Sandusky Civil Law Update: Insurance, New Lawsuit, and the Preliminary Hearing

My post on the potential civil lawsuits arising from the Jerry Sandusky molestation scandal at PSU still generates a fair amount of traffic, mostly from people looking for updates on the latest legal developments. If the internet asks, it shall receive.

There have been four major developments relating to the case:

  1. A preliminary hearing for the criminal charges against Tim Curley and Gary Schultz;
  2. The filing of another civil lawsuit against Sandusky, Penn State, and The Second Mile;
  3. The filing of a declaratory judgment action by Federal Insurance Company of New Jersey, the insurance company for The Second Mile, to obtain a court order relieving it of any duty to defend or to indemnify Sandusky for the sexual abuse claims against him; and,
  4. The disclosure of multiple allegations of child molestation against longtime Philadelphia Daily News sportswriter Bill Conlin, allegations involving conduct from decades ago, apparently spurned in part by the Sandusky indictment. (This development is legally connected to the Sandusky indictment because of the statute of limitations, as explained below).

Let’s consider them bit by bit.

On the first issue, in Pennsylvania criminal law, a “preliminary hearing” is a short hearing in front of a judge that takes place soon after an indictment is filed. Although the key witnesses are called to testify, the hearing is not meant to evaluate the credibility of the witnesses, but rather to determine if there’s enough evidence to show probable cause that a crime might have occurred.

By that standard, the preliminary hearing wasn’t particularly interesting, because we already knew that McQueary’s version of events blatantly contradicted the descriptions given by Curley and Schultz, and so the judge correctly ruled that there was sufficient probable cause for the prosecution to continue. (A transcript is available here.) We did, however, learn a little bit more about the positions everyone is taking in the case with Curley’s and Schultz’s position seeming even more curious, inexplicable, and incredible:

In his grand jury testimony, Mr. Curley said Mr. McQueary never told him that what he saw in a locker-room shower was sexual — instead that it was “playful” and “horsing around.” …

Mr. Curley said in his grand jury testimony he never referred the matter to police because he didn’t think a crime occurred, though he did bar Mr. Sandusky, a retired Penn State football defensive coordinator, from bringing children onto campus. …

Mr. Schultz told the grand jury he did not remember who originally reported the locker-room incident. He recalled then-head football coach Joe Paterno using the words “disturbing” and “inappropriate” to describe what Mr. McQueary told him.

“Some kind of wrestling-around activity and maybe Jerry grabbed his genitals,” is what Mr. Schultz remembered Mr. McQueary’s description, he told the grand jury.

Grabbing a child’s genitals strikes me as grossly inappropriate at a minimum and likely criminal in and of itself, but let’s put that aside for the larger problem: why did they bar a high-ranking member of the football program, who was also deeply involved with a children’s charity, from bringing children on campus? Either you think someone is a threat to children or you don’t, and, if you do, you do a lot more than just tell them to go do it somewhere else. It seems Curley and Schultz (and maybe others) recognized the danger Sandusky posed and then acted only to shield Penn State from civil liability for the ongoing abuse.

I thus consider Penn State to have all but lost any defense to sexual abuse claims following the 2002 incident, whether under a negligence per se rule (if they were mandatory reporters) or under a negligence rule (if Sandusky is determined to be an agent or ostensible agent of PSU, which I believe he will be).

On the second issue, another civil lawsuit has been filed in the Philadelphia Court of Common Pleas against Sandusky, Penn State, and The Second Mile, but there’s not really much to report here. The case was filed under a pseudonym, “C. Miller,” and, perhaps more importantly for our purposes, the case was filed as a writ of summons, which is nothing more than a single page legal document noting that one person has sued another person. The writ of summons does not say anything about the allegations that are going to be made. Also, although the Philadelphia Inquirer reports that the plaintiff has 20 days in which to file a detailed complaint, that’s not actually correct. Instead, at any point any one of the defendants could “praecipe” a “rule to file complaint” upon the plaintiff, and then the plaintiff would have 20 days in which to file a complaint detailing his allegations, and then another 10 days before default can be entered. See Pennsylvania Rules of Civil Procedure 1037(a) and 237.1. At the moment, I don’t think any of the defendants have an incentive to do that, so most likely this case is going to sit on the docket for a while until the criminal proceedings have progressed further.

My hunch is that this case has some sort of statute of limitations issue (or it was getting near the statute), which is why the plaintiff’s lawyers felt the need to file a writ of summons so soon.

On the third issue, the insurance company for The Second Mile recently filed a declaratory judgment action to get out of covering any of Sandusky’s legal bills (and any potential judgment in the future) arising from the abuse:

According the suit, Federal insured The Second Mile under a policy that is in effect from April 1, 2011 to April 1, 2012. The policy provided liability coverage for all charity employees who commit a “wrongful act,” which it defined as “any error, misstatement, misleading statement, act, omission, neglect, breach of duty (or) personal injury.”

The policy contained several exclusions, including if the insured person committed a “deliberately fraudulent act or omission or any willful violation of a statute or regulation,” the suit says.

While acknowledging Sandusky was an “insured person” under the policy, Federal contends he is not entitled to coverage because the alleged child sexual abuse was not committed in his capacity as an employee of the charity.

Federal further contends that providing coverage to Sandusky would be “unlawful” because to cover claims arising for sexual abuse of children is “repugnant” to Pennsylvania public policy.

The filing was expected, and requires a little bit of background to explain.

As a general matter, and for good and sound reasons, insurance companies are obligated to provide a defense to anyone who is even arguably covered by a particular insurance policy. Thus, when the employee of the company is sued for any conduct relating to their employment, the insurance company is obligated to at least initially begin the defense of the claim.

