Insurer Denies Coverage for Kc Catholic Priest Abuse Settlements

By Paul Koepp
Kansas City Business Journal
July 12, 2013

http://www.bizjournals.com/kansascity/news/2013/07/12/insurer-denies-coverage-for-kc.html

An insurance company for the Catholic Diocese of Kansas City-St. Joseph has denied coverage for settlements of sexual abuse claims against its priests.

In a federal court filing Wednesday, Chicago Insurance Co. said it has no obligation to cover a $2.25 million settlement the diocese reached Monday with the parents of Brian Teeman, who committed suicide in 1983 after being abused by Monsignor Thomas O'Brien. The case settled on the eve of trial in Jackson County Circuit Court.

According to the filing, the diocese spent $1.4 million to defend the case, including a pre-trial appeal on statute of limitations questions that went to the Missouri Supreme Court.

Michael Rhodes, the Lathrop & Gage LLP attorney representing the diocese, declined to comment. A diocese spokesman did not immediately return a phone call.

Chicago Insurance also denied coverage for six claims the diocese resolved in 2008 as part of a $10 million settlement with 47 plaintiffs.

The cost to the diocese of those six cases was over $1.6 million, partially covered by its self-insurance policy through Lloyd's of London.

Chicago Insurance argued the claims do not meet the "personal injury" definition under its policy, and even if they do, they fall into an exclusion for assault and battery. The company also says the diocese failed to give timely notice of possible demands for coverage, since Chicago Insurance only heard about the Teeman lawsuit just before trial.

Russell Watters and Michael Ward of St. Louis-based Brown & James PC represent Chicago Insurance.

The diocese made a financial move last year that may have helped it free up cash for its legal bills. It modified the mortgage with U.S. Bank on its headquarters at the New York Life building, 20 W. Ninth St., increasing the amount it could borrow from $7 million to $14.8 million.

However, a spokesman said that mortgage modification was to secure a line of credit used to help parishes finance construction projects.

The diocese has faced dozens of sexual abuse lawsuits in recent years. It agreed to a $600,000 settlement in May with the family of a girl abused by the Rev. Shawn Ratigan.

Bishop Robert Finn was convicted in September and sentenced to two years of probation on a misdemeanor charge of failing to report suspected child abuse.