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Kleinbard Scores Victory for PMA in Sandusky Insurance Coverage Dispute with Penn State

Kleinbard’s litigation team led by Steve Engelmyer and Paul Gagne recently achieved a significant victory for its client Pennsylvania Manufacturers’ Association Insurance Company (“PMA”) in PMA’s ongoing dispute with the Pennsylvania State University over insurance coverage for claims by victims of convicted sexual abuser Jerry Sandusky. Penn State has sought coverage under policies issued to it by PMA for the more than $90 million it has expended in defending and settling claims by the victims of Jerry Sandusky.  On May 5, Judge Gary Glazer of the Philadelphia Court of Common Pleas issued a ruling on three summary judgment motions that resolved several critical issues in PMA’s favor in advance of this matter proceeding to trial.

In particular, the court held that Penn State is not entitled to any insurance coverage under seven PMA policies in effect from 1992 through 1999 because these policies contained an enforceable exclusion that excluded coverage for the sexual abuse claims against Penn State. In addition, the court found that only one PMA insurance policy potentially can apply to each claim by a Sandusky victim (the policy that was in effect when the victim first was sexually abused by Sandusky).  Penn State contended that multiple policies should apply to each victim’s claim.  The court’s ruling also rejected Penn State’s effort to dismiss PMA’s defense that coverage is barred under policies issued after May 1998 because senior officials of Penn State knew about Jerry Sandusky’s conduct as of this time but failed to take appropriate steps to prevent any further abuse and did not disclose this knowledge to PMA.  PMA will now have the opportunity to prove at trial that there is no coverage under any policies it issued to Penn State after May 1998 because Penn State had knowledge that Jerry Sandusky abused children.  In all, the court’s recent ruling has substantially limited Penn State’s claims.  Previously, Judge Glazer had granted another summary judgment motion filed by PMA and dismissed most aspects of Penn State’s bad faith claim.