News & Updates

Lessons From Penn State: Institutional Responsibility for Preventing Child or Sexual Abuse July 27, 2012

The Penn State child sex abuse scandal is not only a cautionary tale for institutions of higher learning; it is likely to be perceived as notice of institutional responsibility obligations in future claims involving any organization that deals with children. The independent investigation of the Penn State scandal identifies specific areas of concern — and highlights precautionary measures to help prevent abuse or mitigate risk following a claim — that are applicable to every college, high school, grade school, health care facility, community center, athletics organization, or other institution whose services are focused on children.

Board Responsibilities

Applicable to every institution is the recognition that a board of trustees or a board of directors cannot be just a rubber stamp for decisions made by the president and a small group of trustees. Members of such boards not only have a duty of loyalty but also a duty of care, including the duty to make reasonable inquiry and to exercise the skill and diligence that a person of ordinary prudence would use under similar circumstances. A board breaches its duty when it fails to implement any type of reporting or information system or set of controls. The same can be claimed if a board, having implemented such a system or controls, consciously fails to monitor or oversee its operations, thus disabling itself from being informed of the risks or problems requiring its attention.

A board breaches its duty not because a mistake occurs but because the board fails to provide reasonable oversight in a sustained or systematic fashion. In the case of Penn State, the investigation found that the board failed to exercise its oversight functions by not having regular reporting procedures or committee structures in place to ensure disclosure to the board of major risks. It failed to create a culture of an expectation of disclosure by those answering to it. The board failed to perform its duty of inquiry when, after learning of an attorney general's investigation and the service of subpoenas on the university, it did not demand detailed reporting and did not meet its continuing obligations to require information or answers on any university matter with which it was concerned.

Regulatory Compliance

According to the investigation, the University failed to comply with the Clery Act. The Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act, 20 U.S.C. 1092 (f), is a federal law applicable to any institution of higher learning that participates in federal student financial aid programs. It requires institutions to collect crime statistics relating to designated crimes (including child abuse and sexual assault) occurring at designated locations associated with the institution, issue timely warnings of certain crimes that pose an ongoing threat to the community, and prepare and distribute to the campus community an annual safety report containing the crime statistics as well as other information about the institution’s safety policies and procedures. Institutions are required to collect crime data from all of what the Clery Act calls “campus security authorities." These include a dean of students who oversees student housing, a student center, or student extracurricular activity; a director of athletics, team coach, or faculty advisor to a student group; a student resident advisor, assistant, or student monitor of access to dormitories; a coordinator of a fraternity or sorority; a physician of a campus health center; and a counselor in a campus counseling center or a victim advocate or sexual assault response team in a campus rape crisis center if they are identified by the institution as someone to whom crimes should be reported or if they have a significant responsibility for student and campus activity.

Institutions are required to report any "Clery crime" in their collected statistics even if no criminal charges are filed or no arrest is made. An institution is required to include the report of the crime if the information is reported to a campus authority who believes that the allegation was made to him or her “in good faith." According to the investigation, many individuals at Penn State were unaware of the Clery Act or who qualified as a campus security authority. It found the university failed to provide comprehensive training in Clery Act requirements and took no steps to ensure Clery Act compliance.

Centralized Compliance and Preventative Efforts

Penn State had many protective policies and procedures in place, including those related to sexual harassment, sexual assault, and the protection of whistleblowers — but there was no centralized office, officer, or committee to oversee institutional compliance with the laws, regulations, policies and procedures. There was no systematic training in the procedures, nor was any audit process defined. There was no centralized human resources office responsible for making uniform policies to oversee background checks, hiring, promotion, termination, onboard-orientation, and management training. There was no mechanism for tracking employee training mandated by state and federal law or the university’s policies.

The Bottom Line

These issues must be the concern of every governing body of every institution dealing with children. Although the Clery Act only applies to institutions of higher learning that receive federal financial aid, virtually every state has a similar mandatory requirement for the reporting of suspected child abuse by specific job functions within an organization. Risk managers, officers, and directors of such organizations must take concrete steps to ensure that their employees are trained in these responsibilities, that there is compliance oversight, and that there is whistleblower protection. Boards of trustees and boards of directors must be educated on their responsibilities, duties, and liabilities and create a culture of full disclosure by those who report to them.

After Penn State, prosecutors and juries are going to have little sympathy for organizations that deal with children but do not have rigorous policies and enforcement procedures in place when child abuse is suspected. The Penn State scandal also makes clear that once an incident of suspected child abuse is reported, the institution should have an investigative plan in place using independent counsel to investigate the incident to coordinate with law enforcement officials. 

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