Sandusky Insurer Does Not Have to Indemnify Him

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June 6, 2012; Source: The Legal Intelligencer

NPQ will try not to litter your inbox with much more information about former assistant Penn State football coach Jerry Sandusky, now on trial for child sex abuse associated with his charity, Second Mile. But some of the information may be informative so here is a note on insurance coverage.

U.S. District Chief Judge Yvette Kane of the Middle District of Pennsylvania has ruled that Federal Insurance Co., which had a contract with Second Mile that included indemnification of any “‘loss’ which an insured person becomes obligated to pay for a wrongful act committed, attempted, or allegedly committed by an insured person,” will not have to pay to indemnify Sandusky.

Citing judicial and legislative precedent, Kane found that child sex-abuse, specifically, would negate the enforcement of the contract if the individual were convicted.

Such a contract would allow an insured to shift the consequences of intentional, reprehensible conduct to an insurance company, thereby abdicating personal responsibility…It is entirely clear, and this court holds, that the public policy of Pennsylvania as announced by its courts prohibits the reimbursement of Sandusky for any damage award that he may ultimately be found to owe arising from the allegations that he molested and sexually abused children,” according to Kane.

However, Kane deferred a decision on whether or not the insurance company had to pay for Sandusky’s defense until there was a factual record established by discovery. Sandusky reportedly applied for this benefit relatively late in the process. –Ruth McCambridge