Insurance company sues to avoid paying USC’s Tyndall settlement

An insurance company has sued the University of Southern California over its $215 million settlement involving former gynecologist George Tyndall, alleging it shouldn't have to pay any of it because its policy with the school doesn't cover sexual molestation.

Troutman Sanders LLP partner Paul L. Gale filed the suit last week in Orange County Superior Court on behalf of United Educators Insurance, which he said didn't know of USC's problems with Tyndall until the Los Angeles Times published an expose in 2018. The company's eight policies with the school excluded coverage for "any liability arising out of rendering or failure to render any Medical Services."

The claims against Tyndall "arise out of the rendering or failure to render medical services, and are thus excluded" by the policies, according to the complaint, but USC argues otherwise.

"An actual and justiciable controversy now exists between United Educators and USC," according to the 15-page complaint. United Educators Insurance v. University of Southern California, 2019-01083213 (O.C. Super. Ct., filed July 15, 2019).

USC could not be reached for comment on Friday.

Gale is seeking a declaratory judgment that claims covered by United Educators' sexual abuse exclusions are excluded from coverage as well as a judgment that all claims are excluded by the medical services exclusion.

He also wants a declaratory judgment that no claims are coverable because USC officials failed to notify United Educators about the allegations against Tyndall as policies require, and he wants one stating the claims aren't coverable because Tyndall's behavior began before the policies were in place.

"To the extent USC knew of patient-student complaints about Dr. Tyndall's sexual abuse during medical appointments but took no steps to address such problems, any harm suffered by Dr. Tyndall's victims was not fortuitous but rather "expected or intended" by USC, and, accordingly, there would be no covered Occurrence under the UE Policies," according to the complaint.

The school didn't tell the company it determined Tyndall "engaged in pelvic examinations that did not meet the current standard of care," according to the complaint, and that he had violated USC's harassment policy by making inappropriate comments during patient appointments.

Five putative class actions against USC and Tyndall were consolidated in August 2018, and USC announced a $215 million settlement in October, with an additional $25 million in attorney fees. U.S. District Judge Stephen V. Wilson granted preliminary approval on June 12, with a final approval hearing scheduled for Jan. 6.

Many plaintiff attorneys already have said they'll contest or opt out of it. Doe A.T. v. University of Southern California, 18-CV04940 (C.D. Cal., filed June 4, 2018).

Gale is representing United Educators with Troutman partner Terrence R. McInnis, counsel Ross C. Smith and associate Michael K. Cassata.

The case was assigned to Judge Peter J. Wilson, one of four judges assigned to the complex civil panel.

Gale, who's based in Troutman's Irvine office, filed in Orange County because USC has had an academic center there since 1984.