11-14-11; “Say it ain’t so, JoePa.” Things U.S. risk managers may take away from the tragic end of Joe Paterno’s coaching career

The U.S. sports community was stunned, dazed and amazed to see Coach Joe Paterno initially announce his retirement and then be summarily terminated by the Penn State University Board of Trustees. Joe Paterno has coached football at Penn State University longer than most of our readers have been reading.

The major issue everyone is talking about was the apparent fact Coach Paterno was advised of a very serious situation involving an eyewitness account of at least one unquestioned and shocking crime. News sources indicate while Coach Paterno did report the event to university officials, it appears he took no further remedial action other than initial reporting. News reports indicate he never “circled back” to see what happened with his report. It appears the failure to take further action led to his termination. While we feel badly for Coach Paterno and his many supporters, it is hard to question the decision of the PSU Board of Trustees. We feel confident their attorneys told the Board they had no real choice other than to terminate asap.

Our best wishes and hopes go out to the victims and their families—we hope they work together to get past this media circus and accompanying madness. We also salute the contributions of 84-year-old Coach Paterno whose mistaken judgment in one crisis over a coaching career that spanned decades caused him to be summarily wrenched from a position he obviously cherished and thrived in.

Where is Penn State University at right now?

Well, they are facing both criminal and civil sanctions and probably lots and lots of litigation. The main perpetrator of this tragic mess left employment with the University about a decade ago; but he left behind a trail of young claimants who are now becoming adults and able to sue the school in their own name as adults. It is our assumption that is the genesis of what has brought this issue to the national spotlight.

To the extent news reports indicate as many as forty claimants have stepped forward, it is possible Penn State may be looking at damage claims of at least $25,000,000 to $250,000,000. Punitive damage counts may make the potential losses stratospherically higher. Please note the litigation may be moved to Pittsburgh or Philadelphia or even Chicago where claimant attorneys will seek juries who are not sympathetic to Penn State University. One may also assume there may be Plaintiff attorney websites springing up across the country seeking more claimants willing to step forward. The cost of hiring attorneys to defend all of the expected civil claims is certain to be well into the millions. Current administrators will also face lots of demands on their time to participate in investigations, depositions and discovery.

From the perspective of U.S. risk managers, we feel this situation parallels the problems faced by the Catholic Church in this country over the last several decades. Thousands of claimants have come forward to assert criminal attacks similar to the Penn State situation. If you aren’t aware of what has happened as components of the Church have struggled to defend themselves, several U.S. Catholic Dioceses have filed for bankruptcy to seek protection from the cost of settlements, verdicts and defense costs.

While Penn State’s endowment may protect them from bankruptcy, the hit to the University from the embarrassment and settlements/verdicts isn’t going to be good for school attendance or future fund-raising. The endowment’s credit rating is already taking a hit. We assure our readers some Catholic parishes initially tried to take collections specifically for their defense situation and lots of parishioners revolted, claiming they didn’t want to foster or implicitly condone the conduct leading to the needed defense funds.

Trust us, major corporate and individual contributors to Penn State University will not want to see their hard-earned contributions earmarked to resolve this messy litigation at all levels. One solid thought is to rapidly seek confidential settlement meetings and rapid closure of all criminal and civil claims with the victims, their attorneys and their families. We don’t feel any good will come from dragging this one out.

One simple strategy to avoid such problems in your company

Start and maintain an Harassment Hotline/Email Address

One thought for risk managers is to expand the concept of having an harassment hotline or email address for your facilities and larger community. Please note the hotline shouldn’t be limited to your workers—if you deal with the public, make it available for anyone to relay a concern about a crime or inappropriate conduct of any kind. All complaints, questions and inquiries of any nature need to be kept completely confidential. HIPAA/GINA concerns in such reports should follow the privacy requirements of U.S. law if any medical information is part of the complaint.

The hotline concept is to allow for rapid and open reporting of every questionable activity or action that occurs within your organization. We recommend you advise every worker of the concept at new employee orientation and at employee meetings at least once a year. Complaints of harassment relating to racial/sex/national origin/religion should all be funneled into this system. The complaining party can and should be given a reference number for their call-in complaint. Your decision on resolution of any complaint needs to be reported back to the complaining party to insure you have taken any step needed to resolve it within your discretion.

Please note having such a hotline should allow you to rapidly perform an effective incident investigation you may not be otherwise able to do. When a complaint comes in, your hotline managers can take webcam statements, pull surveillance videos where possible and seek needed documentation to build a solid file. If it is done properly, you can basically build a solid defense case-in-chief to be prepared for civil or criminal litigation. If you don’t have such a hotline, it is wildly difficult to investigate when there is a significant delay in reporting—by the time the situation boils up to the media or a lawsuit, you will have to fight and expend lots more time to try to catch up to what may have occurred weeks, months or years ago.

In our view, the cost of operating and managing an harassment hotline/email address is inexpensive in relation to the cost of one claim that goes awry, as happened at PSU. Effective and confidential management of all complaints will provide your organization with defenses it wouldn’t otherwise have and should limit litigation.

When do you go to the police to relay a hotline complaint?

Ah, this is a delicate question to resolve. In our view, when you receive a report of actions that arguably could be a felony, the authorities have to be involved. At Penn State, senior administrators have already been charged with crimes for not reporting actions that clearly comprised at least one and maybe lots of felonies. Our sources indicate they didn’t consult with University counsel about the issue or investigate further. They basically just buried the reports which probably made them accessories after the fact. We are certain the local police have to be furious to learn they weren’t consulted and therefore couldn’t have quietly and smoothly apprehended the criminal and stopped his actions.

This failure to take action or report to the authorities may have resulted in lots more children being attacked when such attacks clearly could have been prevented. In our view, defending those former PSU administrators in a criminal courtroom will be very challenging based upon the facts as we understand them. Another tragedy of their inaction is the tumultuous end of Coach Paterno’s amazing career and legacy.

If the actions reported are less serious but still indicate there are potential criminal actions, we recommend your organization contact legal counsel and get a detailed opinion of what the best approach would be. Just by doing so, you protect yourself and your organization from later criticism and possibly criminal charges.

At KC&A, we are contacted about such issues by clients and prospective clients on a regular basis. We are happy to assist with setting up or managing an harassment hotline. We are also happy to provide your managers research and analysis of employment law, general liability, criminal situations and other similar concerns. Some of these requests may come from harassment hotline complaints. If you have thoughts, questions and concerns, please send a reply.