Fr. Bob (that’s what we’ll call him) was a faithful parish priest for more than 25 years. One day, a process server showed up at the rectory door and handed him a summons and complaint. The complaint alleged that some 20 years earlier he had engaged in sexual contact with the plaintiff, who was then a young teenager and an altar server, and who now suffers from extreme mental anguish because of that conduct.

Fr. Bob is furious, mortified, humiliated, and terrified. He remembers the young man, he counseled him and found him deeply troubled—but he never, never touched him inappropriately, much less had any sexual contact with him. He calls his bishop immediately, but the bishop is unavailable. He calls the vicar general who tells him the diocese was served with a summons and complaint, too, in which the plaintiff alleges that the diocese knew, or had reason to know, of the inappropriate conduct, and failed to take reasonable steps to prevent it from occurring. The vicar general tells him to not talk with anyone, especially the press, and to wait for further direction.

The vicar general then calls Fr. Bob and tells him he is being placed on administrative leave, pending further investigation. Fr. Bob is transferred to the chancery and given a room at the local retreat center. A few days later, he meets with an attorney and tells him everything he remembers, including every action from his past 25 years that could possibly be perceived by someone to have involved inappropriate touching. He racks his brain as a kind of general confession and recalls the outer limits of acceptable conduct—an emotional embrace of sympathy with a woman in distress, a caring touch to a troubled teen. The attorney takes notes.

Several months go by, and Fr. Bob is still on administrative leave. One day, a confidential letter arrives from his bishop. The bishop tells him that due to the pending claim and ongoing investigation, his priestly faculties are suspended indefinitely, and he is not permitted to remain employed by the diocese or to receive further living accommodations. He has 30 days to move. He has no family to count on; no friends on which he wishes to impose. With $2,500 dollars in his bank account, he looks for a low-rent apartment in a bad part of town. He takes up new residence, with no job, and a stash of peanut butter and Top Ramen in the cupboard. Several months later, he receives another letter from the bishop; his priestly faculties are removed altogether. He is no longer a priest. The lawsuit settles.

Can priests be treated this way? Yes. Since its founding in 2002, Opus Bono Sacerdotii has heard from too many Fr. Bobs. By our reckoning, there are hundreds like him. According to the latest count, some 6,000 priests have been accused of sexual misconduct, and if past studies are any indication, many have been accused wrongly. (The John Jay Report, commissioned by the U.S. Conference of Catholic Bishops in 2004, reported that 17 percent of accusations against 4,392 priests were deemed ultimately “not credible.”) Should 1,000 Fr. Bobs be treated this way? Certainly not. And, thankfully, many bishops do not treat their priests this way. But understanding how insurance law works will explain (but not justify), at least in part, why Fr. Bob’s story is not a fiction, but a reality in all too many cases.

How Insurance Works

Insurance is a product of modern life with long roots. When British ships began rounding the Horn to travel to Asia in search of silk, spices, and china, some ships never returned. Ship owners in the 16th and 17th centuries began looking for financiers who would help undertake the risk for the voyage—someone who could help pay for the ship and its loss if it went down. In 1688, Edward Lloyd opened up a coffee shop bearing his name in Tower Street, London, where ship owners and merchants met to discuss deals and insurance—an agreement in which risk of loss could be apportioned among individuals for a fee. To this day, Lloyds of London remains one of the most successful insurance companies, making a profit on premiums paid in exchange for accepting a risk of loss.

The concept is the same today, although highly regulated and highly technical: Somebody pays money to somebody to cover a risk of loss. This same concept applies to the Roman Catholic Church and its many sub-organizational units, the principal of which are known as “dioceses” or “archdioceses,” whose head is the “bishop” or “archbishop.” To ensure that this sub-organizational structure remains subject to the highest organizational head (the Supreme Pontiff), the actual owner of all property and concerns within a given diocese is not the diocesan entity, but the bishop himself. This arrangement has allowed for a unique feature in American law in which the bishop is allowed to be a “corporation sole.” The bishop owns everything, lock, stock, and barrel.

