Insurance Company Suing Sigma Chi (U of Georgia alleged incident)
 

Interesting suit dealing with the issue of what an insurance company should have to pay for.

http://media.www.redandblack.com/med...-3752860.shtml

Excerpt from much longer article (article has some links with it to additional documents):

The University chapter of Sigma Chi fraternity is being sued in federal court by its insurance underwriter, stating it should not have to defend the fraternity against an injury lawsuit brought by a Gainesville woman.

Liberty Capital Corp. states in its lawsuit against Sigma Chi that the fraternity was not acting in accordance with the insurance policy and it should not have to pay damages if the woman wins her lawsuit against Sigma Chi. . . .

Can you post a link to the full article?

I just read this on Twitter. Sucks.

To the lawyers:

Is it even necessary to sue Sigma Chi? Couldn't the insurance provider just deny the claim (stating that they were negligent/acting outside of the scope of coverage)?

Yeah, I think I can.
Just a second and I'll dig it up. Here we go.... the article is in the July 24 '09 online issue of the Red and Black (student paper at UGA).

http://media.www.redandblack.com/med...-3752860.shtml

And here's the one to the federal court filing

http://media.collegepublisher.com/me...s/p01j094u.pdf

There could be a lot of reasons for doing this through a lawsuit - one that comes to mind is that they want to get a court decision on the books that interprets the policy in a certain way. That would have more of a preclusive effect on future claims than a denial of this claim.

Plus, if they have to run their policy language by the insurance commissioner, the company can point to a favorable court decision if they were to write their policies in a certain way that would foreclose coverage on these claims in the future.

Seems like a lot of extra effort. Seems surprising that there wouldn't already be a decision on the books (considering the number of fraternity/sorority claims in the past decade or two). Guess that's why you all get paid the big bucks, though.

It's sort of surprising that the chapter thought the insurance company would pay the claim. Didn't everyone get the living daylights scared out of them in risk management sessions about how we would all be personally liable if someone got hurt when we were violating the rules?

I guess this reflects the danger of using scare tactics vs. the more complicated legal truth. And it probably reflects the chapter not having money lying around to pay the woman's claim.

The girl, and Sigma Chi too I guess, is really lucky that she didn't end up with brain damage or break her neck. It sounds like she fell of the loft and landed on her face.

The company might be looking at the litigation costs and deciding it's better to get declaratory relief saying that they're out of the picture rather than defending a claim for the young lady's personal injuries.

I imagine our liability policies contain all kinds of exclusions. If Sigma Chi loses here, blame their IHQ for negotiating an insufficient policy.

Bad week to be a Sigma Chi IHQ lawyer...

But can you negotiate a policy that covers you for damage that results from breaking the law? That's kind of what they are looking at here: members were responsible for serving alcohol to an underage person who because injured as a result of her drunkenness. Is anyone going to cover you for that?

[Eta: well I guess almost all auto-insurance covers us from damages that resulted even if we broke some laws, but I have a hard time imagining that a GLO could get coverage for what happened here.]

ETA: actually I'm surprised that Sigma Chi is sticking by the chapter as much as they are considering that some Sigma Chi policies were likely broken as well. On some level, I admire them for it, but, if the reporting in the Red and Black is accurate, there's a yikes factor too. Ask yourself what the Sigma Chi legal team and fraternity leadership would have said about this scenario in advance.

Several years ago, one of our daughters was at a fraternity party at the lake home of one of the members' grandparents. They made a slip and slide on which you slid down the hill and went up in the air a ways and then down into the lake. Except our daughter--she's really little and she flew further out than anyone else and landed hard on her rear on a mostly submerged stump. Her body started to go numb and luckily, her boyfriend saw what happened and dragged her out before she swallowed any more water.

The fraternity risk people kept calling us, assuring us that they'd pay for all her bills, which amounted to thousands (and they did); they were probably afraid that we'd sue. Once we saw that she wasn't going to have lasting effects, we knew we wouldn't but we could tell that the fraternity was terrified.

Oh, and they left the slip and slide in place and another small girl went down it an hour later--after the ambulance had carried our daughter away!--and she was injured and had to go to the ER too. (She wasn't at the party when our girl was hurt and had no idea what had happened before.) I bet that that fraternity's Risk Management folks were alll over them.

Yipes - that is scary. I'm glad both girls are OK.

If this fraternity party was held at someone's house, would the owner of the house have any sort of liability since it took place on his property?

The ADPi was really bruised up and our daughter had a badly sprained back. They were both in physical therapy for a couple of months but finally got better.

Oddly enough, the fraternity seemed desperate to go ahead and pay the bills and not involve the grandparents and I'm wondering if they even knew about the party.

I'm glad they were okay, Carnation.

You'd think that if you know you're at fault or if you think you're going be held liable, that you'd want to make arrangements to pay medical expenses to avoid the additional costs of the suit.

Maybe the Red and Black's coverage misrepresents what the medical expenses really were so that's why it hasn't been taken care of in this case.