iwobi's casual pass.
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Pickford made amends when he saved a penalty from Maddison, as did Iwobi on 54 minutes with his half-volley bringing Sean Dyche's men on level terms in the enthralling 2-2 clash.