As proper custodian, every bishop must take care of his lock, stock, and barrel, and that has led to the need to insure against the loss of property in his possession, and against claims made by third parties against him due to the conduct of people—and priests—working or serving under him. For this reason, a bishop obtains the same kind of insurance that commercial corporations typically obtain: “first-party” coverage for losses the bishop incurs for his property (for example, cars, buildings, equipment) and “third-party” coverage for claims made against the bishop for a variety of reasons (for example, bodily injury, property damage, employment, pollution, errors and omissions). Clergy abuse claims fall under these “third-party” coverages, and often under “general liability” policies and/or clergy malpractice policies, although both tend to raise the same issues we address here.

Although written in excruciating detail, general liability policies are simple in structure and promise to do two basic things: defend the policyholder against claims and pay claims through settlement or judgment on behalf of the policyholder. These two duties—the “duty to defend” and the “duty to pay”—create a host of legal issues that have vexed, not only Catholic bishops and their attorneys, but corporate entities of all kinds, and their attorneys, too. For purposes of our discussion, we refer only to the bishop, although the same issues apply to the many sub-organizational units of the Catholic Church, such as religious orders, monasteries, and societies. Indeed, religious organizations of all stripes and at levels will recognize the same circumstances and dynamics presented here. Our purpose is not to address the tactics organizations take in defense of clergy abuse cases, or to excuse the conduct that gave rise to these cases. Nor is it to cast blame on accusers or their attorneys in the claims they raise against these organizations. Our goal is limited—to explain how the insurance coverage issues surrounding these claims lead to Fr. Bob’s predicament.

Who Defends Fr. Bob?

The duty to defend is well-defined under insurance law. Over the years courts have clarified the scope of this duty—an insurance company must defend a claim against an insured when there is a possibility the claim is covered, and even if the claim is frivolous or without merit. As courts are wont to say, “the duty to defend is broader than the duty to indemnify.” “Defend” means hiring lawyers to defend against the case.

As broad as this duty is, other principles are at work to make it impossible for the duty to apply to a clergy abuse claim. Even when the insurance company’s duty does exist, that duty creates plenty of opportunity for conflict between and among the individuals being defended, and between and among those individuals and the insurance company itself. First, let us discuss the conflicts between and among the individuals being defended.

Because an insurance company promises to defend against covered claims, the threshold issue is in determining what claims are being made and against whom. A plaintiff in a clergy abuse case typically alleges two kinds of claims—claims against the abuser, and claims against those who should have known about the alleged abuser and failed to prevent the abuse from happening. But those claims are very different and allow for very different coverage duties.

Claims against the alleged abuser are not typically covered under an insurance policy (or as a matter of public policy), because those claims allege intentional or willful misconduct. The rationale for such a prohibition is not terribly surprising—if people or organizations could obtain insurance for engaging in crimes or intentional misconduct, they would proceed to engage in crimes and intentional misconduct. Plus, allowing coverage for intentional conduct goes against the general grain of insurance. Insurance protects against accidents or occurrences (think back to our history of insurance: ships going down on the open ocean). An occurrence is typically regarded as some kind of event that results in bodily injury or property damage neither expected nor intended by the insured. Abusive conduct is not an occurrence, because the resulting damage or injury is expected or intended. (Some insurance policies might agree to provide a defense until a “final adjudication” of abusive conduct is rendered, but those are typically the domain of “director and officer” policies and similar terms are not usually found in general liability policies.)

Thus, Fr. Bob gets no defense, at least by the bishop’s insurance company. And neither will the bishop, if the plaintiff alleges that the bishop aided and abetted Fr. Bob. If a plaintiff is particularly bent on punishing the Church for abusive conduct, this is precisely, and exclusively, what the plaintiff will allege, because the plaintiff knows that such allegations will bar the Church from obtaining any defense, or indemnity, from its insurance companies. Such motives are also found in suits against corporate defendants. Those defendants, as would the bishop here, have to fund the defense of the case, and any settlement or judgment, on their own.

Plaintiffs can even pursue claims, when no evidence exists, that the bishop aided or abetted an abusive priest. In such cases, the plaintiff will claim that the bishop failed to employ reasonable care and that the plaintiff was injured because of that failure. The legal names for these claims will take on different shades—respondeat superior, negligent infliction of emotional distress, clergy malpractice, negligent/reckless hiring/supervision. These claims—generally described as “negligence claims”—may take on different life in different states. The gist is that the injury to the plaintiff was foreseeable, and that care could have been taken to prevent the injury from happening: “If only you would have done something, this horrible tragedy never would have occurred.”

