PA Court Finds No Coverage for Sandusky Claims

Legal issues and case law continue to emerge from the Jerry Sandusky matter.   The Second Mile, a charitable organization run by Sandusky, submitted a claim to its Directors and Officers insurance carrier.   As we previously posted, The Second Mile’s insurer, Federal Insurance Company, has been vigorously opposing Sandusky’s claims that it owes him any coverage for the underlying civil and criminal litigation.

Although the Middle District of Pennsylvania previously denied Federal’s motion for judgment on the pleadings, Judge Yvette Kane recently granted Federal’s summary judgment motion.  Judge Kane held that Federal was not obligated to cover Sandusky’s legal fees since Sandusky’s crimes did not take place in his capacity as an employee or executive of the charity, a standard required by the applicable Federal policy.  In fact, Judge Kane explained that the fact that Sandusky met and allegedly abused victims “during the course of activities of Second Mile” does not impart a duty on Federal because Sandusky’s abuse of the children was “personal in nature, and performed in his individual capacity.”

Sandusky opposed the motion and requested additional time for discovery to review Federal’s claims files, its underwriting manuals and other Federal policies that Federal used to exclude sex abuse or molestation from coverage.  Judge Kane denied this request on the basis that subsequent discovery “will not alter the court’s conclusion that the Federal policy does not cover the acts in question.”

As this case proceeds, WCM will continue to provide updates on the court’s decisions.

Thanks to Remy Cahn for her contribution to this post.  If you would like more information please write to mbono@wmclaw.com