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Lawsuits & Litigation

Michigan State Sues Insurance Carriers for Nassar Coverage

— July 31, 2018

Michigan State University is suing its insurance carriers for refusing to cover the financial fallout of its recent sexual assault scandal.

The university issued a statement announcing the suit last Thursday. It named 13 of its insurance providers as defendants.

“We are suing our carriers, including our largest carrier United Educators, for failing to honor their policies,” said Robert Young, the school’s general counsel.

“It is disappointing and unfortunate we have to go to court on this matter, but we are hopeful this lawsuit will bring us to speedy resolution and that the insurance companies will honor their contractual obligations,” said the school’s statement. It cites the “complete failure to provide MSU insurance coverage” for claims involving Larry Nassar, a former sports medicine specialist who molested hundreds of girls at an on-campus clinic.

Image by Ryan J. Farrick.

Michigan State’s settlement, reports, allots $425 million to the 333 Nassar victims who’d filed suits by May 16th. An additional $75 million is earmarked to new claimants and future litigants.

Former Michigan governor and MSU Interim President John Engler said the settlement will be funded through bonding, fund reserves and cost cutting. Engler says the school intends to pursue liability coverage from its insurers.

The 13 defendants had each provided MSU with liability coverage—coverage which the school says should be applied toward the settlement.

“For example, UE an insurer proving 17 years of primary and access liability coverage to MSU, actively promoted its policies’ coverage of the types of claims at issue in this case stating in policy ‘Coverage Highlights’ that its policies cover ‘vicarious liability for sexual or physical abuse or molestation’ and noting on its website that it added personal injury coverage for sexual harassment claims to its general liability policies in 1999 ‘recognizing that this would have [UE’s general liability policies] encompassed the sexual assault-related nature of Title IX claims,” says the suit.

But MSU says the companies have refused to pay and that “they have refused to acknowledge even the potential for coverage.”

“No Defendant Insurer has paid any amounts whatsoever to reimburse MSU for costs it incurred in connection with the defense and settlement of MSU’s liability arising out of Nassar’s conduct. And as a result of Defendant Insurers’ breach of their contractual duties under their respective policies, MSU has born and continues to pay for the entire cost of its investigation and defense with respect to the Underlying Claims, and will likewise bear the full costs of the settlement,” the suit says.

Several of the carriers named in the suit covered Michigan State since 1996, which was the year the university hired Nassar.


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