Can Public Policy Trump Coverage? Pennsylvania Supreme Court Tackles Sex-Trafficking Claims
On November 18, 2025, the Pennsylvania Supreme Court heard oral argument on two certified questions sent to it by the Third Circuit Court of Appeals concerning whether Pennsylvania’s public policy against sex-trafficking precludes insurance coverage for claims against an insured alleging conduct that would violate Pennsylvania’s anti-trafficking law, 18 Pa. Const. Stat. § 3011.
The case pending before the Third Circuit out of which the certified questions arose is Samsung Fire & Marine Ins. Co., Ltd. (US Branch) v. RI Settlement Trust, No. 23-1988, 2024 U.S. App. LEXIS 30348 (Aug. 12, 2024). In that case, the insurer is seeking a declaration that it has no duty to defend or indemnify its insureds – several entities that own and operate the Roosevelt Inn hotel in Philadelphia – for a series of underlying civil actions filed against them by sex-trafficking victims alleging that the hotel insureds engaged in conduct violative of Pennsylvania’s anti-trafficking law, and asserting causes of action for negligence. The insurer argues that, even if the general liability policies it issued to its hotel insureds, on their face, provide coverage for the underlying claims, it still has no duty to defend or indemnify the insureds because Pennsylvania’s public policy against sex-trafficking precludes the availability of insurance coverage for claims alleging conduct that violates Pennsylvania’s anti-trafficking statute. None of the hotel insureds were criminally charged under the criminal anti-trafficking statute.
During Tuesday’s oral argument, the Justices appeared hesitant to recognize a public policy exception to an insurer’s broad duty to defend claims that may fall within a policy’s coverage where such claims allege conduct that would violate Pennsylvania’s anti-trafficking statute, but where the insured was not criminally charged under the statute. To this end, the Justices focused on the claims and allegations asserted in the underlying complaints and questioned both sides heavily as to why the Court’s decisions in Minn. Fire & Cas. Co. v. Greenfield, 855 A.2d 854 (Pa. 2004) and Mutual Benefit Ins. Co. v. Haver, 725 A.2d 743 (Pa. 1999) – wherein the Court held that coverage was barred, as a matter of public policy, for civil damages resulting from certain particularly repugnant crimes –should or should not be expanded to encompass claims such as those asserted against the hotel insureds in the underlying complaints. Several Justices further expressed concern that recognizing the exception advocated for by the insurer is a slippery slope, as doing so could open the door for insurers to disclaim coverage any time an insured is accused in a civil lawsuit of engaging in criminal conduct for which the insured was never criminally charged.
Going forward, the Supreme Court will render a decision on the certified questions, which the Third Circuit will then rely on in determining whether the insurer has a duty to defend and indemnify its hotel insureds in the underlying actions.
For questions, please contact Charles W. Spitz, Principal in the firm's Casualty Litigation Department and Co-Chair of the firm's Hospitality & Retail Practice Group at 215-587-6629 or cspitz@postschell.com, Rachel DiMarco, Associate in the firm's Insurance Law Department at 215-587-1151 or rdimarco@postschell.com, or the Post & Schell attorney with whom you normally consult.
About the Author
Rachel DiMarco is an Associate in the firm's Insurance Law Department and counsels and assists multi-line insurance carriers and regional insurance companies in all aspects of coverage matters, including insurance contract analysis and preparation of coverage opinions and reservation of rights letters. She also defends insurance clients against bad faith claims and represents them in coverage disputes through declaratory judgment actions.