Coverage and Liability Issues in Sexual Misconduct Claims

Part I.Claim Trends and Changes in the Law,Case Management and Risk ManagementClaim TrendsOne significant claim trend is that courts and defendants are allowing anonymity of alleged sexual abusevictims and more open resolution of claims, through John Doe filings, and non-confidential settlements.A related trend is the growth and active participation of survivors groups in sexual misconduct litigation.The SNAP (Survivors Network of those Abused by Priests) website includes information about perpetratorpriests and actions by Dioceses to address sexual abuse claims.The combination of survivors’ anonymity, support groups, and public outrage has warranted insureds’concerns about negative publicity and their willingness to pay large sums. Abuse claims againstthe Archdiocese of Boston resulted in an $85 million payment to settle 541 claims and the resignationof a Cardinal. There was a recent settlement by the Diocese of Orange, California, part of the Clergy Icoordinated proceedings, wherein approximately $100 million was paid to 87 claimants. A recent juryverdict award of $437,000 to a single victim of sexual abuse by a priest from the San Francisco Archdioceseis not being appealed by the Archdiocese.Changes in the LawsThe most significant change in the law in recent years concerned the statute of limitations. Many stateshave eliminated the statute of limitations defense or made the defense fact-intensive so as to forecloseopportunities for early dispositive motions.The available causes of action, remedies, defenses and claim values vary greatly, depending on jurisdiction.We refer the reader to Part Three for specifics on the jurisdictional differences. As a result of thesejurisdictional differences, choice of law disputes is becoming more prominent in the underlying andcoverage cases.Changes in Case ManagementIt is becoming more common for multiple victims to consolidate lawsuits and coordinate proceedings.This has required parties and the courts to use case management and alternative dispute resolution (ADR)procedures to address what has essentially become mass tort litigation.Another change has been the increase in filings of petitions for voluntary bankruptcy by defendants.The bankruptcy proceeding addresses pending claims and may also require the presence of a futureclaims representative to represent those claimants who are unable to present claims at the time of theproceeding.Changes in Risk ManagementSeveral churches and social service providers with primary care responsibilities for minors who havebecome defendants in such claims have implemented risk management practices and loss controlprocedures. These include the screening of all workers, physical plant changes, policies for interactionswith children, and mechanisms for investigating and responding to claims. Although these improvementshave resulted in a downturn in reported incidents, the long tail and increased complexity of litigationcontinues to produce higher expenses, settlements, and jury verdicts.– i –