An insurer of the charity started by convicted serial child molester Jerry Sandusky does not have to cover the former Penn State assistant football coach’s legal bills, a federal judge has ruled.

U.S. District Chief Judge Yvette Kane of the Middle District of Pennsylvania ruled Friday that Federal Insurance Co., The Second Mile’s insurer, was not obligated to cover Sandusky’s legal costs. Kane said she was convinced Sandusky’s sexual abuse of children, though he met many of them through The Second Mile, did not take place in his capacity as an employee or executive of the charity. Kane relied on the criminal and civil allegations against Sandusky as her baseline facts.

"Applying the facts set forth in the criminal and civil claims against defendant Sandusky to the language of the insurance policy leads to the clear conclusion that defendant Sandusky’s offenses against children — whether proven or merely alleged — were not conducted in his capacity as an employee or executive of The Second Mile," Kane said in an 18-page opinion in Federal Insurance v. Sandusky.

While one civil lawsuit lodged against Sandusky, the charity and Penn State alleges Sandusky molested the complainant "’during the course of activities of Second Mile,’" the acts themselves were still not in Sandusky’s capacity as the founder of the charity, clearing the insurer.

"The fact that Sandusky met his victims through The Second Mile — or even sexually abused victims ‘during the course of activities of Second Mile’ — does not change the fact that his sexual abuse of children was personal in nature, and performed in his individual capacity," she added.

According to Kane, about a month after his arrest, Sandusky filed a claim for coverage under the policy for criminal charges he was facing along with the civil claim in Doe A v. The Second Mile. Doe A is believed to be the first lawsuit filed amidst the scandal. Kane said Federal provided Sandusky’s criminal defense attorney with $125,000, subject to its reservation of rights.

However, Federal followed with the underlying federal lawsuit against Sandusky, asking the court for a declaratory judgment that it was not required to provide insurance coverage to the embattled former coach for both the civil and criminal claims he was facing.

Moving for summary judgment, the insurer argued that Sandusky’s acts were not committed in his "’insured capacity,’" that he was collaterally estopped from denying facts that led to his criminal conviction of 45 counts of sex abuse, and that insuring Sandusky would run counter to public policy.

Sandusky argued that defining insured capacity was ambiguous. He also asked the court for leave to conduct discovery to establish facts in opposition to Federal’s summary judgment motion. He asked to conduct discovery on language from other Federal policies the insurer has used to exclude sex abuse or molestation from coverage, information about representations the insurance company has made to the Pennsylvania Department of Insurance, the insurer’s claims and underwriting manuals related to the policy at issue, their underwriting and claims files for the policy, information about how Federal marketed the particular policy and the insurer’s claims and underwriting files for other insureds submitting similar claims.

"The court rejected his request and granted summary judgment in favor of Federal," Kane said. "Even if [Sandusky's] inquiries are resolved in his favor, permitting discovery will not alter the court’s conclusion that the Federal policy does not cover the acts in question."

"Sandusky makes no argument that disputed facts — if resolved in his favor — would support a finding that his acts served his employer’s purpose rather than his own."

Dennis St. J. Mulvihill is part of the team of attorneys representing the insurer from Robb Leonard Mulvihill in Pittsburgh. Mulvihill did not immediately respond to a call requesting comment.

Brian J. Osias of the Newark, N.J., office of McCarter & English is representing Sandusky and did not immediately return a call requesting comment.

Amaris Elliott-Engel can be contacted at 215-557-2354 or aelliott-engel@alm.com. Follow her on Twitter @AmarisTLI.

(Copies of the 18-page opinion in Federal Insurance v. Sandusky, PICS No. 13-0507, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •