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Insurer files countersuit against archdiocese

By Shelley Murphy, Globe Staff, 4/29/2004

An insurance company that was sued by the Catholic Archdiocese of Boston for failing to cover settlement payments made last year to victims of clergy sexual abuse filed a counterclaim yesterday in federal court, arguing that the church owes the company money.

Lumbermens Mutual Casualty Company insists that its policy covering the archdiocese for injuries related to "occurrences" meant only those that were accidents.

"There is no coverage for damages which were the proximate result of the intentional criminal conduct of priests who committed acts of sexual abuse against minors," the company argued in the counterclaim filed in US District Court in Boston.

Lumbermens, a member of the Kemper Insurance Cos. of Illinois, asserts that the archdiocese should be forced to reimburse Lumbermens for sums it has paid to settle complaints filed by victims of clergy sexual abuse.

Although Lumbermens doesn't say in its suit how much it is seeking, the archdiocese disclosed in its suit that the company contributed $2,160,000 toward the church's $10 million settlement in 2002 with the 86 victims of former priest John Geoghan, who was killed in jail last year.

The archdiocese agreed last September to pay up to $84,250,000 to 552 victims of clergy sexual abuse and filed suit against Lumbermens last month in federal court accusing the company of fraud and breach of contract for failing to contribute anything toward that settlement. By the archdiocese's calculation, $59.3 million of the settlement related to policy periods when Lumbermens was the church's sole insurer and an additional $7.7 million arises out of policy periods when Lumbermens' coverage overlapped with that of another insurer.

The suit chronicled a dispute with Lumbermens over coverage that dates back to 1993, when the archdiocese notified the company that it had received several claims by individuals who alleged they had been molested by priests between 1954 and 1983.

In the response and counterclaim filed yesterday by Lumbermens, the company denied the archdiocese's allegations and argued that it doesn't owe the archdiocese any money.

The countersuit cited a report by Attorney General Thomas F. Reilly in July 2003 that concluded that the widespread abuse of children by priests was due to "an institutional acceptance of abuse and a massive pervasive failure of the leadership."

Pointing out that church officials had acknowledged they made mistakes, Lumbermens' suit says: "Unfortunately, despite finally mouthing accountability, it is clear from this lawsuit that the [archdiocese] nevertheless persists in its attempts to evade true accountability -- namely, enduring the consequences of its actions."

Neither John Tener, the lawyer who filed the suit on behalf of Lumbermens, nor Kate Ciminich, the lawyer who represents Archbishop Sean P. O'Malley in the initial lawsuit, would comment yesterday.

But Jeffrey A. Newman, the lawyer who represents many of the victims of clergy sexual abuse, said the claims filed on behalf of victims were based on negligence by church officials, not on the acts of individual priests, and therefore the insurers should be forced to pay for the settlements.

"For them to say, `We don't have to pay because these were criminal acts,' is really avoidance, and it's irrelevant," Newman said.

The Rev. Christopher J. Coyne a spokesman for the archdiocese, said the church has raised close to $100 million by selling church property to pay the settlements to victims of clergy sexual abuse, but that the church needs the money from its insurance carriers to pay off debts and expenses.

"The archdiocese has used up all of its assets basically to pay off the settlement and maintain its own finances, and there's a serious debt that's been realized," Coyne said. "We're going to continue to move forward and work vigorously to retain the payment from the insurance company due us."