Coverage and Liability Issues in Sexual Misconduct Claims

Part III.Overview of Civil Liability andInsurance Coverage Issues in Sexual Misconduct ClaimsIn civil actions for damages, the most common causes of action asserted against perpetrators are assault,battery and breach of fiduciary duty. The most common causes of action asserted against other potentiallyliable parties, such as the perpetrator’s supervisors, relatives and co-workers include: negligent hire,retention and supervision; vicarious liability; and, failure to warn or report the abuse. The typical remediesare compensatory and punitive damages. Sexual misconduct claims against government agencies andschool boards can include civil rights allegations that allow a prevailing plaintiff to recover attorneys’fees.Defenses available to all defendants include denial of sexual misconduct, contributory negligenceby the victim and the statute of limitations. The most common defenses available to non-perpetratordefendants are to deny notice of the abuse or of the perpetrator’s deviate propensities and to argue that theperpetrator’s activities were outside the course and scope of an employment or agency relationship. Notfor-profitentities may have defenses based on charitable immunity. Government agencies may also haveimmunity defenses. Ecclesiastical defendants may have defenses based on the First Amendment. Certainprofessionals may have physician-patient and clergy-penitent privileges.This booklet does not purport to address all liability and coverage issues that may arise in connection withsexual misconduct claims. Below is a brief description of 5 specific subject areas, followed by a subject areainventory table, and then a state-by-state detail of current law.Timing and Number of Occurrences/ClaimsIn “occurrence” policies, courts have been inconsistent regarding policy triggers and number of occurrenceissues. Decisions range from one occurrence for each policy period during which sexual misconduct tookplace to the other extreme that all victims abused by a single offender over any number of policy periodsconstitute one occurrence. Due to lessons learned in coverage actions involving “occurrence” policies,most modern “claims made” policy forms are specific. The number of limits available and the proper dateof loss are clearly delineated despite the number of victims, perpetrators or policy periods involved.Coverage for Intentional ActsMost courts have held that the injury is deemed expected or intended by an insured when the characterof the act is so reprehensible that an intention to inflict injury must be inferred as a matter of law in casesof sexual misconduct to minors. However, there are decisions that an insured is covered in a suit allegingsexual molestation unless the insured’s intent to cause harm to the claimant is proved.Also, as a general rule, most insurers do not provide coverage to the abuser because his or her conductwould be deemed intentional and may be outside the course and scope of coverage available to anyparticular “insured”. However, some current coverage forms provide a defense to an alleged abuser forthose insureds who need to attract, retain and otherwise protect volunteers and workers that may be atrisk of being falsely accused of sexual misconduct.In general, courts have found that insurers have a duty to defend claims asserting negligent retention andsupervision or premises liability. Nonetheless, courts have found no duty to indemnify when an insuredknew or should have known that the employee’s sexual misconduct was substantially probable. Other– iv –