Ironically, these claims are good news for the bishop. Negligence claims are typically covered under general liability insurance policies. That means the bishop can count on having the insurance company defend him against these claims and pay for the damages attributable to them. The insurance company’s duty to defend him is hugely significant—courts generally require the insurance company to defend the policyholder against all claims in the suit. That means the attorneys appointed to defend the bishop will have to defend him, not only against the covered negligence claims, but also against any non-covered claims alleging the bishop intended to produce the plaintiff’s injury, such as claims he aided and abetted the abuse. In other words, the presence of a negligence claim gives the bishop a defense to the intentional claims. This can mean lots of money over the life of a long clergy abuse case.

The Bishop v. Fr. Bob

But none of this is good news for Fr. Bob. From the start, Fr. Bob is left out. The insurance company will not defend him. The bishop may or may not defend him; he is not required to defend him. Many bishops do come to the aid of their priests voluntarily, and pay for their legal representation, but they also can find themselves disposed, like their counterparts in the corporate world, who are forced to defend a mid-level manager accused of sexual misconduct: “Just why are we paying so much money for this guy?” Some bishops have abandoned accused priests altogether and forced them to fund their defense on their own. Unless a priest has access to substantial funds (or a kindly pro bono attorney), he will be unrepresented by counsel and left to twist in the wind. Ironically, if Fr. Bob is charged with criminal conduct, he will at least get the services of a public defender. If the suit is merely a civil complaint, Fr. Bob is on his own.

But a bishop’s incentives to leave Fr. Bob hanging go deeper. Negligent supervision claims of the kind the plaintiff alleges against the bishop usually always pit the corporate organization against the employee accused of misconduct. The organization’s best defense to a claim that its higher-ups failed to reasonably supervise one of its employees—that they “should have known better”—is to deny that claim altogether: “We had no idea!” But the bishop, like the corporate higher-ups, has another, more compelling, reason to distance himself from the accused priest—his insurance coverage is dependent on it. To justify the insurance company’s defense and potential payment for the case, the bishop must take pains to demonstrate to his insurance company that he (or his agents) never knew about any circumstances that would have led him (or them) to reasonably suspect his priest was engaging in abusive conduct.

To be sure, the insurance company will be looking for evidence at every turn to justify its retreat from the case. From the outset, the insurance company reminds the bishop in a “reservation of rights” letter that it has tentatively accepted the defense of the case, but it is “reserving its rights” to withdraw that defense, or to pay no money to the plaintiff, for reasons it believes excuse them under the particular terms of the policy, and render “no possibility” of coverage. If ever any of those reasons becomes clear, the insurance company can, and will, withdraw from the case, and no longer pay defense fees for it. And, even if it funds the defense of the case, it will still use those same reasons to deny paying any money to the plaintiff for it.

This dynamic makes the bishop’s cause all the more urgent. The immediacy of a claim requires the immediacy of a legal defense, and that defense can reach very high dollar amounts very quickly. A settlement down the road is one thing; the need to answer a complaint in court, to conduct an internal investigation, and to grind through litigation is very different. The temptation is strong: Let’s let Fr. Bob hang now; we can try to revive him later if we want to. And Fr. Bob has no choice but to hang. He has no response to the bishop’s defense, if he wishes to maintain his innocence. If the bishop’s defense is, “My goodness, I never knew,” Fr. Bob cannot quite join the fray and say, “Oh, yes you did.”

The Insurance Company v. the Bishop

These are just a few of the bishop’s headaches with insurance. When stakes are high, the insurance company will prowl for ways to escape coverage by asking pointed questions of the bishop, with potential grounds for denying coverage lurking behind them. Just when, exactly, does the plaintiff say the abuse occurred? (Denial grounds: The abuse occurred outside the policy period.) Just how was the bishop negligent in not discovering that abuse, and just when, exactly, was he so negligent? (Denial grounds: This negligence is too diffuse to be regarded as an “accident” or an “occurrence,” which is the condition of coverage.) Does the plaintiff allege the priest touched him? (Denial grounds: This conduct might not constitute “bodily injury,” and, therefore, would not be covered.) How many times does the plaintiff allege the priest touched him? (Denial grounds: The company only pays one claim per occurrence.) Why didn’t you warn us about this claim, when you applied for insurance? (Denial grounds: The application misrepresented the risks to be covered.) Why didn’t you tell us about this claim in time for us to handle it? (Reason: The company is prejudiced in its defense.) Why did you meet with the accuser and apologize to him? (Denial grounds: The company now has admissions of guilt to deal with.)

