The company that provided the Catholic Diocese of Kansas City-St. Joseph its liability insurance in the 1970s says it shouldn't have to defend the church or pay damages in a litany of sexual abuse cases.
The U.S. Fidelity and Guaranty Co. filed suit in federal court Friday against the diocese, which has been sued by more than a dozen plaintiffs who say they were victims of sexual abuse in the '60s and '70s. In the majority of those cases, the court has dismissed all claims against the diocese except the intentional failure to supervise clergy.
The insurance company says the policies it underwrote only cover injuries that were the result of accidents, not injuries that were expected or intended on the part of the diocese.
"The issue is, did the supervising bishop or supervising personnel know or should have known that the priest or clergyman was abusing children?" says Peter Swisher, a law professor at the University of Richmond (Va.) who has written extensively about liability insurance in the wake of church abuse scandals.
Swisher says across the country, courts have offered varying opinions on whether companies providing liability insurance to churches should have to pay. It's a key question because settlements in these cases can reach into the tens of millions.
"Let's say the bishop – instead of taking action against the abusing priest – maybe transfers him to a different parish," says Swisher. "The insurance companies would argue that's tantamount to an intentional act."
And liability insurance won't cover intentional acts. In cases where the courts have granted the insurance company declaratory relief, the religious organization is on the hook for its own defense and any damages that may result.
In an email, a spokesman for the Diocese of Kansas City-St. Joseph wrote that the diocese hasn't been served with the lawsuit yet and couldn't comment on it at this time.
Why insurance companies seek declaratory judgments
Even if the insurance company's request for declaratory relief isn't granted, the lawsuit could put a cap on how much U.S. Fidelity and Guaranty – which was bought out by Travelers in the 1990s – would have to pay in a settlement.
"The insurance company may be trying to get a declaration about the amount of money that is at risk and limit their exposure," says Jeffrey Thomas, associate dean at the University of Missouri - Kansas City School of Law. "They're going to try to get out of it entirely, but I don't think that's as likely to happen. They're more likely to limit the amount of their coverage."
The policy the diocese bought in the '70s limits damages to $300,000 per occurrence. Once considered an adequate amount of coverage, it's low by today's standards.
It's possible there are other policies besides the two the insurance company admits to in the suit. Though the diocese alleges it purchased other, excess policies that would up the amount of coverage, neither the church nor the insurance company has been able to prove they exist.