Insurers Sue Church for Abuse Data

Three insurance companies have sued the Roman Catholic Archdiocese of Los Angeles, accusing Cardinal Roger M. Mahony of refusing to share information about alleged sex abuse by priests, and precluding scrutiny of his activities as their supervisor.

The insurers have asked a judge to order Mahony to provide documents that could be used to defend the church or to relieve them of liability stemming from allegations by more than 535 people who say they were molested by priests since the 1930s.

“For whatever reasons, the archbishop’s [Cardinal Mahony’s] apparent goal is to obviate any meaningful disclosure of the facts and circumstances of these claims, and yet to pressure [the insurers] to contribute enormous sums of money” to settle the cases, according to the lawsuit.

The strategy “precludes any public or internal scrutiny of the archbishop’s conduct, whether direct or by silent ratification,” the lawsuit said.

“They have full access to the files,” responded Mahony’s lead lawyer, J. Michael Hennigan. “They are supposed to be on our side.”

Hennigan denied that the Los Angeles church was uncooperative and accused insurers of trying to delay efforts to settle the cases without the time and expense of holding trials and lengthy investigations into the claims, called discovery.

“They don’t want to settle anything or even talk about settlement without full discovery. Do the math here. We have 550 claims,” Hennigan said. “What do you think full discovery means? What decade will that be finished in?”

Hennigan said lawyers for the archdiocese have “fully cooperated” with insurers, providing them adequate information with which to evaluate claims.

He said his legal team has had no problem evaluating the claims with that information.

San Francisco attorney Robert G. Levy, who represents the insurers, declined to comment.

The 12-page complaint was filed by three members of American International Group Inc.: the Insurance Co. of the State of Pennsylvania, Granite State Insurance Co. and American Home Assurance Co. They provided coverage for the church in the 1970s.

More than $1 billion in damages could be assessed against the church, the insurance companies stated in the lawsuit. Of that total, the three insurers are “potentially at risk for hundreds of millions of dollars,” said Raymond P. Boucher, court-appointed liaison counsel for the alleged victims in the Southern California clergy abuse cases.

The breach between the church and three of its 20 or more insurers opens a new chapter in the blizzard of lawsuits alleging clergy misconduct. It also may create an unlikely courtroom alliance; lawyers for both Mahony and the accusers are expected to join forces temporarily to keep insurers and their money in the case.

Damages to hundreds of plaintiffs would normally be paid by the church and its insurers, who must agree before a settlement can be reached.

Last month, the Diocese of Orange settled 90 claims for $100 million, about half of which was contributed by its insurers.

The insurers’ lawsuit alleges that Mahony has threatened to sue them for negotiating in bad faith if they refuse to contribute to a massive settlement, even if some claims are false or exaggerated.

Insurers say they lack meaningful factual information -- including medical, family and work histories of alleged victims -- on which they can evaluate claims and participate meaningfully in the ongoing settlement talks.

More than two years ago, a state judge barred legal discovery in the clergy abuse cases, including depositions of potentially important witnesses, while settlement talks are underway.

In the lawsuit, the Insurance Co. of the State of Pennsylvania and Granite State also ask U.S. District Judge Nora Manella to find that Mahony’s alleged failure to cooperate excuses them from future obligations to pay any part of a settlement.

That’s what happened when the Boston Archdiocese agreed in 2003 to pay $85 million in church money to 544 alleged victims of clergy abuse. The archdiocese sued its insurer, Lumbermens Mutual Casualty Co., which argued in court that it was not obliged to pay because the settlement had been voluntary.

American Home is asking the judge to declare that it has no obligation to pay any claims against the archdiocese. The company says it has no record of a 1972 policy that the archdiocese says provides $5 million in excess liability coverage.

In a separate case, Chicago Insurance Co. has asked a state court in Los Angeles to decide whether a policy purchased by the archdiocese in 1974 was exhausted, after an earlier $25,000 payout to settle a clergy sexual abuse claim.

The odd realignment of parties was clear Wednesday as lawyers for those suing Mahony challenged the lawsuit as a legal tactic by which insurers are trying to avoid paying.

“They were happy to take the money from the archdiocese during the years when the policies were in existence,” Boucher said. “Now that there is a responsibility and an obligation to pay up, they want to run and hide.

“This has nothing to do with the exchange of information and really very little to do with the litigation,” he said.

He accused the insurers of “trying to force the archdiocese into bankruptcy by walking away from their obligations.”

“Our clients have a right to be compensated,” he said. “The only way they will ever be compensated is if the carriers participate in fair and meaningful fashion.”

Boucher said he was contacting insurance experts for advice on whether he can intervene in the suit on behalf of his clients.

“It’s not uncommon for the plaintiff and the defendant to look for the goose and decide, ‘Let’s see how many eggs we can squeeze out of it,’ ” said James M. Fischer, who teaches insurance law at Southwestern University School of Law in Los Angeles.

“There is a natural alignment there at the same time the plaintiff and the defendant are banging each other over the head” in the underlying case.