The answers to these and many other thorny questions could mean the difference between having insurance and no insurance. It also can mean the difference between negotiating with one insurance company, and with multiple insurance companies, each of which is looking to disclaim coverage, or to shift coverage to a different company covering a different period with different policy terms. The devil is in the details, and he prowls like a roaring lion looking for policy exclusions.

The bishop has even further conflicts to address, conflicts that corporate officers also encounter in defending claims against employees—conflicts with the attorneys whom his insurance company has appointed to defend him. Courts across the country have struggled to address what many refer to as the “tripartite relationship” between the insurance company, the policyholder, and the defense counsel retained to defend against the case. The defense counsel owes a duty to the policyholder to defend against the suit. But the insurance company is paying for the defense of that suit, and that defense involves claims that are covered by the insurance policy, and claims that the insurance company contends are not covered by the insurance policy. What happens when the defense counsel, working on the insurance company’s dime, has the ability to steer the defense of the case toward non-covered claims, and away from covered claims? Most states address this problem by requiring the insurance company to pay for separate and independent counsel to represent the policyholder when the policyholder, citing conflicts, demands it.

Insurance companies often do not like to recognize this right to independent counsel, because it costs them more money in the short run. But courts will generally impose this option on them when they refuse to take it. If the bishop declines to press his case for independent counsel, then the bishop is put at risk by the defense of the case. If the defense, even unwittingly, proceeds toward non-covered claims or non-covered policy periods, then the bishop is facing liability without coverage.

Who Calls The Shots?

Insurance law can shackle a bishop in another critical way and further punish Fr. Bob: It bars the bishop from controlling the defense of the case. When the insurance company assumes the defense of a case, it generally is given complete control over that defense. Put simply, the bishop must do whatever his insurance company-appointed lawyers say he must do. Many a bishop has tried to intervene on behalf of an accused priest, only to be warned by his attorneys, and by his insurance company, “Don’t do that.” This does not happen for insidious reasons; it happens for financial reasons.

When a claim is filed, the insurance company undertakes the cost and risk of defending against that claim. If the company defends it poorly, it pays more; if the company defends it well, it pays less. It is the insurance company’s money at play and the policyholder cannot, and better not, do anything to jeopardize that play. An inherent “duty to cooperate” is implied in every insurance policy, and many a policyholder has faced a wagging finger from the insurance company (and/or its defense attorneys) reminding of this duty.

And many a bishop has faced this wagging finger, too, when he has tried to advance the cause of an accused priest. What will a jury think, say his defense counsel, if they find out that the priest who is being sued for abusive conduct is being given aid and comfort from his own bishop? If the jury is inclined to believe the claims against the priest, they will also be inclined to punish the bishop for providing him with any aid and comfort. The bishop’s safer course: Do nothing that could appear to link him with the priest. This is why, for Fr. Bob, the message is: “You’re on your own, pal.”

Some will point out that insurance plays a relatively small role in the dynamic that develops between a bishop and his accused priest. Of the $2.6 billion the Church has paid in response to clergy abuse claims, about 30 percent has been covered by insurance. But payout proportion fails to account for the 100 percent control an insurance company has in defense of the case. In fact, it underscores the kind of leverage the insurance company has over the bishop.

Who Really Pays?

Recall that the plaintiff often alleges two kinds of claims in a clergy abuse case—claims for intentional conduct (which insurance does not cover) and claims for negligent conduct (which insurance might cover). The difficulty that arises in determining how much money a given plaintiff should be paid for a given lawsuit is compounded in determining how much money should be apportioned between the plaintiff’s intentional claims and negligence claims. And if the plaintiff is claiming punitive damages, too (as the plaintiff often does), how much money should be apportioned to those? The insurance company normally will not pay for any damages attributable to intentional conduct or for punitive damages.

