Penn State: insurance, not tax dollars, to cover potential sex-abuse litigation

By Jon Campisi | Dec 7, 2011

Any potential financial liability stemming from the Pennsylvania State University child sex-abuse scandal will not affect taxpayers.

The school recently announced that any cash settlements or jury verdicts following what are expected to be a slew of civil suits in relation to the molestation scandal will come from private insurance dollars.

On Tuesday, the Philadelphia Inquirer reported that Penn State President Rodney Erickson stated in a letter to Pennsylvania state Sen. Mike Stack, (D., Phila.), that the collegiate institution was covered by its liability insurance in the event that the school has to pay up following widespread allegations of sex abuse at the central Pennsylvania campus.

“It is the expectation of the university administration that our liability insurance will cover any obligation arising from civil lawsuits,” Erickson wrote in the letter to Stack, a copy of which the newspaper said it had obtained.

On Dec. 1, Stack, who represents Pennsylvania’s 5th Senatorial District, and serves as minority chairman of the Senate Banking and Insurance Committee, wrote Erickson a letter in which the lawmaker laid out his concerns about the “financial future of the university.”

In the letter, which had been posted to the legislator’s website, Stack said his concern was in “regards to the ability of the University to handle the financial strain of the civil litigation onslaught that is sure coming.

“Since the Commonwealth of Pennsylvania helps fund a portion of the annual budget for PSU, I would like to be clear in my opinion that in no way should taxpayer funds be used to offset the payouts of these lawsuits,” Stack stated in his letter. “While this may be a delicate discussion at the moment, it is one of great concern.”

According to the article in the Inquirer, Erickson also is said to have indicated that he plans to arrange a meeting with other state legislators to discuss the university’s financial liability in the wake of a sex scandal that has rocked the nation.

Erickson replaced fired former president Graham Spanier, who lost his job along with former longtime head football coach Joe Paterno.

The child sex-abuse scandal unfolded in early November, when former football defensive coordinator Jerry Sandusky was charged via grand jury report with 40 counts of child molestation dating back decades.

Sandusky, who retired from Penn State athletics in 1999, stands accused of sexually abusing eight young boys whom he met at a charity he started in the late 1970s called The Second Mile.

It’s alleged that Sandusky molested some of the boys he met through the organization for disadvantaged youth on the university’s campus.

Sandusky faces a preliminary hearing at the Centre County, Pa. Courthouse next week.

Two others are also being charged along with Sandusky. Former Penn State business administrator Gary Schultz and the university’s athletic director, Tim Curley, are facing failure to report and perjury charges.

As for civil litigation, attorneys for one alleged victim have already filed suit in state court. On Nov. 30, lawyers Jeffrey Anderson and Marci Hamilton filed a lawsuit at Philadelphia’s Court of Common Pleas on behalf of a man who alleges he was 10 years old in 1992 when he was allegedly molested by Sandusky.

The man, now 29, claims he was sexually abused by the former assistant football coach more than 100 times.

That lawsuit is pending in court.

Also last week, Harrisburg attorneys Ben Andreozzi and Jeffrey Fritz announced that a civil action they had filed in late November on behalf of one of the alleged Sandusky victims outlined in the grand jury report had been settled.

The attorneys had filed for injunctive relief against The Second Mile charitable organization, seeking to prohibit the organization from transferring or dissolving its assets prior to any potential civil litigation.

The settlement was reached between the two parties on Dec. 1.

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