Insurers Sue Spokane Diocese to Avoid Victims’ Claims

Less than two weeks before the Catholic Diocese of Spokane is due to file for bankruptcy protection, its insurance carriers are suing to avoid paying victims’ sexual-abuse claims.

The American Casualty Co., the diocese’s liability insurer, contends it should not have to pay claims brought by victims of the Rev. Patrick O’Donnell because the diocese was aware of the abuse and therefore victims’ injuries were not accidental.

“The diocese was aware, at the highest levels, of O’Donnell’s propensities, pedophilia, actual misconduct and inability to control his behavior,” the lawsuit states.

“There is no coverage for the O’Donnell claims because the diocese expected the harm that O’Donnell would continue to cause to children.”

O’Donnell, 62, served as a priest for the Spokane diocese until he was removed from ministry in 1986. He has admitted he sexually abused boys from the time he was in seminary.

The complaint for declaratory relief was filed Nov. 23 in Spokane County Superior Court.

Included in the complaint are four other insurers hired by the diocese: Pacific Insurance Co., Columbia Casualty Co., Continental Insurance Co. and Glens Falls Insurance Co. They claim their policies – some nearly three decades old – were lost or include specific exclusions for sexual-abuse claims.

They also argue the diocese failed to provide them with “timely notice” of the occurrences of abuse.

All five companies are owned by CNA, a Chicago-based global insurance organization. Charles Boesel, spokesman for CNA, declined to comment on the lawsuit.

The diocese disputes the complaint, said the Rev. Steve Dublinski, the diocese’s vicar general. He said the diocese was surprised by the lawsuit.

“We’ve been working with the insurance companies for over two years so we are disappointed with this action,” he said. “This puts the diocese and the claimants in jeopardy of not being able to fulfill that fair, just and equitable compensation.”

The Spokane Diocese plans to file for Chapter 11 bankruptcy protection on Dec. 6, a move that Bishop William Skylstad has said will allow the diocese to continue functioning while protecting people who were sexually abused by priests in the past.

The filing would place on hold the insurance companies’ lawsuit, as well as 19 lawsuits that 58 plaintiffs have filed accusing nine diocesan priests and two Jesuits.

A bankruptcy court judge will determine which assets – property, parishes, schools or insurance policies – may be used to cover victims’ claims.

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