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Liberty Mutual unit ordered to reimburse USA Gymnastics

Posted On: Aug. 17, 2022 12:54 PM CST


In a follow-up to a ruling earlier this year, a federal appeals court said Tuesday that a Liberty Mutual Insurance Group unit must reimburse USA Gymnastics an additional $458,472 in legal costs associated with the activities of Larry Nassar, the physician convicted of sexually assaulting numerous female gymnasts, under its claims-made directors and officers liability policy.

In February, the 7th U.S. Circuit Court of Appeals in Chicago, in a divided opinion, ruled Liberty Mutual unit Liberty Insurance Underwriters Inc. must indemnify the gymnastics organization, which is now in bankruptcy, in its first ruling in USA Gymnastics v. Liberty Insurance Underwriters Inc.

There were also ancillary disputes, however, over the amount of attorneys fees that Liberty Insurance owed USAG, according to the latest ruling in the case. 

The bankruptcy court and the U.S. District Court in Indianapolis “correctly concluded that USAG was entitled to a presumption that the fees it incurred were reasonable and necessary,” Tuesday’s ruling said.

“Liberty must therefore rebut the presumption by showing that various portions of the fees did not meet that standard.  Because Liberty fails to do so, we affirm.”

USAG had sought about $3.18 million in past defense costs, the ruling said. 

Days before oral argument, the appeals court was informed that Liberty had paid USAG $1,655,680 toward the judgment, which left a “live controversy” over the remaining $458,472, the ruling by the three-judge panel said.

Attorneys in the case did not respond to requests for comment.