Insurer Sued by Church Files Countersuit

The Associated Press, carried in Herald Tribune [Boston MA]
Downloaded April 29, 2004


Lumbermens Mutual Casualty Co., accused by the Archdiocese of Boston of fraud and breach of contract for failing to cover settlement payments to victims of clergy abuse, filed a countersuit, arguing that the church owes the company money.

"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 on Wednesday in U.S. District Court in Boston.

Lumbermens insists that its policy covering the archdiocese was for accidental injuries.

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

Last September, after the archdiocese agreed to pay $85 million to 552 victims of clergy abuse, Lumbermens wrote to Archbishop Sean P. O'Malley stating that the settlement was a "voluntary payment," and that the company was not obligated to contribute to the settlement.

The church sued, asking a judge to rule that Lumbermens had a duty to defend and indemnify the archdiocese for sexual abuse claims between 1964 and March 31, 1983, with no limit on the total that could be paid out.

The archdiocese calculates that $59.3 million of the settlement relates to periods when Lumbermens was the church's sole insurer. Another $7.7 million arises from periods when Lumbermens' coverage overlapped with another insurer.

The church's lawsuit describes a dispute between the archdiocese and Lumbermens that dates to 1993, when the archdiocese told the company it had received claims of abuse, and the company denied coverage, forcing the church to pay about $2 million of its own money to settle the claims.

Lumbermens later paid back the church some of the money, but claimed it had no documentation of its policies dating back to 1968, and believed there was a cap on the total amount the company would pay to victims.

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

The Rev. Christopher J. Coyne, a spokesman for the archdiocese, told The Boston Globe, "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. We're going to continue to move forward and work vigorously to retain the payment from the insurance company due us. ... We paid our premiums."


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