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August 30, 2004

LA priest abuse toll may top $1.5b

Settlements' cost would be highest of any diocese

By Jean Guccione, Los Angeles Times | August 30, 2004

LOS ANGELES -- Damages claimed by hundreds of people who say they were sexually abused by Roman Catholic priests could exceed $1.5 billion in the Archdiocese of Los Angeles, far more than any other diocese has paid, according to newly released documents.

The total is based on a request, by the lead lawyer for plaintiffs, that insurers put aside at least $3.1 million per individual claimant to resolve child molestation cases involving the dioceses of Los Angeles and Orange. There are more than 500 child-molestation claims naming Los Angeles-area priests and 60 others alleging abuse by priests from the Diocese of Orange.

Attorney Raymond P. Boucher said the amount is justified based on the jury verdicts and the settlements of other clergy sexual-abuse lawsuits around the United States. He says it is also consistent with a Los Angeles judge's secret valuation of the local claims after a closed, two-day evidentiary hearing earlier this year.

Since then, Boucher has asked two companies who insured the Diocese of Orange -- which is part of the Los Angeles clergy-abuse litigation -- to review their financial reserves to make sure the funds are sufficient to cover pending sex abuse claims against the church. Damages, if proved, could be paid both by insurers for the church and from other church assets.

The dimensions of those key questions -- if claimants win, how much they can collect and from whom -- were disclosed last week in letters to the insurers. Most of the proceedings in the consolidated cases, designed to settle once and for all the potential liability for the two dioceses, are held in secret. At least 20 insurance companies are involved, covering church liability since 1950, according to court records.

The amount that insurers are willing to pay already has emerged as a stumbling block to pretrial settlements in the first wave of cases, the 60 against the Orange Diocese. The claims against the diocese could reach at least $186 million if the $3.1 million valuation method prevailed.

All three groups of interested parties -- claimants, the two dioceses, and the insurers -- have jockeyed intensely for advantage in the massive litigation, documents and transcripts show.

Lawyers for those who say they were abused have accused insurers of not making a meaningful contribution to the amount of money the Orange Diocese is offering, an allegation the companies deny.

In turn, attorneys for Cardinal Roger M. Mahony of Los Angeles say in court papers that they are involved in a dispute with their own insurers over "the existence, nature, and amount of coverage."

And Boucher, the court-appointed liaison counsel for the plaintiffs, told California state officials that the companies' reserves were "woefully inadequate" to cover all the pending claims, as is required by state law. The claimants, he said, "have a vital interest in the adequacy of reserves." Continued...

Liability coverage for the Orange Diocese, underwritten by Travelers Casualty & Surety Co. for 1976-81 and by Centennial Insurance Co. for 1981-87, provides "virtually unlimited coverage to the diocese for sex abuse lawsuits," Boucher said in letters to the insurers.

Unlike most newer policies, the Travelers and Centennial contracts do not contain aggregate coverage limits for the types of negligence alleged in the abuse cases, Boucher said. Centennial's potential liability could hit $229 million in the Orange Diocese cases alone, according to his calculations. Travelers could face as much as $79.5 million, he said.

In June, Boucher notified California's insurance commissioner, John Garamendi, of his concerns. The attorney said last week that he planned to ask other insurers involved in the Los Angeles litigation to increase their reserves as well.

A spokeswoman for Travelers, Marlene Ibsen, said the company would not comment on individual risks or reserves, but added, "We are comfortable with our overall reserve position." A Centennial spokesperson did not return calls Friday.

In an interview, Boucher estimated that the Los Angeles Archdiocese had as much as $10 billion in potential insurance coverage. Mahony's lawyers recently acknowledged for the first time in court papers that their coverage for sex abuse cases is "potentially billions of dollars."

Coverage estimates vary wildly depending on how the terms of each policy are interpreted. One of the biggest challenges, according to lawyers on both sides, is determining when policy limits are reached.

Attorneys for claimants, for example, say their clients are entitled to the maximum policy limit for each time they were fondled or raped by a priest. Insurers, on the other hand, want to calculate their losses more conservatively, applying the cap once for each victim, or even once per priest, regardless of the number of claims against him.

One of Travelers' attorneys, James M. Altieri, declined to comment on Boucher's estimates, citing a gag order by a judge.

A member of Mahony's legal team said the estimates seemed excessive. "We are still evaluating the cases, but $1.5 billion seems way too high," Donald F. Woods Jr said. "As far as we know, there is not any diocese anywhere in America that comes anywhere near reaching that amount."

The Archdiocese of Boston agreed in September to pay $85 million in church money to 544 alleged victims of clergy sex abuse, then sued Lumbermens Mutual Casualty Co. for not contributing to the settlement.

The insurer has defended its decision, saying that any payment would have been voluntary and that the company was not obligated to participate. Meanwhile, Boston church leaders sold a 43-acre parcel of church land to Boston College for $99.4 million in April to help end the litigation surrounding the clergy sex-abuse scandal that erupted two years ago. Each claimant was paid $50,000 to $300,000.

But plaintiffs' attorneys say the cases are different. In Boston, most of the settled claims would have been thrown out of court because victims waited too long to sue.

California legislators gave victims of decades-old sexual abuse one year, 2003, to sue the church and other employers for the negligent hiring, retention, and supervision of known or suspected child molesters. But Mahony's attorneys have threatened to challenge -- all the way to the US Supreme Court, if necessary -- the constitutionality of the law that established that one-year window.

Posted by Nealus at August 30, 2004 10:38 AM

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