LAUSD insurance carrier challenges liability in Miramonte sex-abuse settlements
By Barbara Jones, Staff Writer, LA Daily News | http://bit.ly/13tjqh1
Insurance firm sues to avoid Miramonte abuse-case settlement
If the company wins, L.A. Unified could be on the hook for the $30 million it agreed to pay 58 alleged victims of former teacher Mark Berndt.
By Howard Blume, Los Angeles Times | http://lat.ms/18GmiwE
5/31/2013 02:34:28 PM PDT/Updated: 5/31/2013 03:04:48 PM PDT :: An insurance carrier for Los Angeles Unified has filed suit against the school district, seeking to avoid paying millions of dollars to settle sex-abuse claims filed by Miramonte Elementary students.
The district had been counting on insurance companies to cover the $30 million it agreed to pay 58 alleged victims of former Miramonte teacher Mark Berndt. Roughly 130 additional claims by students and parents have yet to be resolved.
The suit was filed Wednesday by attorneys for Everest National Insurance Co., which holds five $10 million policies for LAUSD dating back to 2007. The company disputes whether its policies cover the claims file by students and parents alleging abuse by teachers at Miramonte Elementary.
The lawsuit also names six other insurance companies that hold LAUSD policies, and asks a judge to determine their responsibility for defending the district and covering any legal settlements or judgments.
Steven Rice, an attorney for Everest, did not immediately return phone calls.
District spokesman Sean Rossall said there are concerns that the Everest lawsuit could jeopardize LAUSD's ability to resolve additional cases.
"The district has worked tirelessly on the resolution of these cases, looking out for the health and education of our students while being stewards of taxpayer resources," Rossall said.
"The lawsuit could limit the district's resources to work toward the resolution of additional cases. It's going to cost more to litigate this case, and we are now defending ourselves on two fronts."
The claims filed by students and parents accuse the district of not doing enough to protect them from veteran teacher Mark Berndt, 62.
Berndt was arrested in January 2012 on charges that he molested 23 students over a five-year period. Authorities say he put cockroaches on the faces of blindfolded students and also enticed them to participate in a "tasting game" in which he spoon-fed them his semen and gave them semen-tainted cookies.
Another Miramonte teacher, Martin Springer, is awaiting trial on three counts of committing lewd acts with a child.
Both Berndt and Springer have pleaded not guilty.
Everest and the six other insurance carries held a total of 31 LAUSD policies, most of them running for one-year periods and many of them overlapping. From July 1, 2007 to July 1, 2008, for instance, the district had separate $10 million policies from Everest and North American Specialty Insurance Co., and a $25 million policy from Lexington Insurance Co.
Other carriers named in the suit are AIU Insurance Co., Allied World National Assurance Co., The Insurance Company of the State of Pennsylvania and Starr Indemnity & Liability Co.
The district has a $3 million deductible in each of the policies.
** See the lawsuit filing:
9:55 PM PDT, May 31, 2013 :: An insurance company has sued the Los Angeles Unified School District seeking to avoid paying settlement costs related to alleged child abuse at Miramonte Elementary School.
The action, if successful, could leave the nation's second-largest school system on the hook for an estimated $30 million that it agreed to pay to 58 alleged victims of former teacher Mark Berndt. At least as many claims remain unresolved, with attorneys seeking higher compensation than the settlement provides.
The suit was filed Wednesday in Los Angeles County Superior Court by New Jersey-based Everest National Insurance Co.
The company "disputes that there is any coverage under the Everest policies" for the claims by L.A. Unified. "A judicial declaration is necessary and appropriate," according to the suit.
So far, other insurers also have refused to pay Miramonte-related claims. Were the companies to prevail, the consequences for L.A. Unified would be extreme. For one, $30 million is the equivalent of shutting the district down for two days. And besides Miramonte, costly settlements or judgments are anticipated in abuse-related cases at other schools.
In December, a jury awarded $6.9 million to a 14-year-old boy who was molested as a fifth-grader by Forrest Stobbe, who taught at Queen Anne Place Elementary School. L.A. Unified has yet to pay pending an appeal. Stobbe was fired and convicted in the case.
The key factor in establishing liability is whether district employees knew or should have known about the abuse — or even about lesser misconduct that suggested a problem. In the Stobbe litigation, the relevant clues included the teacher being observed alone with a girl in his car and falsely claiming he had parental permission to give the student a ride.
In a case involving former De La Torre Elementary teacher Robert Pimentel, the district already has acknowledged that a principal failed to act on complaints. He has pleaded not guilty to sexual misconduct charges involving 12 children under age 14 and remains in jail in lieu of $12 million bail.
At Miramonte, south of downtown, some critics have questioned whether all the costs were necessary. L.A. schools Supt. John Deasy, for example, elected to replace the entire Miramonte staff for the remainder of the school year after Berndt's arrest in January 2012. The district has filed a claim for compensation citing more than $5 million spent to carry out that decision.
Everest named six other insurers as defendants as well. All have provided policies to L.A. Unified, the suit says.
Because they provided general liability coverage, the companies should be responsible for Miramonte costs beyond a "self-insurance" amount, in the district's view. The district's share of the liability should be $3 million or $5 million, said Sean Andrade, an outside counsel representing L.A. Unified.
The likely outcome of the litigation would be a determination of who owes what, said Andrade.
Everest sued "before the district could sue them for breach of contract or bad faith," Andrade said.
"It's troubling that these insurance companies which were compensated to provide this coverage are now trying to escape responsibility," said district spokesman Sean Rossall. "We're going to do everything possible to ensure that the carriers honor our policies. We've been working diligently to resolve these cases in the best interests of the students while also honoring the district's obligation to preserve resources for all students."
Lawyers representing Everest did not respond to a request for comment.
Berndt, 62, awaits trial on accusations that he spoon-fed his semen to blindfolded students in his classroom as part of a tasting game, among other allegations. He has pleaded not guilty. He remains in custody in lieu of $23 million bail.