Penn State D&O coverage may reimburse employees for legal fees related to investigation

STATE COLLEGE, Pa.—Pennsylvania State University says its insurance may reimburse legal fees incurred by employees subpoenaed by federal authorities in connection with child sexual abuse allegations against former Assistant Football Coach Gerald A. Sandusky.

Last month, the subpoena, sent by the U.S. attorney’s office in Harrisburg, Pa., sought information about payments by trustees to Penn State and also requested documentation about the reporting requirements of employees and staff relating to misconduct allegations by the staff or individuals associated with Penn State.

The State College, Pa.-based university said Tuesday that employees summoned by the subpoena should get their own attorneys, and costs incurred may be covered through its directors and officers liability insurer.

“The university is suggesting those individuals who received subpoenas retain their own counsel and the university will agree to reimburse them for their legal expenses if they were acting within the scope of their employment and in the interest of the university. Expenses of such counsel may be paid by the university's D&O insurance carrier,” Penn State said on its website.

The university maintains general liability and D&O insurance policies, which are expected to cover the defense of claims brought against the university and its officers, employees and trustees.

As of Jan. 31, Penn State had paid $5,723,553 in legal fees and to consulting and public relations firms as it addresses the child sexual abuse allegations against Mr. Sandusky, according to the website.