Insurers Won’t Defend Hazing or Alcohol Claims

Tim Burke, Manley Burke, tburke@manleyburke.com

When hazing causes a tragic death, or serious injury, it often leads to litigation.  Some insurance providers are now taking a very hard look at whether or not they have responsibility to defend such litigation.

In March of this year, Liberty Corporate Capital, an insurance provider for Sigma Alpha Epsilon, filed suit seeking a declaration that it was not responsible for defending the fraternity’s chapter at California Polytechnic State University or its members who participated in the hazing of Carson Starkey.  Starkey died after, as Liberty said in its complaint,¹ “he was hazed and forced to consume alcohol by chapter members as part of a chapter big brother event called ‘Brown Bag Night.’”  Liberty argued that it had no duty to defend because the insurance policy issued to the national fraternity specifically excluded coverage for hazing and alcohol violations.  Further, the insurance company points out that the policy provided for no coverage to any of the undergraduate insureds for any claim arising out of or in any way related to any violation of the fraternity’s alcohol policy.

In a similar tragic matter, RSUI, an insurance company from Georgia, contributed to the settlement of a lawsuit growing out of the death of Michael Starks at Utah State University.  RSUI then filed suit against four of the members of Sigma Nu who were alleged to have played a role in the alcohol poisoning which led to Starks’ death.  The insurance company argued “the defendants are required to pay their portion of the amount used to settle the claims against them.”  Counsel for one of the students was quoted in The Insurance Journal² as saying “you cannot subrogate against your own insured, that is almost the definition of insurer bad faith.”³

The Utah State suit was settled prior to any court hearing. The terms were not disclosed, although attorneys for the students were quoted as saying no money was paid to the insurance company.  The Liberty suit remains pending.

Whatever the results of the Liberty case, the question of insurance coverage is yet another of the consequences of the tragedies of hazing and alcohol.  That insurance companies would seek to avoid coverage is not surprising.  Typically, insurance carriers will neither defend nor pay for the consequences of a deliberate act.  The insurance company of an individual who punches someone in the mouth is not likely to agree to defend the puncher or agree to pay the victim’s dental bill. The punch was a deliberate act.  The individual who threw the punch may not have intended to break the individual’s teeth, but he sure intended to throw the punch.  The same problem exists for those who engage in hazing.  They certainly did not intend that the victim die, but they did intend to haze the victim.

The families of victims like Carson Starkey and Michael Starks will long grieve the deaths of their loved ones, but those who engaged in the hazing that led to the deaths, in addition to whatever criminal consequences they may or may not suffer, may also find themselves with enormous  uninsured personal financial responsibilities as a result of their actions.

1 Liberty Corp. Capital, Ltd. v. Cal. Tau Chapter of Sigma Alpha Epsilon Fraternity at Calpoly State University, et al., No. 11-2626 (CD Cal) (the Complaint was filed March 29, 2011, in the United States District Court for the Central District of California.)

2 http://www.insurancejournal.dot/news/west/2011/05/03/197163.htm

3 Ibid.