Risk Scenario

Your Team Is Primed for the Big Game. Is Your Side A D&O Coverage Primed for a Coach’s Misconduct?

A bad actor places a small college in Pennsylvania on a path to reputational and financial distress.
By: | November 1, 2023
Risk Scenarios are created by Risk & Insurance editors along with leading industry partners. The hypothetical, yet realistic stories, showcase emerging risks that can result in significant losses if not properly addressed.

Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.


Steve Karber is something of a legend on the hoops courts of Philadelphia. Raised in relative comfort on the Main Line, he shunned the trappings of his uppermiddleclass background and sought out the best games he could find.  

It didn’t matter in what neighborhood — if there were two hoops and two backboards and the pace of the game was fast, the scrappy Karber wanted to be in it. Wiry and intense, Karber started as point guard for his high school and college teams, winning some regional tournament titles along the way. 

Karber’s success at the high school and college level was not followed by an invitation from the NBA, although he did spend some time playing professionally in Italy. Where he did add to his legend was as the head women’s basketball coach at tiny Pennview College, back in his old stomping grounds on Philadelphia’s Main Line. 

Revered for its academics, Pennview is not exactly a sports mecca. That never mattered to Steve. He combined his drive and love for the game with charismatic leadership and turned Pennview into a perennial Division III title contender. 

As the calendar pages flipped and 2023 turned into 2024, fans in the Pennview gym — nicknamed The Crucible — could look to the rafters and see more than a dozen Division III championship or runner-up pennants earned by Karber’s teams during his 20-year career at the college. 

Over the years, despite the teams’ successes, rumors occasionally circulated that all was not right in the women’s college basketball program at Pennview. Now and then, a player would quit the team, sometimes switching colleges. But no one ever came forward to name Karber as the cause of their departure.


Gladys Warren became the risk manager at Pennview College in early 2022. One of her first steps, in addition to rightsizing the school’s property valuations and coverage, was addressing possible D&O exposures with the school’s board of directors.

Warren argued for, and the board approved, the purchase of Side A coverage for the school’s directors and staff. With a limit of $2 million, the Side A coverage sits on top of a traditional ABC D&O cover with a $5 million limit. 

Warren isn’t a sports fan. The banners hanging in the school’s gym look impressive, but they mean next to nothing to her. In her short tenure at the school, she hasn’t heard word one about any issues with Steve Karber. 

Warren has just signed off on the renewal for Pennview’s traditional ABC D&O coverage and Side A policy for 2024 when she gets a knock on her office door. It’s the school’s general counsel, Harvey Lemon. As soon as she sees Lemon’s eyes and notices the way he carefully closes her office door, Warren knows something is about to break. 

“You got a minute?” Lemon asks. 

“What is it?” Warren asks, knowing that the answer is going to be painful. 

What’s happened is that Emily Sproul, a sophomore point guard from Haddonfield, NJ, has lawyered up and filed a civil complaint against Karber.  Sproul, who quit the team a month ago, alleges that on multiple occasions, Karber graphically complimented her physical appearance and pressured her to let him see her naked.  

She states that at no time did Karber inappropriately touch her, but that he propositioned her repeatedly, despite her statements to him that she had no interest in a relationship with him. 

“Think it’s true?” Warren asks Lemon. 

Lemon shrugs. 

“Any press?” Warren manages, as a cold, constricting feeling clutches at her abdomen. 

“Not yet,” Lemon says. 

News of the lawsuit hits the front page of the Philadelphia Inquirer the following day.  

Criminal charges of harassment are quickly levied against Karber. 

Warren wastes no time in marching into the office of the school’s Athletic Director, Kent Holmes, looking for answers. 

“Did you know anything about this?” Warren asks Holmes, and she’s not messing around. 

“Not a clue,” Holmes manages to articulate. But something in his eyes sets off an alarm in Warren’s head.  

She gets nothing out of Holmes, but now her mind is reeling. 

“Good gravy, what if Holmes and others knew?” she thinks to herself. 

Her initial sense of cold dread is finding fuel and turning into a running boil of anger. 

Within a week of the Inquirer story, six former Pennview players come forward and make similar allegations against Karber. Four of the six join Sproul’s lawsuit.


