Claims Made Bites: The EPL Risk Manager Checklist

Fire Abuser, Report to Police, Then Google Ex-Employee Monthly Into Perpetuity

For this year’s Halloween season we have an incredibly terrifying situation for risk managers at every level! Can a carrier successfully argue that a previous lawsuit, which did NOT name your insured as a defendant, be used to deny coverage for a current claim that is seemingly related to the previous lawsuit? In this case the court said no, but it’s easy to see how this could have gone against the insured’s favor.

Twin City Fire Insurance Co. v. RK Family, Inc., Case No. 2:24-cv-2275-ALM (S.D. Ohio Sept. 29, 2025)

Before Policy Period:

• December 2020 – May 2021: Supervisor sexually harasses/assaults minor employee
• March 5, 2021: Minor employee reports harassment to store manager
• March 16, 2021: Store manager fires supervisor and reports to police
• June 10, 2021: Ex-supervisor indicted by grand jury (rape, sexual battery, compelling prostitution)

Policy Period:

• March 31, 2022: EPL policy period begins
• May 17, 2022: Ex-supervisor pleads guilty, sentenced to 23-26 years
• June 7, 2022: Minor employee files EEOC charges against insured
• October 16, 2022: Minor employee files civil lawsuit against insured

The Carrier’s Argument

The carrier made a motion for summary judgment to confirm that they had no duty to defend. Their argument was that since the wrongful acts alleged by the plaintiff were all related to the ex-supervisor’s behavior that occurred prior to the inception of the policy, and since the ex-supervisor was indicted by a grand jury in June 2021 (nine months before the policy inception), this was a prior claim outside the policy period.

Here’s where it gets terrifying: The EPL policy defined “Employment Practices Claim” to include “a criminal proceeding commenced by the return of an indictment or similar document” if made “by or on behalf of an Employee.”

The carrier argued that the criminal indictment qualified as an “Employment Practices Claim” and that the subsequent EEOC charges and civil lawsuit were “interrelated” to it. Under the policy’s interrelationship provision, all interrelated claims are deemed first made on the earliest date, which would be June 2021, before the policy period began. Result: no coverage.

The Court’s Response

The court rejected that argument, stating that “at this stage, this Court cannot conclude as a matter of law that the Indictment qualifies as a Claim ‘by or on behalf of’ [the plaintiff] under the Policy to qualify as an ‘Employment Practices Claim’ such that it may be ‘interrelated’ with the [civil lawsuit] or the [EEOC] Charges.”

Here’s the key legal point: The phrase “by or on behalf of” was undefined in the contract and therefore the court determined it was ambiguous. Under Ohio law, ambiguities in insurance contracts are construed against the insurer.

The court reasoned that the indictment was brought by the state in its sovereign capacity, and thus it did not depend on the employee’s decision to initiate or pursue relief “by or on behalf of” the minor employee. Without clear policy language defining what “on behalf of” means, the carrier couldn’t prove the criminal proceeding qualified as an “Employment Practices Claim.”

We Can All Breathe a Sigh of Relief… Right?

We can all appreciate this particular happy ending; a reasonable conclusion by the court. But here’s the scary part: a different court could have easily ruled in favor of the carrier and stated that the indictment was related to the current claim, therefore there’s no coverage.

The Impossible Standard

But let’s focus on what the carrier’s position actually required of the insured. Even if we accept the carrier’s interpretation, how exactly was the insured supposed to know about the criminal indictment?

The insured was not named in the indictment. The state prosecuted the ex-supervisor for his crimes. The employer had no involvement in that criminal case. They weren’t a party, they weren’t notified, and they had no reason to be monitoring it.

The only way the insured could have been aware of the indictment was if they were keeping tabs on their ex-supervisor, essentially Googling him monthly to see if his name popped up in any criminal proceedings. How else could the insured have known about and reported this “claim” a claim which, again, did not name them as a defendant?

Think about what this means for risk management: 

Fire the abuser? Check. 

Report to police? Check. 

Monitor that ex-employee’s criminal proceedings into perpetuity in case it somehow becomes “your” claim under an EPL policy? That can’t be the standard.

A Potential Solution

One solution might be to amend the definition of “claim” to stipulate that the insured must have been made aware of the claim in question. If the insured was not named in the indictment, then how could they have been expected to report the matter? If the definition of claim required the insured’s knowledge, than this particular argument by the carrier could not have been made as the insured had no knowledge of the indictment.

While this didn’t come up in the court documents, one would have to assume that when the insured completed their application for EPLI coverage, they answered “not aware” to questions about circumstances that may give rise to a claim. The carrier apparently didn’t expect the insured to have knowledge of the criminal case either, otherwise they would have raised misrepresentation.

Let’s have policy language that affirms the definition of “claim” cannot be met without the insured’s actual knowledge. That way risk managers can sleep a little better knowing this particular coverage gap will not be lurking, waiting to ensnare their businesses in terrifying coverage gaps.

When carriers include criminal proceedings in the definition of “Employment Practices Claim” but pair it with vague language like “by or on behalf of,” they create ambiguity that should, and in this case did, get resolved against the insurer. But insureds shouldn’t have to fight these battles in court.

Don’t let your coverage be buried in the graveyard of undefined policy terms and impossible reporting standards. This Halloween, the scariest story isn’t about what goes bump in the night, it’s about discovering your “claims-made” policy thinks a claim was made before you ever knew it existed. Demand clear language, or risk becoming another casualty of coverage denial season.

This analysis is provided for educational purposes only. For specific insurance coverage questions, consult with competent coverage counsel.

Meet the Author

Lucas Roberts

Wholesale Broker, Anzen

Lucas Roberts is a professional lines specialist with experience in both underwriting and wholesale brokerage. He maintains an active LinkedIn presence, regularly sharing insights on professional liability developments. This blog takes a deeper dive into developments that have far-reaching consequences for the professional liability market.

You can see more of Lucas’s Claims Made Bites on his LinkedIn.