As USC Doctor Faces Sexual Misconduct Charges, Insurance Coverage Debated in Court
A former University of Southern California (USC) gynecologist was accused of sexual misconduct while “attending to” hundreds of patients.
The women, for years, had gone to university officials regarding their concerns, but according to them, their requests were not addressed adequately. According to the women, they had attended regular check-up appointments with the USC doctor, only to be sexually assaulted during the exams.
These women were typically students between the ages of 17 and 29 years old at the time of incident. The sexual abuse and battery are alleged to have occurred between 2009 and 2016.
In 2016, the university conducted an internal review of the doctor’s practices and determined that his pelvic exams “may have been inappropriate.”
The doctor retired under a separation agreement with a payout in 2017. USC never reported its findings to the state medical board.
That’s when the women filed a class action against the doctor and USC.
Meanwhile, USC turned to its health care professional liability insurer for help.
USC held two policies underwritten by Arch Specialty Insurance Co. One was for 2017 and another for 2018. Each had a limit of $10 million in liability.
Arch denied coverage, stating that it did not believe it had a duty to cover the cost of the underlying suit. It had found out that the Los Angeles Times was planning on running an article on the gynecologist’s misdeeds and that USC ignored complaints for years prior to the suit.
To Arch, this not only meant an additional flood of litigation against the university but also that USC knew about the allegations before it signed off on its 2018 policy and never disclosed that information to its insurer.
Arch further argued that the USC policy excluded incidences of sexual abuse or molestation.
In court for the underlying suit, a California judge approved a $215 million settlement for the survivors.
Arch filed suit against USC, seeking rescission of the 2018 policy as well as alleging that USC knew about the possible sexual abuse claims and did not notify Arch.
Scorecard: The women in the underlying suit were awarded $215 million. Whether Arch Specialty Insurance will be on the hook is up for the courts to decide.
Takeaway: Disclosing vital information to insurers during policy renewal is paramount to knowing whether or not a company will be covered in the event of a claim. &