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Arch Specialty refusing to cover USC in sexual abuse case

Arch Specialty Insurance Co. has filed a complaint against the University of Southern California after the school demanded the removal of the existing abuse or molestation exclusion from its excess healthcare professional liability policies.

Westlake Village, Calif.-based insurance broker Chivaroli & Associates Inc. reportedly contacted Arch Specialty on behalf of the university and threatened litigation if the insurer refused to change the policies.

George Tyndall, who primarily was a gynecologist at the USC Student Health Center, was fired on June 30, 2017, after being found to have conducted improper medical care and sexual and racial harassment over several years. His termination took place one day before the inception of the university's policy with Arch Specialty under which it submitted the claims, the insurer alleged.

Arch Specialty insisted that the university "kept [it] in the dark" about the allegations against Tyndall and that it would not have offered insurance to the university under the same terms had it known about them.

USC reportedly learned that the Los Angeles Times was planning to run a story, which was published in May 2018, about the allegations against Tyndall before it demanded the amendment of its policy with Arch Specialty.

The university's excess healthcare professional liability coverage policies with Arch Specialty were issued for the policy periods of July 1, 2016, to July 1, 2017, and July 1, 2017, to July 1, 2018. The policies provide insurance excess of $100 million in underlying coverage provided by several carriers.

Arch Specialty is also seeking the rescission of its 2017-18 policy for USC, citing the university's alleged failure to disclose the accusations against Tyndall when it applied for the policy. Under the terms of Arch Specialty's healthcare liability insurance, the university had a duty to disclose all facts material to the risk the insurer would undertake, which included the allegations against Tyndall.

A University of Southern California spokesperson said the institution has not yet reviewed the complaint in detail.