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Penn State Sues Liability Carrier

Source: Centre Daily Times

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Posted on 17 Feb 2012

The Jerry Sandusky case has left Penn State in a legal battle with its liability insurer.

The insurer, Blue Bell-based Pennsylvania Manufacturers’ Association Insurance Co., doesn’t want to pay for the costs coming from a civil lawsuit filed by a man who said he was molested by Sandusky.

The university filed its suit Wednesday in the Court of Common Pleas of Centre County. According to the university, the lawsuit “seeks to enforce its rights under its PMA policies and is in sharp contrast to PMA’s tactical action.”

PMA filed a civil suit Jan. 31 in the Philadelphia Court of Common Pleas, seeking to get out of having to pay for costs coming from a civil suit filed by “John Doe.” That suit is against The Second Mile, the group for at-risk youth Sandusky started and through which he allegedly met his victims, and the university.

Penn State’s lawsuit stated that despite the fact that the university has bought PMA insurance for 50 years when “John Doe” filed the suit, “PMA failed and refused to provide coverage for which PSU bargained and paid.”

The suit said the university can’t determine the costs at this time, but the university is seeking damages of more than $50,000, with the amount to be determined at trial.

In a statement, Senior Vice President for Finance and Business David Gray said the university believes PMA’s suit “is without merit.”

“Despite substantial insurance premiums paid by the university to PMA over decades, PMA has refused to provide the coverage for which the university is entitled,” Gray said. “We are extremely disappointed that rather than act in good faith with its insured, PMA instead chose to file an anticipatory lawsuit against us.”

The PMA spokesperson could not immediately be reached for Wednesday night.

So far, two lawsuits have been filed against the university as a result of the child sex abuse allegations against Sandusky, a former football coach. He is awaiting trial on charges he sexually molested 10 boys he met over a period of 15 years.

President Rodney Erickson has said a number of times that the university’s legal costs would be covered by general liability insurance and directors and officiers insurance policies.

Erickson has also said the university has to do the right thing for the alleged victims. The university has said that no money from tuition or the state will go toward picking up the costs from the scandal.

The university has been trying to recover from the fallout of the scandal, including unveiling a website, www.openness.psu.edu, Tuesday with information about the situation, the university’s response to it, costs associated with it and other spending information. But the repercussions of the allegations continue to be felt. Penn Staters for Responsible Stewardship, a group seeking to unseat members of the university board of trustees, issued a statement Tuesday saying the new website “is nothing more than a disappointing and superficial attempt at transparency.”


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