LDS Church sues insurance providers

[webbles]

54 minutes ago, Duncan said:

One thing about those training videos isn't, for me, so much the video but teachers get substitutes for primary and youth classes, who is to say these subs have had the training?

If you are called as a substitute, you have to watch the videos.  But I bet a lot of substitutes aren't officially called.

[Amulek]

I'm not sure if this has changed, but when the system first rolled out there wasn't a way to track people if they didn't have a calling which required the training, so something like an intermittent (but uncalled) primary substitue wouldn't even show up on the reports - regardless of whether or not they had taken it.

Whenever my wife's co-teacher is out I usually end up being her go-to sub (depending on the week). I happen to have a calling that requires the training as well so that's not an issue. And, on the days that I am in there, which have been several (they are working on finding her another co-teacher), I would say that most of the other subs tend to be people in callings that are required to take the trainings as well. I suppose that on rare occasion there's someone who happens to fill in who hasn't had the training, but it's a pretty rare occurrence - at least in our ward - so I'm not especially bothered by that.

Edited August 2, 2023 by Amulek

[carbon dioxide]

On 7/28/2023 at 6:39 AM, jonah747 said:

Will your insurance company reimburse you if you have home insurance and you burn your house down?  No.
Will your insurance company pay out a life insurance policy to the wife if the husband commits suicide?  No.

For crimes like molestation or abuse in religious institutions, insurance does not work that way.

It all depends on what the policy says.   You are also conflating with what the owners of a home do with what a member of the Church does.   They are not quite the same thing.   If a neighbor comes into my house and burns my house down, it is covered. 

[jonah747]

On 8/1/2023 at 9:36 PM, carbon dioxide said:

It all depends on what the policy says.   You are also conflating with what the owners of a home do with what a member of the Church does.   They are not quite the same thing.   If a neighbor comes into my house and burns my house down, it is covered. 

You're right. It depends on the insurance company.

[smac97]

On 7/30/2023 at 6:40 AM, smac97 said:

The policy appears to require the insurer to pay amounts owed by way of settlement.  

Nope.  That is not how settlement works.  If I agree to settle a legal dispute, and if that settlement includes a "No Admission of Liability" provision, then a bystander cannot come along and say that my payment of that settlement is an "implicit" admission of liability, or that the claim is legitimate.

The same reasoning applies to the policy itself, which is obligated to pay out regardless of the merits of the legal claim ("The National Union Policy provides that National Union has:  the right and duty to defend any Suit against the Insured that seeks damages for Bodily Injury . . . covered by this policy, even if the Suit is groundless, false, or fraudulent...").

Thanks,

-Smac

Looks like the Church can continue its suit against the insurance companies:

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The Church of Jesus Christ of Latter-Day Saints can resume its lawsuit against two insurers for partial coverage of defense and settlement costs stemming from the sexual abuse of several children, a federal appeals court ruled Tuesday.

National Union Fire Insurance Co. of Pittsburgh, Pa., and Ace Property & Casualty Insurance Co. wrote ambiguous policy provisions defining “occurrences” of negligence, Judge Gregory A. Phillips said for the US Court of Appeals for the Tenth Circuit. Those provisions must therefore be read in favor of the church as a policyholder under Utah law, Phillips said. The decision reversed judgment for National ...

Paywall after that.  The 10th Circuit decision is here.  A Grok summary:

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Summary of the 10th Circuit Opinion Church of Jesus Christ of Latter-day Saints v. National Union Fire Insurance Co. of Pittsburgh, Pa. & ACE Property and Casualty Insurance Co., No. 25-4049 (10th Cir. July 28, 2026)

Background

Between 2007 and 2011, Michael Jensen sexually abused multiple children in Martinsburg, West Virginia. Jensen’s parents held prominent volunteer positions in the local LDS congregation, and his mother had recommended him as a babysitter to church families. Several victims later sued the Church (and others) in West Virginia state court, alleging the Church failed to take reasonable precautions that could have prevented the abuse. The Church settled with the remaining plaintiffs during trial.

