Insurer Denies Coverage in Kansas City Diocese Settlement

A former insurance company for the Catholic Diocese of Kansas City-St. Joseph is seeking to avoid paying for priest sexual abuse settlements.

The Chicago Insurance Co. said in a federal court filing Wednesday that it has no obligation to cover a $2.25 million settlement the diocese reached with the parents of Brian Teeman, the Kansas City Business Journal first reported Friday. The parents contended their 14-year-old son committed suicide in 1983 because of repeated sexual abuse by a Kansas City priest.

The insurer also is seeking to deny coverage for six claims from a 2008 settlement, the Business Journal also reported. In the 2008 settlement, the diocese agreed to pay $10 million to 47 plaintiffs who filed sexual abuse lawsuits against 12 current or former priests. The six claims in question cost the diocese more than $1.6 million, partially covered by its self-insurance policy through Lloyd’s of London.

The Business Journal said 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, saying Chicago Insurance only heard about the Teeman lawsuit just before trial. Jury selection for the trial was underway Monday in Jackson County court in Independence when the Teeman settlement agreement was announced.

Online court records show that the complaint was sealed Friday to protect some of the identities of the victims from the 2008 settlement. A redacted version isn’t yet available.

Plaintiffs’ lawyer, Rebecca Randles, told The Associated Press that the suit wouldn’t affect victims, noting that the diocese already paid the plaintiffs who were part of the 2008 settlement and that the Teeman suit was settled based on the assumption that there would be no insurance coverage. She said that while negotiating the Teeman settlement, the diocese was aware that the insurer would contest paying.

Diocese spokesman Jack Smith told the AP that the company was the diocese’s insurer in the 1970s and 1980s and is seeking to restrict its liability for that time frame.

“It’s an insurance dispute about how much they owe,” Smith said. “We haven’t had a chance to study it that much. But I think what they are doing is basing upon a similar action that was ruled upon in federal court with regard to the Archdiocese of St. Louis, which is currently being appealed in the 8th Circuit Court of Appeals. It’s sort of an ongoing insurance dispute about what sort of coverages were in effect during the ’70s and ’80s.”

Chicago Insurance attorney Russell Watters declined a request from the AP to comment through a spokesman from his law firm, St. Louis-based Brown & James PC.