Insurers Adopting Hard-Line Stance on Sex Abuse Coverage : Policies: Companies have paid settlements totaling hundreds of millions of dollars in clergy molestation cases. As a result, churches are finding it more difficult to find or renew policies.

After servants of God sexually abuse youths a Roman Catholic archdiocese faces bankruptcy because of clergy abuse suits. When a treatment center for pedophiles is closed, other churches try in vain to insure against clergy abuse.

Acts of retribution from God?

No--insurance companies.

As clergy sex abuse cases unfold and court judgments rise into the hundreds of millions of dollars, insurers have become important arbiters of issues, including compensation for victims and how sex offenders will be treated.

Some religious and mental health officials are concerned that as insurers take an increasingly hard-line approach to settling lawsuits or renewing liability coverage, abusive clergy seeking help will be forsaken, as will their victims.

“The only sex offender treatment I foresee is in the prisons,” said Donald Hands, former director of the Barnabas Center, a treatment center for sexual disorders in Oconomowoc, Wis.

Cost estimates for the priest sex-abuse scandals in the United States reach as high as half a billion dollars. And that is only in the Catholic Church. Experts say the scandal cuts across denominational lines.

The exact figures are unknown because churches and insurance companies are reluctant to reveal settlements.

“If we gave out numbers, then each case would want to settle for that same amount,” said the Rev. Ron Wolf, former chancellor of the Santa Fe archdiocese in New Mexico.

What is clear is that insurance companies are being asked “to pay the lion’s share,” said Jeffrey Anderson, a Minneapolis attorney for abuse victims.

But many insurance companies are balking at paying, and some have responded with lawsuits against churches they say should have known better than to hire priests who had a history as sexual abusers.

In Santa Fe, Archbishop Michael Sheehan is asking parishes for cash to avoid bankruptcy court as the archdiocese grapples with scores of sex-abuse lawsuits that could cost up to $50 million.

Church officials praised archdiocesan insurers, Lloyds of London and Interstate Fire and Casualty, for helping to pay for 16 settlements related to the alleged victims of former priest Jason Sigler.

But archdiocesan officials said insurance companies have refused to pay in other cases.

Norman Weissman, a spokesman for Lloyd’s in New York City, declined an interview, saying it is against Lloyds’ underwriters policy to discuss cases.

Several insurance companies have sued the archdiocese of Santa Fe in federal court, alleging negligence in overseeing the assignments of known pedophile priests. The archdiocese countersued insurers in state district court, alleging that the companies failed to uphold their contracts with the archdiocese.

In Wisconsin, the Barnabas Center closed last May because church insurance plans would no longer pay for inpatient care for clergy, said Hands, who co-founded the sexual disorder facility in 1988.

Treatment can become expensive because inpatient programs cost from $250 to $800 per day, and can last up to 18 months. Most insurance companies cringe at the amount, and churches, dried up from settlement awards, cannot make the payments, Hands said.

For local churches, the bottom line is often rising insurance costs and limited or no coverage for clergy sexual abuse.

Clarence Dziak, president of Great American Insurance Co. in Albuquerque, said that the payment crisis in New Mexico has made it difficult for all churches to buy insurance, and pastoral liability coverage will not be offered.

“We don’t want to cover churches. The lawsuits are causing a ripple effect throughout insurance companies that insure churches,” Dziak said.

Paul Ogden, insurance risk manager for the Presbyterian Church (U.S.A.), said the Presbyterian churches may get coverage, but every underwriter had an exclusionary provision for child molestation and pastoral liability.

Ogden added that “insurance companies are running scared,” and policies have become costly.

Even expensive policies do not ensure payment.

“Although churches are forcefully litigating and using hardball tactics, insurance companies will not pay if you are guilty” of sex abuse, said Steve Goldstein of Insurance Information Institute, an insurance industry clearinghouse in New York.

The Servants of the Paraclete, a treatment center in Jemez Springs, N.M., agreed to a $5.6 million settlement for victims of former priest James Porter in Minnesota and to a $2-million settlement for his victims in New Mexico. The Servants of the Paraclete said it was assigning them its rights against insurance carriers, and that the settlements would be collected from the insurers, not from the treatment center.

But the treatment center is still in court seeking reimbursement from its three chief insurers, Catholic Mutual Relief Society of America, Great American Insurance Co. and St. Paul Fire and Marine Insurance Co. for alleged breach of contract.

Other treatment centers fear they also will be held accountable if treatment doesn’t work.

Gerald Kaplan, director of Alpha Human Services in Minneapolis, said the possibility of recidivism cannot be eliminated.

“It is an unfortunate concept to hold centers accountable for recovery of patients. A treatment program cannot guarantee that a patient will not re-offend,” Kaplan said.

“Pretty soon there will be no treatment centers,” Kaplan said.