Judge: Insurer Must Cover Defense Costs in Sandusky Molestation Case

NU Online News Service, June 6, 3:03 p.m. EDT

A federal judge ruled that Federal Insurance Co. will have to cover defense costs of Gerald A. Sandusky, the former Penn State assistant coach accused of molesting children, under a professional-liability policy.

Sitting in the United States District Court for the Middle District of Pennsylvania, U.S. District Court Judge Yvette Kane ruled that while there is a public-policy question regarding whether the insurer would have to indemnify Sandusky for liability for the alleged assaults, the policy does require the carrier to cover defense costs.

Federal Insurance asked Kane to rule that, as a matter of public policy, the insurer did not have to provide indemnity and defense costs to Sandusky, the founder and former head of The Second Mile foundation for children.

The court ruled that under the directors and officers policy the foundation purchased in 2011, the carrier will not be obliged to indemnify Sandusky for “civil liability for damages arising out of defendantSandusky's alleged molestation and sexual abuse of children.”

However, the court would not grant the insurer permission to not cover Sandusky's defense costs because there is not factual evidence to make a decision at this time.

“Because discovery has not commenced, the court is also without facts specific to this case that may bear on the court's public-policy determination and may dictate the breadth of any rule that the court may craft,” says Kane in her decision.

Late last year, Sandusky, a PennState defensive coordinator under legendary coach Joe Paterno, was accused of child molestation going back over a number of years and involving at least 10 children.

All of the accusers say they met Sandusky at The Second Mile foundation that he started for children.

The ruling is Federal Insurance Co. v Gerald A Sandusky (4:11-cv-02375).