Insurer Says 16 Diocese Victims Are Not Covered

By Olivier Uyttebrouck
Albuquerque Journal
November 12, 2015

http://www.abqjournal.com/674342/news/insurer-says-16-diocese-victims-are-not-covered.html

When former Gallup Bishop Donald Pelotte apologized to victims of sexual abuse by priests in 2005, he singled out Clement Hageman as among “the most abusive priests in the diocese.”

This week, one of the two insurers expected to provide money to settle the Diocese of Gallup Chapter 11 bankruptcy said that claims filed by 16 of Hageman’s alleged victims are not covered by the diocese’s insurance policies.

If a judge agrees, “then no coverage would exist for approximately 16 claimants where Father Hageman is alleged to have been the abuser,” an attorney for the New Mexico Property and Casualty Guaranty Association said in a motion filed in U.S. Bankruptcy Court in Albuquerque.

Hageman pastored Madre de Dios Church in Winslow, Ariz., until his death in 1975.

The 16 claimants are among 57 alleged victims of clerical sexual abuse who have filed claims in the two-year-old bankruptcy case.

The Guaranty Association inherited responsibility for insurance policies issued to the diocese from 1965 to 1977 by Home Insurance Co., which entered liquidation proceedings in 2003. The association was created by a New Mexico state law in 1978 to cover policies issued by defunct companies.

The Home Insurance policies excluded injuries that were “either expected or intended” by the diocese, wrote Edward Mazel, an Albuquerque attorney representing the association. Before Hageman worked for the Diocese of Gallup, he had worked in the Diocese of Corpus Christi, where sexual abuse allegations were made against him, according to personnel records made public in other cases.

The Diocese of Gallup contends that the association is liable for 34 claims, putting its liability as high as $3.4 million, Mazel wrote. The association contends it is liable for no more than $100,000, “regardless of the number of children” abused.

Disputes over the diocese’s insurance coverage helped sink two previous attempts to mediate a settlement in the case this year, Mazel wrote. A third round of mediation is scheduled Dec. 3-4.

In a hearing Tuesday in U.S. Bankruptcy Court in Albuquerque, attorneys for the diocese said they were optimistic that mediation will lead to a settlement.

But Donald Kidd, a Houston attorney representing alleged victims, said he doubted mediation will succeed. He also predicted that $3.2 million in legal and professional costs in the case will exhaust money available to settle claims.

U.S. Bankruptcy Judge David T. Thuma said Tuesday that he would consider allowing one or more civil cases to proceed to trial in state court if mediation fails next month.

The diocese filed for bankruptcy in November 2013 in response to 13 civil lawsuits filed against it, but the bankruptcy halted all civil actions against the diocese.

Mediation is “our last, best hope to settle,” Thuma said. “If that doesn’t work, we will have to try something else.”