Two New Hampshire nonprofits that ran youth facilities for the state are suing their insurer seeking defense and indemnity coverage for child abuse lawsuits filed against them.
Philadelphia Indemnity Insurance Co., the insurer for Mount Prospect Academy and the Vermont Permanency Initiative, Inc. (VPI), maintains that only one of multiple policies it issued to them is triggered by the claims in the lawsuits. The insurer further maintains that this abusive conduct liability is in danger of being exhausted by defense costs before even one case goes to trial.
In the individual lawsuits against the service organizations, the plaintiffs allege they were mistreated as children while at the state’s Youth Detention Center (YDC) and/or at private contractor locations like those operated by Mount Prospect Academy and VPI, which provide educational, therapeutic, and residential services to children.
More than 1,300 people have sued the state since 2020 alleging that they were physically or sexually abused in state custody as children while under YDC care. Only one case has gone to trial, resulting in a $38 million verdict. Two other cases have been settled by the state for $10 million and $4.5 million.
Mount Prospect Academy has thus far been cited in 133 lawsuits claiming mistreatment primarily in the 2000s, while VPI has been named in two, according to the complaint.
New Hampshire Abuse Class-Action Suit Tossed, Individual Claims Stand
Mount Prospect and VPI says that the Philadelphia policies issued to them include comprehensive general liability coverage, umbrella coverage, abusive conduct liability coverage, and professional liability coverage. The professional liability and abusive conduct policies provide retroactive coverage to July 7, 2003.
The two firms argue that the Philadelphia insurance policies cover the allegations now being raised in the individual lawsuits against them because “a reasonable insured engaging in ‘more than a casual reading of the policy as a whole,’ would absolutely conclude that the plaintiffs are owed both a defense and indemnity for the individual lawsuits.” The suit is asking the court to declare that Philadelphia owes them coverage.
The complaint asserts that the Philadelphia policies provide coverage for, among other risks, corporal punishment, bodily injury resulting from the use of reasonable force, bodily injury arising out of false arrest, detention or imprisonment, and bodily injury resulting from discipline., according to the lawsuit. Also, the plaintiffs believe, coverage should be triggered because the dates upon which the various plaintiffs allegedly suffered their injuries correspond with the policies’ time periods.
However, Philadelphia has denied most coverage. The insurer maintains that only the abusive conduct liability coverage applies to the claims and that policy has a $1 million limit that is in danger of being exhausted as it is a defense-within-the-limits, or wasting, policy.
Among other defenses, Philadelphia claims that no coverage exists under most of the policies because all the lawsuits seek damage for forms of child abuse. The insurer also maintains that the alleged claims and damages are limited or excluded from coverage, in whole or in part, according to the terms, conditions, limitations, and exclusions in the policies. Furthermore, the insurer says some or all of the plaintiffs’ claims may be barred because the plaintiffs allegedly failed to give timely notice of the underlying suits.
The plaintiffs insist the insurer still has an obligation to cover.
“Even if the allegations in these individual lawsuits against Mount Prospect Academy and VPI are fraudulent or groundless, Philadelphia’s duty to defend is still triggered when the facts alleged in these complaints are compared against the applicable policy language. Philadelphia’s coverage position simply makes no sense, and it is to the plaintiffs’ severe detriment because defense costs deplete the wasting coverage of only $1,000,000 that has been acknowledged by Philadelphia. So, under Philadelphia’s scheme, there will be no insurance coverage left for these myriad cases by the time that any of these cases are ready to be tried,” the plaintiffs contend.
In addition to the YDC case that went to trial and the two other settlements, about 130 claimants have settled with an alternative state fund established by the legislature in 2022. That fund has more than 230 claims still pending. The deadline was June 30, 2025. That alternative fund was challenged in court then upheld in September, although lawyers for victims have vowed they will appeal to the state Supreme Court.
Was this article valuable?
Here are more articles you may enjoy.