A growing number of school districts paid out legal damages or settlements of $1 million or more last year—many stemming from lawsuits related to sexual misconduct, crimes, and discrimination, and some of it dating back decades, according to a new report.
United Educators, an insurance and risk management company focused on schools and colleges, recently released its latest annual report analyzing some of the largest financial losses districts sustained as a result of legal claims.
The latest report lists 69 publicly reported damage awards and settlements of $1 million or more among K-12 schools and colleges in 2022. That was up from 38 awards of $1 million or more in 2021.
“We’re seeing more large settlements and judgments against schools and colleges, which can have very real impacts,” said Bryan Elie, vice president of underwriting and product development for United Educators.
The increase highlights a number of different trends, including a growing tendency by sexual abuse victims to hold institutions accountable for how they address abuse and state law changes that allow more abuse victims to sue. In addition, a greater mistrust of educational institutions has helped spur more lawsuits and larger jury awards, according to the report’s authors.
Beyond the legal and financial consequences, there’s an emotional impact, as students and staff members come to terms with potential wrongdoing by their district, and a reputational cost.
United Educators’ report is far from a perfect science. The company pulls its data from publicly available records and reports, and there are likely some settlements and jury awards that aren’t public.
One-third of large settlements reported in 2022, or 23 of them, stemmed from sexual misconduct claims, often from incidents several years or decades ago. That’s similar to 2021, when 13 of the damage awards and settlements—34 percent—were related to sexual misconduct claims.
In 2022, the cost of sexual misconduct claims included in the report ranged from $1 million to more than $600 million, Elie said. The largest award, totaling $615.6 million, was paid out by the University of California system, which was accused of negligence for employing a gynecologist who sexually abused dozens of women.
“Half a billion dollars or more, I don’t care how big the institution is. That’s game changing, and could be institution-destroying, depending on the fiscal strength of that institution and the [insurance] coverage they may have,” Elie said. “Regardless, it’s taxing, and that’s an impact that’s going to be felt for a while.”
Several school districts in 2022—including the Union School District, Los Angeles Unified School District, Riverside Unified School District, and Pasadena Unified School District, all in California—were ordered to pay damages or settled lawsuits stemming from allegations that administrators did not act swiftly to investigate employees accused of sexually abusing students.
The state of Hawaii and its education department will pay $10 million to a former high school student with developmental disabilities who was repeatedly sexually assaulted by several students while in school. The woman’s family said school employees were aware of the problem but took no action to intervene.
Insurance policies typically cover much of the sum school districts must pay out, but the large damage awards and settlements still carry financial consequences.
Impacts beyond the budget
Along with the monetary impact of large settlements or judgments, affected districts must grapple with the emotional impact on the school community. Often, the reputations of the schools involved are tainted for years after a lawsuit is resolved, Elie said.
“If you’re a teacher and administrator at a public school district, you’re getting paid to teach and manage, not to talk to attorneys or go through depositions, but it can become a huge distraction,” Elie said. “It could cause an institution to really retrench and have to reevaluate some of their core activities that are integral to education.”
Even if the school wins the lawsuit, the cost of defending itself against claims has also increased, and can put a strain on budgets, Elie said.
Taking a more proactive approach to risk management
Driving some of the increase in the number and value of districts’ largest losses is a movement among states to extend the statute of limitations on sexual misconduct claims. Those extensions mean allegations from decades ago can surface and spur new lawsuits, Elie said.
There also seems to be an increase in general mistrust of education organizations, and juries seem more likely now than in decades past to scrutinize whether schools “did everything possible” to protect students’ and staff members’ safety, he said.
In the 2022 report, seven reported losses of $1 million or more involved COVID-19 and colleges’ tuition charges during the pandemic’s early months, six were accidents or crimes resulting in death, and five were discrimination claims.
Forty of the 69 large losses detailed in the report were among K-12 schools.
A Washington school district, for example, was ordered to pay $34 million to parents and students exposed to polychlorinated biphenyls (PCBs) at a school building and suffered serious neurological injuries, the report says.
And a California district will be required to pay $18 million to the family of an 8-year-old boy with Down syndrome who died after staff strapped him to a chair and left him unsupervised. The boy fell backward and broke his neck, according to the report.
In addition to the largest claims, there has also been growth in damage awards and settlements of $250,000 or more. United Educators tallied 107 such awards last year, up from 19 in 2015.
“Where you would go back 20 years ago, there may have been more deference to the decisions that were being made at educational institutions, and today [juries] are really questioning that you’re really doing all that you can in the name of safety,” Elie said.
That means districts need to take a more proactive approach to risk management.
Rather than just drafting policies that outline a commitment to safety, schools need to actively enforce those policies by training employees, talking to families and students about their responsibilities, and investigating claims of wrongdoing or danger immediately, Elie said.
“I think what we’re seeing now is educational institutions of all types actually have to actively manage the risks and their exposures and create a cultural change,” Elie said. “It’s not just the people at the top. It’s sort of everybody’s job to think and to act with with care and concern to move the needle to prevent [these] claims and situations.”
