Church Insurance Company to Revise Sexual Misconduct Coverage
Episcopal News Service. February 2, 1993 [93027]
David Skidmore
Parishes burdened by the high cost of health insurance now have a new financial headache to worry about: losing their liability coverage for cases of sexual misconduct.
Faced with the specter of multiplying claims and million-dollar judgments, the Church Insurance Company has decided to drop the current liability coverage for sexual misconduct claims in favor of a more limited plan. Beginning July 1, Church Insurance's basic property and casualty policy will no longer provide liability coverage on claims involving sexual misconduct.
Insureds, however, won't be left totally in the lurch. They will have the option of selecting a buy-back endorsement that gives them limited liability coverage of $350,000 per claim with an annual claim cap of $700,000. The new option requires strict guidelines on hiring and training personnel in child and youth ministry, and in handling sexual misconduct cases. The present policy has a cap of $2 million per claim and no conditions for personnel hiring and training.
Given the rapid rise in the number of claims and settlements, few churches or dioceses are likely to forego the special rider. Those that do will be playing a risky game of roulette, according to William Fischer, Church Insurance's vice president for property and casualty claims, because they will be left unprotected.
Diocesan and parish representatives will have the opportunity to quiz Church Insurance officials about the change at workshops scheduled between Easter and mid-May. Church Insurance is planning to hold the workshops at five hub cities. Three so far have been identified: New York, Los Angeles and Indianapolis. Discussion of the details of the policy change will be preceded by a daylong conference that will address the ethical and mental health aspects of sexual misconduct.
The new restrictions are the result of the dramatic increase in sexual misconduct claims in recent years: from three to five claims annually in the late 1980s, to 39 last year. At the November 10 Executive Council meeting, Alan Blanchard, president of the Church Pension Fund, Church Insurance's parent organization, reported that "cases are coming out of the woodwork." For every dollar collected in premiums the last two years, he told the council, two dollars were paid out for claims.
The potential of a $1.2 million claim, as was the case two years ago when a jury decided in favor of a woman suing the Diocese of Colorado for sexual exploitation by her parish priest, is a powerful motive for tighter employment standards and stricter procedures for investigating, disciplining and rehabilitating offenders. Since the company's first sexual misconduct claim in 1983, Church Insurance has paid out $4 million in claims, most involving sexual exploitation. The highest awards, the Colorado case not withstanding (which is on appeal at the Colorado Supreme Court), go for child sexual abuse cases. The company's most recent claim involving sexual abuse of six teenage boys in Baltimore was settled out of court for $800,000. Because of exorbitant defense costs --$50,000 to $70,000 per case -- the company prefers to settle out of court, said Fischer. Only two claims have ever gone to adjudication: the Colorado one and a Seattle case four years ago that resulted in a $60,000 award. Most are settled for smaller sums, he said, in the range of $500 to several thousand.
Yet the potential remains for multimillion dollar awards, especially in suits naming several defendants. Plaintiffs, noted Fischer, are not averse to naming an accused priest's former as well as current parish and diocese, and even the national church in some instances, resulting in four or five defendants instead of one. That can leave the Church Insurance Company contemplating a payout of up to $10 million on one misconduct case.
With the issue riding high in the public's mind and victims showing little tolerance for a weak response, church officials must be prepared to respond quickly and pastorally when a victim comes forward, said Fischer. If they opt instead to circle the wagons, "then you can bet on them retaining an attorney. That's pretty much a given."
But churches and bishops are getting the message. When the news broke October 5 that the vice president of the House of Deputies, the Rev. Wallace Frey, had engaged in sexual misconduct with young male adults under his care, diocesan Bishop David Joslin of Central New York wasted no time accepting Frey's resignation and forming a pastoral care team for Frey's parish. A joint statement from Presiding Bishop Browning and President of the House of Deputies Pamela Chinnis on the Frey case left no doubt that the church would not tolerate sexual misconduct: "Sexual abuse and the betrayal of pastoral trust cannot be tolerated within the clergy or among the lay leaders of the church," they said in a statement sent to all the dioceses. They also gave their full support to efforts by the Central New York Diocese and the national church's Office of Pastoral Development to assist with the healing process for the victims, the congregation and Frey and his family.
For the Rev. Chilton Knudsen, pastoral care officer for the Diocese of Chicago and consultant to the national church, the new attitude is a welcome change. "It's been a long time that we have hoped for a clear, concrete statement from the presiding bishop's office on this issue," she said. "I couldn't have asked for a better one. It's clear. It's balanced. It doesn't talk about the victims or the substance of the allegations, but it talks about the impact on the congregation. It talks about healing for the priest and his family."
The Church Pension Fund also deserves praise for moving aggressively to implement risk management strategies, Knudsen said. The new guidelines on liability coverage will make a big difference in making bishops, dioceses and vestries more accountable for whom they nominate and hire to provide youth or pastoral ministry, she noted.
The guidelines, which will be submitted to the Church Pension Group this month for final approval, require insureds to provide each of their covered employees with a policy manual that defines inappropriate sexual behavior, severely limits ministry with youth and children for persons convicted of child sexual abuse or diagnosed as having pedophilial or other psychological conditions disposing them towards child sexual abuse and sets out procedures for investigating complaints and disciplining and rehabilitating the offender. Insureds are also required to provide four hours of training on child sexual abuse to church employees and volunteers supervising youth ministry. Also, church employees, whether lay or clergy, must arrange for a professional consultation or a counseling referral for themselves if their pastoral work involves more than six sessions with the same client.
Prior to employing personnel, or ordaining or accepting clergy into a diocese, insureds must do a background check to determine whether any convictions or allegations of sexual misconduct exist for an individual. For individuals found to have engaged in sexual misconduct, their continued employment with the insured will require that they obtain their bishops' endorsement, undergo a rehabilitation assessment by a professional and provide restitution to their victims as determined by their ecclesiastical superiors.
An earlier draft contained a provision limiting employees' work week to 60 hours and requiring early intervention with offenders, and support programs such as employee assistance programs. This was later dropped when Church Insurance officials realized that there was no way to fairly or accurately monitor a church's or diocese's compliance.
The guidelines are not intended to be a manual for how churches perform ministry, said the Rev. David Rider, director of clergy wellness for the Church Pension Group, which prepared the final version. Their purpose is to provide better risk management of Church Insurance liability coverage by decreasing the incidence of sexual misconduct claims and increasing the company's defensibility against such claims. They also are meant to be more than just a cost-control tool. "It's a cooperative strategy to help the church minister to human pain," said Rider. The requirements for employee background checks, procedures for rehabilitating and disciplining offenders, training youth ministers in issues of child sex abuse, and standards for pastoral counselors are attempts "to foster justice and reconciliation," he said.
The proposed guidelines were given a positive reception by diocesan chancellors meeting at the Waycross Conference Center in Indiana, January 79. Rider was on hand at the meeting to brief the chancellors on the changes and to answer questions.