Insurer Says Penn State Is Double Dipping on Sandusky Arbitration

MANHATTAN (CN) — An insurer sued Penn State, claiming the university is double-dipping by filing a second request for arbitration, which already has begun, to try to recoup $42 million in damages it paid to Jerry Sandusky’s sexual abuse victims.

United Educators Insurance on Monday asked the New York County Supreme Court to stop Penn State’s second attempt to arbitrate a dispute over who is responsible for picking up the hefty tab for several lawsuits against the school.

United Educators calls Penn State’s second arbitration claim “an improper and impermissible attempt at forum shopping,” and that it repeats a request for an arbitrator that was set in motion in September 2016.

Back then, both parties agreed to waive American Arbitration Association rules and conduct negotiations by their own standards, including selecting a group of agreed-upon umpires to officiate.

Now, the insurer says, the university is wrongfully doubling down on its attempts to get a favorable ruling in its quest to recoup settlements it paid to victims who said Penn State brass did nothing to stop Sandusky from molesting children on campus.

Lawsuits against Penn State commenced after Sandusky was convicted in 2012 of 45 counts of child sex abuse and sentenced to 30 years in state prison.

Three high-ranking Penn State officials have been convicted or pleaded guilty to criminal charges of endangering the welfare of children.

Those charges opened the door for the former assistant football coach’s victims to demand damages from the university for negligence, and for Penn State, in turn, to ask its insurer for indemnity.

United Educators denied financial responsibility for the lawsuits from the beginning, saying the allegations were excluded by its liability policies with Penn State.

Unable to reach an agreement, the parties proceeded to arbitration, the details of which are still being ironed out.

The insurer says the university threw a curveball into the conflict resolution process by asking the court in March for a new, “entirely duplicative” arbitration, seeking recovery of “in excess of $42 million of unreimbursed settlements payments, to date, made by Penn State, with respect to the claims and lawsuits … alleging sexual misconduct by Jerry Sandusky.”

The wording in the claim is identical to the one Penn State already filed, the insurer says. The only difference is that the new proceedings would be governed by the American Arbitration Association, hardly enough of a departure from the original arbitration to warrant a new filing, United Insurers says.

It seeks a court order to compel the “first-commenced arbitration” and staying “the purported later-commenced AAA arbitration,” and oral argument on the issue.

Penn State’s media relations office did not respond to an e-mail sent late Tuesday morning.

United Educators is represented by Harry Cohen with Crowell & Moring.

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