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General Star v. Mid-Atlantic Youth Services et al  (M.D. Penn. September 27, 2010)

Last year, news outlets across the country picked up a story about the administrator of a juvenile detention facility paying county judges for sending teens to the facility. The insurer issued three insurance policies to the Mid-Atlantic Youth Services Corp providing a variety of coverage, including professional liability coverage. Subsequent to the scheme being discovered numerous individuals and class actions were field against Mid-Atlantic seeking damages and alleging that the judge’s improperly convicted the juveniles in order to maintain occupancy levels and to receive payoffs. Mid-Atlantic sought defense and indemnity for these claims.

The insurer denied coverage resulting in the instant action. The court held that the policies did not apply to the underlying claims because the actions did not involve claims of negligence but malicious and intentional actions that could not be considered an “accident.” Moreover, the court held that the policies “knowing violation” and “criminal acts” exclusions applied.

For a copy of the decision, click here

Brian Biggie and Sharon Angelino