Lawsuit against USC Alleges Material Misrepresentation for For Coverage for Sexual Abuse Claims
Arch Insurance recently filed a lawsuit in the U.S. District Court of Central California, seeking to be relieved of any obligation to indemnify a $215 million settlement stemming from allegations against the school’s gynecologist, Dr. George Tyndall. USC, and its insurer, Arch Insurance, settled a group of claims related to Dr. Tyndall’s sexual abuse of dozens of patients, between 1989-2016.
According to an article in the Insurance Journal from earlier this week, Arch’s newly filed lawsuit brings up issues related to material misrepresentation and fraudulent inducement. Arch alleges that before the acts of Dr. Tyndall were public knowledge, USC learned of a pending news story related to the allegations. Upon learning of this pending news report, USC contacted Arch, its insurer, and without telling Arch about the allegations, insisted that Arch amend its policy to delete the Abuse or Molestation Exclusion. Arch, having no reason to suspect ulterior motives, agreed to delete the exclusion, which then left Arch responsible to cover the $215 settlement. The allegations lead to the resignation of USC”s president, and the suspension of Dr. Tyndall’s medical license. Moreover, Dr. Tyndall was recently charged criminally, and faces up to 53 years in prison if convicted.
The lawsuit seeks rescission of the pertinent policies, if the abuse or molestation exclusion is not determined to be part of the policies and enforceable. Arch’s position is that USC made material misrepresentations in obtaining its policy, in that they knew about Dr. Tyndall’s acts, but did not inform Arch. We suspect a litany of depositions will be involved here, seeking information related to two global questions: 1) What did USC know, and 2) When did USC know it? We will keep tabs on this litigation going forward. Please email Brian Gibbons with any questions.