Pressured by the college President and the board’s executive committee, Karber resigns, but the extent of the damage to Pennview is just beginning to be understood. 

Sproul’s account of what Karber subjected her to is not the worst of it. A player who quit the team in 2015 alleges that not only did Karber proposition her, but he once groped her as she was leaving his office after a meeting.  

Two other former players come forward with similar stories: that Karber’s predations went beyond verbal harassment and involved inappropriate touching. 

The Inquirer carries the story that more criminal charges have now been filed against Karber in relation to the most recent round of allegations. 

The civil case is then expanded to include not only Karber, but the Athletic Director, the President and members of the Board of Directors individually as defendants. 

Good luck with any civil jury trial in Philadelphia, or for that matter, much of the United States these days, Warren’s broker and underwriter tell her.  

“You settle and you settle fast,” they advise. 

But not so fast. Within the space of three more months, the news breaks that criminal charges are now pending against the college’s President and Athletic Director. 

City of Philadelphia detectives and attorneys for Emily Sproul and her co-plaintiffs’ have uncovered credible evidence that both the AD and the President knew about Karber’s predatory and illegal behavior and assisted him in covering it up.  

In several cases, the allegations are that not only did they refuse to believe the stories of aggrieved female athletes, they pressured them to transfer schools. 

Warren is now beside herself. 

“You knew! Not only did you know, but you helped him cover it up,” she says during a phone call with the college President, who has been denying her requests for a face-to-face meeting. 

“Under the advice of my attorneys….” the college President begins to say, but Warren has heard enough and hangs up on him. 

The Sproul claimants’ settlement figure is $50 million. The school’s traditional ABC D&O policy contains broad exclusions for sexual misbehavior. But that’s not the case with the Side A coverage.  

Karber has already submitted bills from his retention of counsel that will exhaust the Side A coverage, and the college may not be in a position to indemnify any other board members or executives individually. 

In addition to Pennview’s reputation being on fire, Karber and the school’s president and 11-member board are on the hook for millions in damages. 

They are also out a risk manager, as Warren tenders her resignation. 

Members of the board — many of them business or public sector leaders with sterling resumes — can’t believe what just happened to them. 

The criminal trials of Karber and the college President and AD are yet to be adjudicated. But the school directors and officers are numb from what’s already occurred. 

“Where did we go wrong?” one of two old friends who sit on the board asks the other over drinks. 

“Where didn’t we?” the other answers. &

Risk & Insurance® produced this scenario in conjunction with Berkshire Hathaway Specialty Insurance. This scenario is provided for general educational and informational purposes only as an example of the type of claim(s) that may be submitted under a liability policy. Applicability of coverage terms depends on the actual facts of each individual claim and the terms, conditions and exclusions of the applicable insurance policy. The information contained herein is for informational purposes only and may not be relied upon as legal, financial, regulatory, compliance, or any other type of professional advice. Not all products and services are available in every jurisdiction, and insurance coverage is governed by actual policy language.

According to Keith Freid, Product Officer, Private and Nonprofit Management Liability for Berkshire Hathaway Specialty Insurance, there are lessons to be learned from the situation at Pennview.  

  • Board members and administrators should be actively involved in the purchase of D&O liability insurance and pay particular attention to how much Side A limits the organization is buying to protect their personal assets. Benchmarking against other organizations can be useful as well as considering average settlements and defense costs in the various types of claims that can arise.   
  • Instill anti-sexual harassment policies, update them regularly and communicate them with training for all levels of the organization, including in this case faculty, staff and administration. 
  • Establish and encourage the use of clear and confidential avenues for bystanders and/or students/employees to promptly report incidents of harassment or express concerns without fear of retaliation. This gives management the opportunity to act on issues immediately before they become more widespread and escalate.  
  • Policy exclusions are not always a bad thing for an insured: Adding a specifically tailored sexual misconduct exclusion to Side A coverage can help ensure that policy limits are available to the Board of Directors and not exhausted by defense payments made on behalf of an employee who engaged in criminal sexual behavior.   

As always, check with your broker, outside counsel, or carrier about how to appropriately deal with your exposure and ensure ample limits for the organization and individual directors and officers.  

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected].

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