Boston Archdiocese Sues Insurer

The Archdiocese of Boston is suing one of its insurers, accusing the company of fraud and breach of contract for failing to cover settlement payments to victims of clergy abuse.

Last September, after the archdiocese agreed to pay about $85 million to 552 victims of clergy abuse, Lumbermens Mutual Casualty Co. wrote to Archbishop Sean P. O’Malley stating that the settlement was a “voluntary payment” and that the company was not obligated to contribute to the settlement, The Boston Globe reported.

The archdiocese calculates that $59.3 million of the settlement relates to periods when Lumbermens, the lead underwriter of Kemper Insurance Cos. group, was the church’s sole insurer. Another $7.7 million arises from periods when Lumbermens’ coverage overlapped with another insurer.

“Largely as a result of (Lumbermens’) denial of coverage, the RCAB (Roman Catholic Archdiocese of Boston) was forced to borrow money to fund the settlement and to offer certain valuable property for sale,” the lawsuit said.

A spokeswoman for the company declined to comment to the Globe about the lawsuit.

The lawsuit asks a judge to rule that Lumbermens had a duty to defend and indemnify the archdiocese for sexual abuse claims between 1964 and March 31, 1983, with no limit on the total that could be paid out.

The lawsuit describes a dispute between the archdiocese and Lumbermens that dates to 1993, when the church told the company it had received claims of abuse, and the company denied coverage, forcing the church to pay about $2 million of its own money to settle the claims.

Lumbermens later paid back the church some of the money, but claimed it had no documentation of its policies dating back to 1968, and believed there was a cap on the total amount the company would pay to victims.

The lawsuit alleges that Lumbermens refused to participate in negotiations over the more recent cases, but in Feb. 2003 “at long last confessed” that there were no aggregate limits on how much it would pay to victims each year.

Copyright, Associated Press, 2004.