Coverage and Liability Issues in Sexual Misconduct Claims

Part III.courts have found that if the policy excludes coverage for intentional acts of “an insured” instead of “theinsured”, then the intentional act of any insured bars coverage for all insureds. Some states have statutesor legal precedents that express a public policy prohibiting insurance coverage for intentional acts.Sexual Misconduct ExclusionsThe decided cases indicate that, for the most part, sexual misconduct exclusions have been successful.The principle issues addressed by the courts include whether the wordings apply to all the insureddefendants and whether the wordings apply to all claims or only to those that arise solely from, or areclosely intertwined with, the sexual misconduct.Statutes of LimitationsWhere there is claimed repression of memory of the cause of action, several jurisdictions have appliedthe “discovery rule”, either legislatively or judicially, to toll the limitations period until the injured partydiscovered or should have discovered the elements of the cause of action.In recent years, some state legislatures have greatly expanded the limitations periods for childhood sexualabuse claims. For instance, California recently enacted legislation which suspended the strict interpretationof the statute of limitations for the calendar year of 2003.Reporting LawsEvery state has a child abuse reporting law requiring persons designated as mandatory reporters (teachers,healthcare providers, etc.) to report known or suspected incidents of child abuse.Findings of the report on the Crisis in the Catholic Church in the United States prepared under the auspicesof the U.S. Catholic Conference and the attendant Study of Sexual Misconduct in the Catholic Churchperformed by the John Jay College of Criminal Justice of the City University of New York are that the surgein acts of abuse began in the 1960s and continued until the mid-1980s. Also, the U.S. Justice Departmentcurrently reports that there has been a significant reduction in reported incidents of abuse during the1980s and 1990s. Some of this reduction could be due to new and improved risk management practices ofmany organizations and a zero tolerance policy in the Catholic Church. Although seemingly so, this datais not at all contradictory as the increase in litigation and claim activity may be attributed to the long tailof these matters, mass-media attention and public outrage toward certain institutions’ mishandling of theproblem.OtherPlease note that some jurisdictions provide for charitable or sovereign immunity. Also, a handful ofjurisdictions have recognized respondeat superior liability for sexual misconduct claims in certaincircumstances. To the extent any of the states have legal precedent on any ‘other’ issues; we have attemptedto note them in the following sections of this booklet.– v –