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  Settlement Doesn't Spell End of Court Battle for Victims, Diocese

By Dylan T. Lovan
Associated Press, carried in Kentucky.com [Kentucky]
June 8, 2005

LOUISVILLE, Ky. - The Roman Catholic Diocese of Covington and alleged victims of abuse negotiated more than a year to reach a blockbuster $120 million settlement, but whether that figure holds up depends on yet another legal battle.

The diocese is now suing three insurers that have been asked to kick in $80 million of the settlement fund, which if approved by a judge, would be the nation's largest.

The church's insurers aren't likely to hand over millions without a fight, according to one attorney who won a multimillion-dollar award from another Kentucky diocese.

"The $80 million is certainly not a certainty," said Bill McMurry, attorney for abuse victims who won a $25.7 million settlement with the Archdiocese of Louisville two years ago. "Given my experience and knowledge of these cases around the country, I would be surprised if all the insurance companies involved just throw $80 million into this fund."

The victims' class-action lawsuit, the first of its kind in the country, alleged that the Covington diocese attempted to cover up widespread sexual abuse by priests dating back five decades. Attorneys for the victims plan a nationwide advertising campaign seeking victims to share in the settlement. And they fully expect the insurers to pay up.

"This a correct amount, and it's a real amount, and we intend to get that amount," said Stan Chesley, a Cincinnati attorney who filed the class-action suit against the Covington diocese.

But first, the diocese must successfully sue its own insurers for millions. The diocese's suit was filed May 26 against three insurers, American Insurance Company of Novato, Calif.; The Catholic Mutual Relief Society of America; and the Catholic Relief Insurance Company of America, which are both based at the same address in Omaha, Neb.

American Insurance, a subsidiary of The Allianz Group, a German conglomerate that listed nearly $130 billion in revenues in 2004, has refused to pay any money into the settlement fund, according to the diocese's lawsuit. And Catholic Mutual has proposed to pay an amount that was "far below that for which it is legally responsible," the suit said.

The diocese is arguing that its insurance policies provide coverage for sex abuse claims.

Calls placed to Catholic Mutual were not returned Wednesday. A spokesman for American Insurance, John Kozero, said the company does not comment on pending litigation. The third company, Catholic Relief, is a "wholly owned property and casualty insurance affiliate of Catholic Mutual," the suit said. Catholic Mutual's assets exceed $75 billion, according to its Web site.

Churches sued over priest abuse sometimes get less from their insurers than they counted on. Insurers for the Archdiocese of Boston balked when they were asked to pay for the bulk of an $85 million settlement with alleged victims in 2003. The archdiocese was forced to sue Lumbermens Mutual Casualty Company, its largest carrier, after it asked the company to pay $59 million of the settlement. In March, the church announced that it had settled for $20 million from Lumbermens.

McMurry said the Covington settlement is full of "uncertainty," because the number of alleged victims is not yet known and the insurance money isn't a guarantee. He said the Louisville settlement included no insurance money.

Insurers have accounted for much of the estimated $1 billion paid or being paid to church abuse victims nationwide, said Jeffrey Anderson, a St. Paul, Minn., attorney who has litigated abuse cases in several states.

"Historically, over 80 percent of the settlements that have been made have been covered by insurance," Anderson said. "That percentage has been diminishing over the years because the insurance companies began to write policies that excluded the bishops for coverage for any acts related to sexual abuse."

Anderson said the companies' longstanding relationships with the churches often compel them to pay millions into the settlements.

"When you look at the fact that these insurance companies have been insuring these dioceses and taking these premiums for all these years, and you put it in that perspective, it doesn't seem out of whack that they would have that kind of insurance available to them."

Chesley declined to estimate how many victims attorneys have estimated would come forward in the Covington settlement. He filed a motion Tuesday asking a judge to allow the class of victims to join the diocese's suit against its insurers.

 
 

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