This is where a different round of conflict begins. The insurance company is not about to give up money cheaply, when it is not required to do so. The insurance company will argue, as it is its right, that the bishop must pay for a large amount of these damages; the bishop will argue, as it is his right, that he must pay for a smaller amount of these damages. The bishop will have to pay something; the question is how much, and that is the subject of intense, even fierce, negotiation and dispute. Depending on the particular facts, insurance companies, defense counsel, personalities, and histories involved, a veritable side skirmish can break out in the midst of joint war with the plaintiff. And the more dollars at stake, the more likely and intensely will that skirmish occur, to the point of separate litigation, as numerous bishops have already experienced, when insurance companies reach for a myriad of reasons to deny the claim.

But all of this is out of sight from the plaintiff (and even the priest). Of course, the plaintiff knows there is fighting within the confines of the bishop’s camp. But the problem is not the plaintiff’s concern. The plaintiff wants a pie, and the plaintiff often does not care how the bishop and his insurance company carve it up between them. Adding more parties to the pie does not affect this; it tends to help, as it permits the plaintiff to demand a higher number, if more parties are contributing to the pie.

The internal complexities can reach staggering proportions when additional parties are involved. Those additional parties may include additional bishops, with different insurance companies and different defense counsel, as well as additional insurance companies who sold policies for different time periods. Huge internal battles are often waged over which insurance company should pay what amounts for conduct alleged to have occurred, or not to have occurred, within a particular policy period, and, again, with respect to more or less culpable activity in those periods. The bishop (and his personal attorneys) will be arguing for coverage; the insurance companies will join with each other to argue against coverage, and then will turn on each other to say, “you pay.” And, again, when dollars justify it, those disputes will reach the attention of the courts—to the great joy of the plaintiff, who knows money will be coming from somebody, somewhere. Many dioceses have been forced into separate litigation with their insurance companies over these internal insurance disputes.

But most clergy abuse cases, like most civil cases in general, settle short of trial. Settlement is a fact of life for many reasons, chief of which is that both sides, after getting a good chance to inspect the strengths and weaknesses of each other’s cases, can make a calculated estimate about settlement at a certain dollar figure. And here is where insurance law squeezes the bishop (and may crush Fr. Bob) in yet another way.

Many bishops have wished to defend themselves, and their priests, against claims they believe are unfounded, or that do not warrant the damages the plaintiff is seeking. They would rather go on trial and take their chances. But once again, the duty to defend comes into play. With defense comes control, and most insurance policies give the insurance company full control. Again, it is their mone,y and they do not want the bishop to play with it. And not without good reason. While a bishop may think he has a good defense, his attorneys are presumed to have superior training, skill, and experience to assess that defense better than he can.

While some policies might permit the bishop to exercise settlement authority, even this right is fraught with peril. First, the bishop may underestimate the potential hostility of a prejudiced jury looking for a chance to soak the Church for any reason, or no reason. Second, policies that give him settlement authority may punish him for exercising it wrongly. Certain “hammer” clauses will make him liable for judgment amounts above the settlement figure recommended by the insurance company. A bishop who elects to take his chances at trial must have some nerve. A weaker exit through settlement should not be presumed to be cowardly retreat.

Thus, when prudence dictates payment of a claim through settlement that the bishop believes is unjust, Fr. Bob may fall victim. The settlement implies that somebody must have done something wrong, if the bishop agreed to pay money to settle the case. In short, an insurance company’s insistence that the bishop settle a case for amounts within the limits of the policy effectively robs the bishop (and the priest) of their ability to claim innocence. Such circumstances, for sure, test the mettle of a bishop, because he has every reason in the world (or at least the financial world) to throw Fr. Bob under the bus.

And, yet, within this right to settle cases on behalf of the bishop is a further layer of complexity—the limits an insurance company is obligated to pay under the policy. The bishop typically has “layers” of insurance coverage—coverage with one company for one amount, and coverage with one or more companies for amounts above that amount. One need not be conversant about these layers to see the kind of internal conflicts that can occur when a claim might be covered under one policy, but not another, or when a plaintiff claims amounts within, or above, any of these layers, or when an insurance company declares that its “per occurrence” limit is exhausted by one act of alleged abuse, leaving the bishop exposed to other acts contained in the same single circumstance. These things will make Fr. Bob’s head spin, and, again, evaluation of which numbers are at issue will be determined without his knowledge or input. He is the plaintiff’s pawn in a chess game for available funds.

