NEW YORK (NY)
Times Union [Albany NY]
March 28, 2024
By Brendan J. Lyons
Survivors’ coalition accuses insurers of ‘egregious delay tactics,’ but those companies argue criminal conduct may not be subject to policy coverage.
ALBANY — A coalition representing alleged survivors of child sexual abuse are calling on state lawmakers to investigate the insurance industry’s practices as many of those companies — which have provided policies to New York Catholic dioceses dating back decades — are fighting efforts to have the insurers pay settlements to victims.
The Coalition for Just and Compassionate Compensation, which bills itself as an independent alliance of survivors of child sex abuse, sent a letter Wednesday to state Sen. Neil Breslin and Assemblyman David Weprin, who chair their chambers’ insurance committees, requesting that they convene public hearings and examine whether the insurers are complying with the intent of the New York’s Child Victims Act.
The outreach by the coalition, whose members also include attorneys representing victims of clergy sex abuse, comes as a legal battle over the obligation to provide coverage for the abuse perpetrated by priests and others is unfolding in a case filed in state Supreme Court last year by Chubb Insurers against the Archdiocese of New York.
“Given the gravity of these issues and their far-reaching implications for survivors across New York state, we respectfully request that the insurance committees of both the New York state Senate and Assembly, under your esteemed leadership, hold hearings to examine the insurance industry’s practices in relation to the CVA,” the coalition wrote.
The coalition claims the insurers have used their strategy in multiple jurisdictions, including cases involving Rockefeller University Hospital, Boy Scouts of America and school districts across New York.
Attorneys for Chubb Insurers, which reported more than $225 billion in assets and $57.5 billion of gross premiums written in 2023, have asserted in court filings that their companies “have no duty to provide insurance coverage” in many of these cases and that the Archdiocese of New York “alone must bear the full financial consequences of its criminal behavior.”
The Archdiocese of New York is affiliated with or operates dozens of churches, schools and other entities that are facing thousands of claims under both the Child Victims Act and the Adult Survivors Act. Those statutes temporarily lifted New York’s statute of limitations to allow survivors of abuse to file lawsuits against their abusers or the institutions that harbored them.
The Chubb Insurers issued insurance policies to the Archdiocese of New York beginning in 1956, but says they do not cover damages for “bodily injury that the insured expected or intended.” In 1986, Chubb Insurers began adding sexual molestation exclusions in their excess policies and, in 1988, to their primary policies.
“For decades, the ADNY’s clergy and employees raped and molested children entrusted to them in ADNY-affiliated churches, schools, and camps,” attorneys for Chubb Insurers wrote in a memorandum filed in August in state Supreme Court. “The ADNY hid these crimes, protected the perpetrators, and in many cases, punished and stigmatized those victims brave enough to come forward. … Incredibly, the ADNY now portrays itself as the hero for finally acknowledging its wrongdoing, claiming its insurers stand in the way of justice and compensation for its victims.”
James R. Marsh, an attorney who is a trustee of the survivors coalition and whose law firm specializes in child sex abuse litigation, said the standoff with the insurance companies has been compounded by the fact many Catholic dioceses have filed for bankruptcy in the face of thousands of Child Victims Act claims.
In those cases, dioceses end up paying millions of dollars in legal fees and insurers “have less of an incentive to come to the table because they know that by waiting out as long as they can, the situation is only going to get worse and worse,” Marsh said. “When you have an insurer that’s unwilling to come to the table to make good on these claims, the result is the diocese and the institutions go into bankruptcy.”
Marsh said the situation has been exacerbated by mergers and acquisitions of insurance companies, with investors often reluctant to pay coverage for claims that would draw down their assets.
“Let’s say the CVA passes, and now your billion dollars is going to be used to pay claims. What are you going to do to deal with that situation? You’re going to fight every single claim,” Marsh said. “You’re going to refuse to negotiate; you’re going to refuse to pay; you’re going to litigate all the claims, because now all of your money is at stake. So you’ve got no incentive to cover the claim.”
In court filings, the Chubb Insurers note they have continued to defend both the Archdiocese of New York and its affiliated parishes and schools, but they have also sought more details on the organizations’ handling of sexual abuse cases, including details of any criminal conduct and the systematic efforts to cover it up.
Indeed, investigations and litigation have revealed that many dioceses hid sexual abuse cases from police and the public. Two years ago, the Times Union reported that former Albany Bishop Howard J. Hubbard, who died last year, admitted in a deposition that the diocese systematically concealed incidents of child sexual abuse and did not alert law enforcement agencies when they discovered it. He said their actions were, in part, intended to avoid scandal and preserve “respect for the priesthood.”
The insurers contend that policies for “bodily injury” and other claims may be void under New York law if it can be shown the conduct was criminal and that institutions knew about it but did nothing to stop it — or continued to enable it. Priests and other employees accused of raping and abusing children were frequently sent to church-run treatment facilities and later returned to ministry with no notification to congregations. They also were routinely transferred to different dioceses when abuse was discovered, only to strike again.
Chubb Insurers, and other insurance providers, have said they reserve the right to recoup defense costs and expenses in instances in which the alleged abuse may be part of an “uncovered claim.”
The coalition has a website that does not list its members, although dozens are child sexual abuse victims whose identities have not been made public. In addition to Marsh, its members include well-known attorneys Hillary Nappi and Jeff Herman, whose firms specialize in litigation involving sexual abuse.
The group said in its letter sent to lawmakers this week that the strategy being deployed by the insurers “is to force policyholders into bankruptcy, thereby relegating survivors of childhood sexual abuse to the status of unsecured creditors.”
“For many survivors — this means losing their chance to have their day in court, and being left to accept substantially lower payments,” the letter states. “This strategy is particularly egregious in light of Chubb’s… having a market capitalization of over $85 billion and record profits. This disparity underscores a profound moral and ethical failure, exploiting the trauma and vulnerability of survivors to enhance corporate profitability.”
But in court filings, Chubb’s attorneys have cast their strategy in a different light, noting that “when an insured perpetrates, tolerates, and hides a vast pattern of horrific child abuse across decades, no insurable ‘accident’ that occurred, and the ADNY has the burden of proving facts showing that it is otherwise entitled to coverage under any of its insurance policies.”
The company argues that if the Archdiocese of New York cannot do that, “the Chubb Insurers have no duty to provide insurance coverage, and the ADNY alone must bear the full financial consequences of its criminal behavior.”
In response to questions about the ongoing litigation, the company issued a statement saying the archdiocese “is trying to shift responsibility for claims of sexual abuse to insurers. Insurance covers accidents, not conduct that was tolerated or hidden. In these cases of alleged horrific sexual abuse, the archdiocese has refused to provide documentation to what they knew about the abuse, when they knew it, and the lengths they went to cover it up.”
The coalition counters in its letter that there has been “deafening silence” from the state Department of Financial Services, which they have called asked to investigate the insurer’s practices in connection with the implementation and intent of the Child Victims Act.
“The strategic denial of claims, manipulation of legal interpretations, and egregious delay tactics employed by these companies not only contravene the spirit of the CVA but also, we believe, may constitute a broader attempt within the insurance industry to systematically deny payments to survivors,” the coalition wrote.
Brendan J. Lyons is a managing editor for the Times Union overseeing the Capitol Bureau and investigations. Lyons joined the Times Union in 1998 as a crime reporter before being assigned to the investigations team. He became editor of the investigations team in 2013 and began overseeing the Capitol Bureau in 2017. You can reach him at blyons@timesunion.com or 518-454-5547.