A federal judge in Pennsylvania has ruled Federal Insurance Co. has no duty to defend convicted child molester and sex abuser Jerry Sandusky.

The insurer, part of the Chubb Group of Insurance Cos., had issued directors' and officers' and employment practices liability coverage to The Second Mile, an organization Sandusky founded for underprivileged children.

The former Penn State University assistant football coach faces civil litigation from his victims and is appealing his June 2012 conviction on 45 of 48 counts related to the sexual abuse of boys, many of whom he met at The Second Mile.

Sandusky was sentenced to 30-60 years in prison.

According to the ruling by U.S. District Judge Yvette Kane, “The fact that Sandusky met his victims through The Second Mile—or even sexually abused victims 'during the course of activities of Second Mile'—does not change the fact that his sexual abuse of children was personal in nature, and performed in his individual capacity.”

Therefore, as Federal Insurance contended in its filing seeking declaratory judgment, Sandusky's actions were outside the scope of his insured capacity under the policies as an executive or employee.

In December 2011, shortly after he was indicted on related charges, Sandusky informed Federal he would seek coverage for defense of the civil and criminal complaints under the D&O and EPL policy.

Federal advanced Sandusky's attorney $125,000, subject to a reservation of rights to deny coverage. The insurer then filed to get a ruling that it was not obligated to provide a defense.

Sandusky's attorney attempted to argue the policy language defining “insured capacity” was ambiguous. Judge Kane disagrees, saying the court “find the policy language regarding “insured capacity” to be unambiguous in limiting coverage to those acts conducted by an insured person acting in his or her capacity as such.”

Kane had previosuly ruled Federal Insurance had no duty to indemnify Sandusky, but the duty-to-defend question remained.

In January, Sandusky and his homeowners' insurer, State Farm, settled a lawsuit brought by the insurer to similarly have a judge declare the company has no obligation to defend or indemnify Sandusky, who had looked to the policy for coverage. Kane also oversaw that case.

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Judge: Federal Insurance Not Obligated to Defend Sandusky

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