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Michigan State sues insurers for coverage of abuse claims

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Michigan State sues insurers for coverage of abuse claims

Michigan State University filed a lawsuit Thursday against 13 insurers seeking coverage for defense costs and damages claims resulting from the sex abuse scandal involving former gymnastics team doctor Larry Nassar.

In January, Mr. Nassar, the former USA Gymnastics and Michigan State University doctor, was sentenced to 40 to 175 years in prison after more than 150 women and girls said he had sexually abused them over the past two decades.

In the lawsuit filed in Ingham County Circuit Court in Lansing, the East Lansing, Michigan-based university asserts that it insurance policies cover it for liability claims relating to sex abuse but the insurers have failed to pay any claims related to scandal.

Its primary insurer, United Educators, a Bethesda, Maryland-based risk retention group, which has covered MSU for 17 years, “actively promoted its policies’ coverage of the types of claims at issue in this case,” the suit states, including “vicarious liability for sexual or physical abuse or molestation.”

“This complaint revolves around defendant insurers’ complete failure to provide MSU insurance coverage…for numerous lawsuits and claims asserted against MSU arising from the conduct of Lawrence ‘Larry’ Gerard Nassar,” the complaint said.

MSU said that to date it has been named in 33 lawsuits filed in the U.S. District Court for Western Michigan, and at least 9 civil lawsuits initially filed in California Superior Court “in connection with the horrifying actions of Nassar.” Others have asserted claims related to Mr. Nassar’s actions but have not yet filed lawsuits.

“To date MSU has incurred millions in defense and costs defending itself in connection with the underlying claims, all of which are covered under the terms and conditions of defendant insurers’ policies,” the complaint said. “The allegations set forth against MSU…assert various bases of liability that are, or potentially are, covered under the terms and conditions” of the policies.”

In May, MSU agreed to settle the claims of 333 who had come forward at the time of the settlement, the complaint said. MSU agreed to pay $500 million, $425 million of which is to be paid into a qualified settlement fund. The remaining $75 million will be placed into an interest-bearing fund for the defense and settlement claims against MSU and for potential future claims.

Since the settlement, and as of the time of lawsuit’s filing, the complaint said 16 additional claimants have filed lawsuits and at least 41 additional claimants have notified MSU of potential claims.

“As a result of defendant insurers’ breach of their contractual duties under their respective policies,” the complaint said, “MSU has borne and continues to pay for the entire cost of its investigation and defense with to the underlying claims, and will likewise bear the full costs of the settlement.”

In April, USA Gymnastics sued seven of its insurers on Friday seeking defense costs related to damages suits it faces related to the Nassar case.