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Priest Abuse Payout May Be Costly

Total damages against L.A. Archdiocese could hit $1.5 billion, says an attorney for alleged victims. Church lawyer questions that figure.

August 29, 2004|Jean Guccione | Times Staff Writer

Damages claimed by hundreds of people who say they were sexually abused by Roman Catholic priests could exceed $1.5 billion in the Archdiocese of Los Angeles, far more than any other diocese has paid to date, according to newly released documents.

That total is based on a request -- by the lead lawyer for plaintiffs -- that insurers put aside at least $3.1 million per individual claimant to resolve child molestation cases involving the dioceses of Los Angeles and Orange. There are more than 500 child molestation claims naming Los Angeles-area priests and 60 more alleging abuse by priests from the Diocese of Orange.

Attorney Raymond P. Boucher says the amount is justified based on jury verdicts and settlements of other clergy sexual abuse lawsuits around the nation. He says it is also consistent with a Los Angeles judge's secret valuation of the local claims after a closed, two-day evidentiary hearing earlier this year.

Since then, Boucher has asked two companies who insured the Diocese of Orange -- which is part of the Los Angeles clergy-abuse litigation -- to review their financial reserves to make sure the funds are sufficient to cover pending sex-abuse claims against the church. Damages, if proven, could be paid both by insurers for the church and from other church assets.

The dimensions of those key questions -- if claimants win, how much they can collect and from whom -- were revealed last week in letters to the insurers. Most of the proceedings in the consolidated cases, designed to settle once and for all the potential liability for the two dioceses, are held in secret. At least 20 insurance companies are involved, covering church liability since 1950, according to court records.

The amount that insurers are willing to pay has already emerged as a stumbling block to pretrial settlements in the first wave of cases, the 60 against the Orange Diocese. The claims against the diocese could reach at least $186 million, if the $3.1-million valuation method prevailed.

All three groups of interested parties -- claimants, the two dioceses and the insurers -- have jockeyed intensely for advantage in the massive litigation, documents and transcripts show.

Lawyers for those who say they were abused have accused insurers of failing to make a meaningful contribution to the amount of money the Orange Diocese is offering, a charge the companies deny.

In turn, lawyers for Los Angeles Cardinal Roger M. Mahony say in court papers that they are involved in a dispute with their own insurers over "the existence, nature and amount of coverage."

And Boucher, the court-appointed liaison counsel for the plaintiffs, told state officials that the companies' reserves were "woefully inadequate" to cover all the pending claims, as is required by state law. The claimants, he said, "have a vital interest in the adequacy of reserves."

Liability coverage for the Orange Diocese, underwritten by Travelers Casualty & Surety Co. for 1976-81 and by Centennial Insurance Co. for 1981-87, provides "virtually unlimited coverage to the diocese for sex-abuse lawsuits," Boucher asserted in letters to the insurers.

Unlike most newer policies, the Travelers and Centennial contracts don't contain aggregate coverage limits for the types of negligence alleged in the abuse cases, Boucher stated. Centennial's potential liability could hit $229 million in the Orange Diocese cases alone, according to his calculations. Travelers could be on the hook for up to $79.5 million, he said.

In June, Boucher notified California Insurance Commissioner John Garamendi of his concerns. The lawyer said last week that he planned to ask other insurers involved in the Los Angeles litigation to increase their reserves as well.

A spokeswoman for Travelers, Marlene Ibsen, said the company did not comment on individual risks or reserves but added, "We are comfortable with our overall reserve position." A Centennial spokesperson did not return calls Friday.

In an interview, Boucher estimated that the L.A. Archdiocese had as much as $10 billion in potential insurance coverage. Mahony's lawyers have recently acknowledged for the first time in court papers that their coverage for sex-abuse cases is "potentially billions of dollars."

Coverage estimates vary wildly depending upon how the terms of each policy are interpreted. One of the biggest challenges, according to lawyers on both sides, is determining when policy limits are reached.

Lawyers for claimants, for example, contend that their clients are entitled to the maximum policy limit for each time they were fondled or raped by a priest. Insurers, on the other hand, want to calculate their losses more conservatively, applying the cap once for each victim, or even once per priest, regardless of the number of claims against him.

One of Travelers' attorneys, James M. Altieri, declined to comment on Boucher's estimates, citing a gag order by a judge. But a member of Mahony's legal team said the estimates appeared to be excessive.

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