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Penn State to pay $59.7 million in Sandusky child sex abuse settlement

By Barbara Goldberg and Daniel Trotta

(Reuters) - Penn State University agreed to pay $59.7 million to 26 victims of convicted child molester Jerry Sandusky, settling the bulk of claims in a major step to move beyond a scandal that upended one of U.S. college football's most lucrative teams.

The university said in a statement it reached the settlements in the wake of Sandusky's conviction in June 2012 for sexually abusing boys while he was an assistant football coach and after he retired.

"We hope this is another step forward in the healing process for those hurt by Mr. Sandusky, and another step forward for Penn State," university President Rodney Erickson said in a statement.

"We cannot undo what has been done, but we can and must do everything possible to learn from this and ensure it never happens again at Penn State," he added.

Claims from six other men who said Sandusky abused them as children have been rejected or may result in possible settlements, the school said.

Sandusky, 69, was sentenced to 30 to 60 years in prison for abusing 10 boys over a 15-year period, in a case that tarnished the reputation of Penn State and its late football coach Joe Paterno, who lost his job for failing to report Sandusky to authorities.

"There is some sense of affirmation, but there remains the deep wounds and scars that are wide open and every day it's a struggle," said Jeff Anderson, a lawyer for the last two victims to accept the settlement.

The figure is close to the $60 million fine imposed by the NCAA - the equivalent of the annual gross revenue of the football program - along with other sanctions.

The victim settlement comes on top of $50 million already spent on fines, legal bills and other costs linked to the scandal that rocked the university after a grand jury indicted Sandusky in November 2011.

"No amount of money can restore the innocence that was taken from the victims. It's only because of their generosity and courage in speaking up that Sandusky was removed from his powerful position and children are safer," said the victim advocacy group Survivors of those Abused by Priests (SNAP).

The school said the settlement amounts will not be funded by student tuition, taxpayers or donations, and that it believes it has various liability insurance policies that will cover the settlements. Penn State did not name the insurers.

The university has sued one of its insurers, the Pennsylvania Manufacturers' Association Insurance Company (PMA), alleging PMA failed to honor its obligations to pay for claims in the Sandusky case.

PMA declined to comment on Monday, and a Penn State spokesmen declined to comment beyond the prepared statement, except to confirm that the PMA litigation was ongoing.

"Penn State believes it has other insurance that has been denied to them and they intend to pursue those other claims," said Clifford Rieders, an attorney who represented one of Sandusky's victims and was involved in drafting the settlement.

The settlements were not split evenly and ranged "from the hundreds of thousands to the several millions" of dollars for each plaintiff, Rieders said.

Anderson said it was likely Penn State agreed to cover the settlements now "with the idea of fighting it out later with the insurance companies."

Sandusky lost a bid earlier this month for a new trial.

Paterno, as head coach of the Penn State Nittany Lions, had won more games than any other major college football coach in history until the NCAA stripped the team of more than 100 victories because of the scandal. Paterno died early last year at age 85.

Three former Penn State administrators, including the former president, Graham Spanier, have been criminally charged with conspiring to cover up the scandal.

(Editing by Dina Kyriakidou and Cynthia Osterman)

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