Whether or not the insurance company has to keep defending the claim (and indemnify, or pay for, any judgment that might be entered against the purported policyholder) comes down to the language of the policy and, in some instances, the public policy of Pennsylvania. Here, both issues are implicated: the policy excludes coverage for “any willful violation of a statute or regulation,” which certainly includes molesting children, and the Pennsylvania Supreme Court has long held that intentional conduct simply cannot be insured at all in Pennsylvania:

Even if coverage is not excluded by the terms of the policy it may be excluded as violative of the public policy of Pennsylvania. Nationwide Mutual Ins. Co. v. Hassinger, 325 Pa.Super. 484, 489, 473 A.2d 171, 173 (1984). In Hassinger, we held that it is against the public policy of this state to provide insurance for certain intentional acts. This ruling is based on the common law adage that a person should not profit from his wrongful acts. Id. The Hassinger court defined intent by relying on the Restatement (Second) of Torts, § 8A. The court held that intent means that the actor desired to cause the consequences of his act or that he acted knowing that the consequences were substantially certain to result. Id., 325 Pa.Superior Ct. at 493, 473 A.2d at 175.

United Services Auto. Ass’n v. Elitzky, 517 A. 2d 982 (Pa. 1986).

In some cases, the plaintiff suspects that the insurance company is going to try to avoid providing coverage to the defendant in the case, and so will allege non-intentional torts like negligence alongside the intentional torts like assault to preserve insurance coverage. Sometimes that makes sense, because sometimes there’s a thin line between intentional conduct and unintentional conduct; consider the example in which a homeowner and their guest get into a shouting match, they start pushing one another, and then the guest falls over and is injured. In that case, although the homeowner likely knows what they intended to do, it may take a jury to decide if the homeowner intentionally shoved the guest over or if they were simply negligent by allowing the argument to get out of hand.

In the only complaint filed against Sandusky, Penn State, and The Second Mile, however, the plaintiffs have not even bothered to make those types of allegations, and instead have alleged only intentional sexual abuse. I don’t blame them, because it doesn’t make sense to allege that Sandusky “negligently” molested them. Either he did it and he meant to do it or it didn’t happen at all. Thus, I expect the insurance company to be relieved of any duty to keep defending Sandusky, although the bigger problem for them is that they will have to keep defending The Second Mile, which was allegedly negligent in failing to monitor Sandusky and failing to stop him when they learned of the molestation accusations.

On to the fourth and final issue, one of the more prominent sportswriters for decades in the Philadelphia area, Bill Conlin, was publicly accused by several adults of abusing them in the 1970s when they were children. As explained by my prior post on the potential claims against Penn State, the victims are thus far outside the statute of limitations for bringing civil claims because their claims expired before August 27, 2002, and because the victims are all over thirty years of age, but their story has generated renewed interest (e.g. here and here and here) in again amending Pennsylvania’s childhood sexual abuse statute to further extend the statute of limitations for criminal and civil claims arising from child molestation.

Personally, I think at a minimum the civil statute should be extended — under current law, a criminal prosecution can be brought until the victim turns 50, whereas a civil lawsuit can be filed until the victim turns 30. We usually apply stricter standards to criminal claims than to civil claims (e.g., the “beyond a reasonable doubt” burden of proof as compared to “preponderance of the evidence), so it doesn’t make sense to stop civil claims at 30 but allow criminal prosecutions for another 20 years. If the claims remain viable enough to warrant imperiling the defendant’s liberty, they warrant the possibility of compensation for the victim. (New Jersey has a similarly strange set up — criminal prosecutions have no statute of limitations, while civil lawsuits do.)

From the Grand Jury Presentment against the Catholic Archdiocese of Philadelphia, to the Sandusky scandal, to the Conlin allegations, the childhood sexual abuse was probably the biggest story in Pennsylvania law in 2011 (with all the unfortunate lawyer advertising to boot), overtaking even the changes to joint and several liability and the Marcellus Shale and fracking developments. One potential outcome from all of this attention could be an extension of the statute of limitations in civil lawsuits stemming from child sexual abuse. Maybe 2012 will be the year the legislature and the governor stop taking away victims’ rights and start giving some rights back.

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  • Eric T.

    Max: Great update. The insurance company trying to get out of defending/indemnifying is interesting. For the intentional acts of Sandusky, there would seem to be no right to indemnify. For the negligence by 2nd Mile and others in failing to act, it would seem that they would be on the hook.

  • Guest

    Let’s hope the Catholic Conference doesn’t block the extension of the statute of limitations in civil cases.

  • Guest

    Thanks for the update. Good roundup. As an aside, I haven’t read your blog in a while. You write so much, it’s a bit daunting to get caught up, especially during the workday!

    As for the civil claims against PSU arising out of the Sandusky scandal, I don’t think that PSU is going to be found to be a mandatory reporter under the statute in question (the victims were simply not under its care, which takes PSU and its agents outside of the statute). Such a finding would damn any negligence per se claim. And, although I agree that the post-2002 claims will be the most difficult for PSU to defend (especially if there are any that occurred on campus), I can’t see any court holding an organization liable for intentional acts of a non-employee that occur on premises that are not controlled by that organization.

    • Anonymous

      I’m inclined to agree on the mandatory reporter part, but liability for events off of PSU’s campus is trickier. Sandusky was plainly an ostensible agent of PSU — he was technically retired, but he maintained and office and considerable authority within PSU. I don’t doubt that, when people dealt with him, they thought he was partly acting on behalf of PSU and that he was vested with some authority at PSU.

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