Gallup Diocese Hit with Complaints by Its Insurer

By Elizabeth Hardin-Burrola
Gallup Independent
April 20, 2015

http://gallupindependent.com/

On the eve of a status conference in U.S. Bankruptcy Court Monday, the Diocese of Gallup’s own insurance company leveled stinging complaints about the diocese and its attorneys in a court document filed Friday.

The Catholic Mutual Relief Society of America and The Catholic Relief Insurance Company of America, collectively referred to as “Catholic Mutual,” filed the document, filled with nine pages of accusations that the Gallup Diocese has been uncooperative, and asked Bankruptcy Judge David T. Thuma to deny the diocese’s request to set mediation for claims settlement.

Instead, Victor R. Ortega, an attorney for Catholic Mutual, asked Thuma to order the parties to proceed to mediation “for the purpose of resolving information and coverage issues.”

Last fall, Susan Boswell, the lead bankruptcy attorney for the diocese, told Thuma that she expected mediation in the case to begin in late October or early November. With Catholic Mutual’s filing, it is apparent the Gallup Diocese and its own insurance company have been in conflict for several months. Catholic Mutual, which is a self-insurance fund of the Catholic Church in the U.S. and Canada, has been expected to contribute a sizeable amount of settlement money to the Gallup Diocese for survivors of clergy sex abuse.

Alleged roadblocks

According to Ortega, Catholic Mutual needs information from the Diocese of Gallup related to all submitted sex abuse claims and information relevant to the diocese’s “legitimate defenses” to such claims. That information, Ortega said, has not been forthcoming.

Referring to the diocese as the Roman Catholic Church of the Diocese of Gallup, Ortega said, “Given that Catholic Mutual is the principal provider of liability protection, it would seem obvious that RCCDG would want to cooperate with Catholic Mutual and provide all necessary information to increase the chances of a successfully (sic) mediation. The exact opposite has happened.”

Ortega said the diocese has given 57 clergy sex abuse claims to Catholic Mutual, but the insurance company “has been able to obtain only the most rudimentary information on all but six or seven” of the claims.

In addition, “for reasons unknown to Catholic Mutual,” Ortega claimed the diocese “has placed every conceivable roadblock in the path of Catholic Mutual’s quest for the vital and necessary information.”

‘Utterly insufficient’

According to Ortega, of the 57 clergy sex abuse claims, “only 15 claims appear to allege that acts of sexual abuse took place within Catholic Mutual’s coverage periods.” Catholic Mutual provided coverage for sexual abuse on an “occurrence basis” from Dec. 1, 1977, to July 1, 1990, he said, and it provided coverage on a “claims-made basis” from 1990 to the present.

One startling statement in Catholic Mutual’s document is that one recently filed claim alleges an incident of sexual abuse just last summer in July 2014. Bishop James S. Wall has made no public announcement about such a recent allegation nor has he announced a law enforcement investigation into that allegation.

Ortega said the remaining 42 claims allege acts of sexual abuse in years preceding the issuance of the first Catholic Mutual coverage certificate on Dec. 1, 1977. At issue is Ortega’s assertion that the Diocese of Gallup “has provided Catholic Mutual with almost no information relative to the 57 tendered claims.”

“It is respectfully submitted that this information is utterly insufficient to enable Catholic Mutual to make a reasoned determination of settlement values and to make a final coverage determination,” he said.

Warburton brouhaha

Another area of conflict is a brouhaha regarding legal files of Robert Warburton, the New Mexico attorney who was the Gallup Diocese’s lead counsel in clergy sex abuse claims prior to the Chapter 11 filing. In January, Ortega said, the diocese revealed the existence of 10 transcripts of interviews with alleged clergy abuse survivors that were not in the insurance company’s files.

Catholic Mutual requested copies of the files and requested an interview with Warburton without the presence of lawyers, Ortega said, “since Mr. Warburton services had been entirely paid for by Catholic Mutual and were not pursuant to any reservation of rights.” The diocese “flatly refused” to allow Warburton to be interviewed under those circumstances, he added, but promised to provide the files.

According to Ortega, the diocese and Catholic Mutual have since been in conflict over details pertaining to the insurance company’s requests for the files and the interview. On Wednesday, Ortega said, the diocese produced Warburton’s files, but they “appear to be heavily redacted and unaccompanied by any redaction log.”

Ortega accused the diocese of producing the redacted files just days ago so those files cannot be reviewed before Monday’s status hearing. He also accused the diocese of “time stalling” tactics “to set a schedule for a claims settlement mediation in which Catholic Mutual will have insufficient information to make reasoned determinations” in mediation talks.

Attorneys for the Diocese of Gallup did not file a response Friday.

In addition to having to sort through this conflict during Monday’s status conference, Thuma is expected to hear about investigations into other insurance coverage, possible claims against other third parties, real property valuation and sales, and potential litigation.