Monday, November 29, 2010

Insurance does not cover diocese
Insurance doesn't cover Milwaukee priest sex abuse
Nov 23, 2010 10:23am Email Print MADISON, Wis. (AP) — The Archdiocese of Milwaukee's insurance company doesn't have to pay damages that could arise from more than a dozen lawsuits involving sex abuse by priests, a state appeals court ruled Tuesday.
The 1st District Court of Appeals decision, if it stands, means the archdiocese may have to pay millions of dollars to settle the cases. The archdiocese is currently in mediation with the plaintiffs and likely will appeal the ruling to the state Supreme Court, archdiocese spokesman Jerry Topczewski said in a statement.

"The resources of the archdiocese are limited and the loss of the financial contribution from insurance companies makes the challenge of resolving these cases all the more daunting," he said.

All but about $2 million of the archdiocese's $63 million in assets are legally committed to specific purposes and can't be used for settlements, he said.

The ruling stems from 13 lawsuits filed by people who claim they were molested by priests that the archdiocese knew posed a threat to children. They say the archdiocese insisted children would be safe around the priests despite knowing the men's histories.

The archdiocese's insurer, OneBeacon Insurance Company, argued it shouldn't be held responsible for damages. Its policy covers accidents, and the misrepresentation was intentional, the company said.

Two trial judges sided with OneBeacon. The archdiocese appealed, arguing it did not intend to harm the plaintiffs.

The appeals court disagreed, saying the victims weren't hurt by accident.

"While the Archdiocese may not have intended to harm the plaintiffs, it certainly intended to keep its knowledge of the priests at issue to itself, ultimately leading to the plaintiff's injuries," the ruling said. "The underlying cause of the plaintiff's injuries, the Archdiocese's misrepresentations, constitutes an act of volition."

Paul Scoptur, an attorney for one of the plaintiffs, said the ruling involves only the archdiocese and its insurance company and will have little effect on the alleged victims. He said he wasn't concerned the ruling could reduce potential monetary awards. The archdiocese should be able to cover them, he said.

"Our presumption all along was there wasn't going to be any insurance," Scoptur said. The archdiocese could be on the hook for a substantial settlement or judgment if the cases go to trial. Four years ago, it settled 10 cases against two priests with Milwaukee ties for about $16.5 million. They were accused of molesting children in California.

The archdiocese split the settlement costs with its insurance companies, which were required to cover some of the damages because those cases involved negligence. The cases involved in Tuesday's ruling are different; they essentially allege fraud.

To cover its share of the 2006 settlement, the archdiocese took out a loan for about $8.5 million, using its Cousins Center campus in St. Francis as collateral. The archdiocese has been trying to sell the campus, which doubles as the Milwaukee Bucks' practice facility, to repay the loan, Topczewski said

Peter Isely, a Milwaukee leader in the Survivors Network of those Abused by Priests, said the ruling should serve as a wake-up call to lay people to pay closer attention to church management because their contributions are now directly in play.

"They have to get engaged," Isely said, "and demand investigation, transparency and accountability."

Topczewski acknowledged the archdiocese takes in contributions from member parishes but said settlement payouts could come from a number of sources, including interest on investments, revenue from programs and real estate sales, just as in the California cases.

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