New laws open door to decades-old child sex abuse cases

By Ed Leefeldt

/ MoneyWatch

When sex abuse victim Jim Keenan filed his first lawsuit 13 years ago, he thought his was "a lone case." But after settling with the Catholic Archdiocese of St. Paul, Minnesota, in 2018, he became the leader of a small army as chairman of a group of 440 sexual abuse victims within that diocese. It paid him, along with other former children who had been molested by clergy, a total of $210 million.

Yet that settlement may pale in size compared to potential payouts in New York, New Jersey and 15 other states around the country that have passed, or are considering, what are called Child Victims Acts (CVAs). These laws allow adults like Keenan, now 52, to sue churches, the Boy Scouts and other organizations that may have ignored, or covered up, cases of sexual abuse. The rationale for CVAs: Children may not be aware of what constitutes sexual abuse, or even that they were molested, and they deserve legal recourse as adults.

Asbestos-like payouts in the billions

These cases are usually resolved with large settlements — sometimes between $500,000 and $1 million per person, lawyers said.

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A recent report by insurance rating agency A.M. Best equates child sexual abuse claims to asbestos liability, because these claims can be attached to decades-old insurance policies that make the payments hard to predict. Asbestos settlements, which have already topped $70 billion, are still rising.

Meanwhile, most churches and other groups didn't purchase insurance to cover them against sex abuse cases until the 1990s, so much of the financial liability could ultimately fall on these organizations themselves. Although plaintiffs who file suits under a CVA law were children when they were abused, their numbers will now likely total in the thousands, and range up to age 75, lawyers said.

Why children don't often report sexual abuse

"The economic burden will fall not on the perpetrator, but on the institution," said Ed Hancock, chief underwriting officer for Church Mutual, a 120-year-old insurer that covers all religious denominations.

The result, which is already having an effect in states such as Minnesota, is that more church dioceses are going bankrupt — a trend that could spread across the country as recognition of the problem, and the legal costs, continue to grow.

States open door to lawsuits

In many ways, Keenan's case is typical. As a 13-year-old he was abused by a priest, but didn't come forward until age 38. Although Keenan, a resident of Savage, Minnesota, sued to force the church to make changes that would protect children, the church fought back. The case was ultimately thrown out by the Minnesota Supreme Court because it was long past the statute of limitations, which usually lasts five years in most states.

But in 2002, California passed the first CVA law in the U.S., opening a one-year "window" for older victims to file a lawsuit. During that period, churches and insurers paid nearly $1 billion in settlements, according to lawyers familiar with these cases. California is now considering passing another CVA to let more abuse victims seek compensation.

Other states followed. In 2013, Minnesota passed a CVA with a three-year window, and Keenan refiled his suit. Cases filed during that window are still winding their way through the courts.

Minnesota attorney Jeff Anderson, who represented Keenan, has since moved part of his practice to New York state, where a CVA goes into effect this month — the law will give victims up to age 55 a year to file suit. A similar CVA window will open in New Jersey in December.

"Institutions usually settle"

For plaintiffs, the prospects of winning a CVA settlement are good, experts said. "There's not a lot of downside risk in these cases," said Church Mutual's Hancock. "Institutions usually settle."

In part, that's because the absence of physical evidence is less important than a victim's testimony. Meanwhile, recent publicity around high-profile sex abuse cases — including allegations against financier Jeffrey Epstein and R&B singer R. Kelly — has caused juries to be more than willing to believe an alleged victim, even if the crime took place decades ago.

"Thanks to Jeffrey Epstein and cases like his, people know more about the gravity of criminal misconduct against a child and what they can do about it," said Anderson, who has handled these types of cases for three decades. "No more pedophile protection."

Epstein, who was arrested in New York in early July and charged with sex trafficking and sex trafficking conspiracy, allegedly abused dozens of underage girls as young as 14 over a number of years. He denies the charges and has pleaded not guilty. Kelly pleaded not guilty last week in a New York City court to charges he sexually abused women and girls.

Jeffrey Epstein accuser Courtney Wild speaks out about sex abuse charges

Most abusers seldom face either criminal or civil penalties. They're usually elderly, often disabled or even dead, and have no money for victims to collect. But the churches and institutions that employed them can face charges ranging from fraud and conspiracy to concealment of a crime, as well as negligent hiring, retention and supervision, said Richard Serbin, an attorney with Janet, Janet & Suggs who has handled such cases for 32 years.

Attorneys representing alleged victims look for records that a church or organization has retained that detail any accusations, as well as the recurring transfer of alleged molesters. "Once you show the institution had knowledge, they share responsibility," Anderson said.

Some institutions are cooperating with these investigations. The New York Archdiocese has posted the names of 120 clergy "credibly accused" of sexually abusing a minor on its website. Those clergy, and others who've been named across the country, may have worked at multiple churches, creating claims in all of them.

It wasn't always so. Lawyers and insurers say that, in the past, churches and other organizations relied on time and the statute of limitations to protect them. Now, these lawsuits are likely to multiply as more states enact CVAs and more victims like Keenan file suit.

About 65,000 cases of child sex abuse are reported annually, according to the American Society for the Positive Care of Children, a national non-profit that compiles child abuse statistics.

Lack of insurance

Institutions didn't have sexual abuse insurance to cover claims going back to the 1960s. Although they began purchasing it just prior to the turn of this century, they may not have purchased enough. Small churches paid just $150 more for this coverage, but only got about $300,000 of protection, Hancock said. This could be exhausted by just one large claim. The price of this insurance is likely to go up as the number of plaintiffs expand, he predicted.

Even before New York State passed its CVA in 2016, the New York Archdiocese, the second-largest in the country, had set up a compensation fund that paid out a total of $65 million to 323 victims who waived their right to sue — on average about $200,000 per person.

Now this Archdiocese is itself suing two dozen insurance companies, including a subsidiary of Chubb, claiming they're refusing to pay for abuse settlements likely to result from the state's new CVA. Chubb, the seventh-largest property-casualty company in the nation, declined to comment.

Another organization that is suing its insurers is the Rockefeller University in New York City. In a lawsuit filed this week, the school said it had received "hundreds of claims" of sexual abuse stemming from one doctor who had worked in child development for its Institute for Medical Research from the 1940s to the 1980s, and it expects additional claims. Rockefeller University accuses the insurers of refusing to settle those claims.

Unless insurers are willing to step up and absorb the losses, which could run into the billions, many churches may have to close. "No religious or charitable institution can magically create a pot of gold," Hancock said. "It doesn't exist."

First published on August 6, 2019 / 1:41 PM

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Ed Leefeldt

Ed Leefeldt is an award-winning investigative and business journalist who has worked for Reuters, Bloomberg and Dow Jones, and contributed to the Wall Street Journal and the New York Times. He is also the author of The Woman Who Rode the Wind, a novel about early flight.

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