Insurance company argues it has no duty to defend or indemnify claims relating to former USC doctor George Tyndall

An insurance company asked a federal court to rescind a health care liability policy issued to USC, claiming that the school hid sexual assault allegations against a former gynecologist, George Tyndall.

"If Ironshore had known of the allegations against Dr. Tyndall, Ironshore would not have issued coverage on the same terms, and certainly would not have agreed to provide coverage for claims arising out of Dr. Tyndall's alleged misconduct," the complaint stated. Ironshore Specialty Insurance Co. v. University of Southern California, George Tyndall, 2:21-CV-1272 (C.D. Cal., filed Feb. 11, 2021)

"We are aware of the lawsuit, and we intend to vigorously defend against it," a spokesperson for the university said Tuesday.

The lawsuit, filed by Paul Burleigh of Klinedinst PC and Ronald P. Schiller, Sharon F. McKee of Hangley Aronchick Segal Pudlin & Schiller, concerns a policy with a $20 million limit of liability that ran from 2017 to 2018 just around the time allegations against Tyndall surfaced. Plaintiffs now want a declaration from the trial court that the excess health care professional liability policy issued to USC bars or limits coverage for claims asserted against the school, its trustees and Tyndall, who was terminated from his position June 30, 2017 after an investigation.

"A real and actual controversy exists between Ironshore, on the one hand, and USC and Dr. Tyndall on the other, concerning whether Ironshore is or was obligated to defend or indemnify USC and/or Dr. Tyndall in the state court actions; and Ironshore is or was obligated to indemnify USC and/or Dr. Tyndall in the federal class action for the federal settlement," Burleigh wrote.

Tyndall was employed at USC beginning in 1989. In June 2016, USC launched a probe after a nursing supervisor raised concerns about Tyndall's interactions with patients. Complaints were also filed against Tyndall in 2013 alleging he made sexually inappropriate and racist comments to patients. Several students came forward about his behavior in 2016. In a report issued on Jan. 31, 2017, USC concluded Tyndall violated school policies but none of that information was disclosed to the public or Ironshore, the lawsuit states.

USC applied to renew its policy but failed to disclose to Ironshore that Tyndall was forced to resign. The policy period USC applied for ran from July 1, 2017 to July 1, 2018. Burleigh claims USC knew the school and Tyndall would face civil actions from former patients once the allegations went public. "The allegations of conduct and resulting harm made by multiple patients against Tyndall were material to the risk that USC was asking Ironshore to undertake for the policy period of July 1, 2017 to July 1, 2018," Burleigh wrote.

Tyndall was fired one day before the policy period was to begin. Lawsuits began to pile up in both state and federal courts against Tyndall, USC and its board of trustees. Patients accused Tyndall of groping them, penetrating their genitalia with unwashed hands and photographing their bodies. Felony charges against Tyndall followed in 2019 and additional charges were filed in 2020, to which the doctor pleaded not guilty.

A federal class action was consolidated as In re: USC Student Health Center Litigation, 2:18-CV-4258 (C.D. Cal., filed May 21, 2018). The class was certified and a settlement was reached in February 2020. USC agreed to pay $215 million plus attorneys fees capped at $25 million.

"Ironshore did not consent to the settlement, but agreed not to raise lack of consent as a defense to coverage under the policy," Burleigh wrote. "Ironshore has paid USC the full limit of liability of the policy subject to a full reservation of its rights, including the right to reimbursement of the policy limits in full."

Ironshore has exclusionary policies that do not cover claims arising from any policy holder's dishonest, criminal or fraudulent acts that cannot be indemnified under the state's insurance laws, the lawsuit said. The policy does not cover any of the claims or violations alleged by the plaintiffs in both the state and federal actions, which include privacy/HIPAA violations or disclosure of nonpublic information, Burleigh argued.

The case has been assigned to U.S. District Judge Christina A. Snyder of the Central District of California.

Ironshore's lawsuit is not the first time an insurance company sought to get out of paying out USC's claims relating to Tyndall's conduct. In July 2019, Troutman Pepper Hamilton Sanders LLP filed a lawsuit in Orange County Superior Court on behalf of United Educators Insurance, which said it did not know of USC's problems with Tyndall until the Los Angeles Times published an expose in 2018. United Educators Insurance alleged it shouldn't have to pay any of the $215 million settlement with the federal class because its policy with the school doesn't cover sexual molestation. United Educators Insurance v. USC, 2019-01083213 (O.C. Super. Ct., filed Jul, 15, 2019)

That same year, Arch Specialty Insurance Co. also sued USC, arguing its liability policy doesn't cover legal costs stemming from sexual abuse allegations. When USC applied for a healthcare professional liability Arch asked the trial court to stop USC's attempt to arbitrate a lawsuit between them. USC filed a motion to compel arbitration shortly after. Arch Specialty Insurance Co. v. USC, 2:19-CV-6964 (C.D. Cal., filed Aug. 9, 2019)