The Snake Pit

But a mere chess game, it is not. It is more akin to a snake pit, with different snakes of different sizes and different venoms. The pit includes any number of plaintiffs’ attorneys, insurance companies, excess carriers, reinsurers, defense counsels, claims administrators, coverage counsels, and, in too many cases, bankruptcy counsels. The bishop (and his attorneys or representatives) may, or may not, be in the pit. Fr. Bob is not one more snake. He is the perceived rat. Worse, he is perceived as a rat by every snake in the pit.

Fr. Bob never signed up for any of this when he decided to lay prostrate before the altar and accept the sacrament of holy orders from his bishop. He signed up to save souls. Too many priests have abused the special vocation to which they are called, and, sadly, they have damaged, not only their victims, but also their fellow priests, by subjecting them to the snake pit on the least allegation of any claim.

It will take generations to evaluate the harm all this has done the priesthood, as there is no end in sight to the realities imposed by civil claims and the insurance coverage of those claims. In the corporate context, many a middle manager has been thrown under the bus, wrongly and unjustly, because of those same realities. Fr. Bob is like the middle manager to the extent he is subject to the same complex rules, analyses, and strategies. But he is like him only in some ways.

The priest gives his vows to one organization. That organization, the Roman Catholic Church, has many branches and divisions, but it is still the same organization, with the same ultimate head. Sometimes, with some difficulties, an accused priest can find shelter in some particular branch or division, assuming the head of that branch or division is willing to take him within it. But now that head will become like the owner of the dog who is permitted only one bite, and if a second claim arises, it would subject him to further liability and the prospect of punitive damages. Why would any branch head take on that potential liability? The mid-level manager can move to a different town, take a job with a different company, do a different kind of work. The priest can do that too—but only if he leaves the priesthood. Gone is yet another priest, among a dwindling supply. Gone is another alter Christus. Vocational death occurs.

St. John Vianney, patron of parish priests, understood this well: “When people wish to destroy religion, they begin by attacking the priest, because where there is no longer any priest, there is no sacrifice, and where there is no longer any sacrifice, there is no religion.” Vianney was, himself, subjected to spurious claims. He survived them. But that was then. It is doubtful he could have survived them today. His diocese would have been covered under an insurance policy that would have robbed him of decision making, and created perverse incentives through a host of actors who would rather he be stripped of the priesthood and living in a bad part of Paris, eating the 19th-century French equivalent of peanut butter sandwiches and Top Ramen. And his accuser probably would have been paid some money.

How Is Fr. Bob Protected?

The problems presented by insurance coverage are far from static, and the Church is only beginning to think through them. The first wave of suits arose in the 1980s; a second wave arose in the early 2000s. Insurance companies reacted to both waves, first, by excluding (or limiting) coverage available under general liability policies, and, second, by offering separate coverage available for clergy abuse claims, but only as to negligence-related claims. In 1988, the National Catholic Risk Retention Group (NCRRG) was formed to help bishops obtain coverage for clergy abuse claims, and it now includes 65 dioceses or archdioceses among its members. Yet, notwithstanding the many benefits it provides its members—benefits admittedly unavailable through commercial insurance—even this organization rejects 90 percent of the claims presented to it for coverage.

None of this is to fault this group, or any insurance company, from taking the actions they have taken to protect their legitimate financial interests under their particular insurance agreements. What it shows is that their interests do not concern Fr. Bob, the priest. Indeed, insurance has propelled many important reforms in response to the clergy abuse crisis—it has introduced personnel screening, strict guidelines for dealing with children, and, in the case of the NCRRG, the widely implemented VIRTUS training. To be clear, though, the purpose of all of these reforms and all of this training is to achieve two purposes: (1) to deter abusive conduct from occurring in the future; and (2) to support the bishop’s defense against some claim in the future. They do not, and cannot, do much to help Fr. Bob, now or in the future.

How then is Fr. Bob protected when he finds himself subjected to a claim of sexual misconduct? Given the realities of modern insurance—even friendly insurance—the answers are unclear. What is certain is that many a bishop has come to feel remorse for the way he has treated Fr. Bob in cases past. How should the bishop treat him going forward? The answers are equally unclear. But significant help is achieved by at least asking the question.