The Church then sought coverage from two of its insurers, National Union and ACE, for defense and settlement costs. Both insurers denied coverage. The Church sued them in the District of Utah. The district court granted summary judgment to the insurers, holding that each instance of abuse constituted a separate “occurrence” under the policies. Because no single settlement exceeded the policies’ retained limits, the insurers owed nothing.

Issue on Appeal

The sole issue was the meaning of “occurrence” in the insurance policies.

• The Church argued its alleged negligence constituted one occurrence.
• The insurers argued each act of abuse against separate victims at separate times and places constituted multiple occurrences.

Holding

The 10th Circuit reversed.

The Court held that the policies’ definitions of “occurrence” were ambiguous. Under Utah law, ambiguous insurance provisions must be construed in favor of coverage. The Church’s interpretation (one occurrence arising from its continuous negligence) was plausible. Therefore, the district court erred in granting summary judgment to the insurers.

The case was remanded for further proceedings.

Key Takeaway

When an insurance policy’s definition of “occurrence” is ambiguous in a multi-victim sexual-abuse context, Utah law requires the ambiguity to be resolved in favor of the insured (here, treating the Church’s alleged negligence as a single occurrence so that aggregated settlements can exceed the retained limit).

This suit does not impact my assessment of the Church or arguments for or against it.  This is just a straightforward contractual dispute.

Thanks,

-Smac

[smac97]

BCC post about this case (Sam Brunson) :

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Background To This Case

There’s a lot going on here, but the short of it is: in 2004, Michael Jensen, then 13, groped two classmates. He was charged with two felonies, but pled guilty to two misdemeanors.¹

A few months later, the family moved to West Virginia. At some point after they moved, his dad was called as a high councilor and his mom as a Relief Society president (I assume at the ward level). His mom offered his services as a babysitter to other ward members and, over four years (ending when he was about 20), he sexually abused several of the children he babysat. He was criminally convicted in 2013.

Some of his victims sued his parents, other Church officials, and the Church itself. After years of litigation, but before a verdict, the Church settled with the plaintiffs.² After settling with the plaintiffs, the Church went to its insurance companies and asked them to pay for the settlement and costs of litigating.

They refused.

The Church vs. the Insurance Companies

And that takes us to the litigation that the 10th Circuit ruled on. When the insurance companies refused to pay, the Church sued them for breach of contract and breach of the implied covenant of good faith. (Basically, the Church said that under its contract with the insurance companies they had agreed to cover these costs. By refusing, they were violating a contractual obligation and acting in bad faith.)

The district court sided with the insurance companies. The Church appealed, and the Court of Appeals sided with the Church.

Good summary, this.

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How did it arrive at its decision? The rest of this post is going to be a little geeky. And also, it’s going to have literally nothing to do with religion. This case doesn’t raise any of the issues that we often see in lawsuits involving the Church. There’s no penitent-clergy privilege. There’s no Free Exercise claim. There’s no Church Autonomy Doctrine. The case hinges on how to read and interpret a contract; it would, presumably, come out the same whether it was the LDS Church or a community center or even a for-profit business.

So what’s at issue? The question of what constitutes an “occurrence.” Specifically, was it a separate occurrence each time over four years that Jensen abused a child, or did all of the abuse together constitute a separate occurrence?

Why did that matter? Well, the Church’s policies required the insurance companies to pay out for each occurrence that lead to bodily injury. But each occurrence had a “retained limit.” A retained limit in these policies seems to be roughly the same thing as a per-occurrence deductible in the kinds of insurance I have. That is, it only paid out to the extent that the cost of each occurrence exceeded the retained limit.

The court explains that if the retained limit were $100 and the Church had a $99 liability, the insurance companies wouldn’t have to pay anything. If the Church had a $101 liability, they would pay $1. So if it had a $1,000 liability, insurance would pay $900.

According to the court, the payment for each individual time a child was abused was below the retained limit. But if they were all a single occurrence, they were above the retained limit. That is, if each time Jensen abused a child, that was a separate occurrence, the insurance companies did not, in fact, have to pay. But if they were aggregated into a single occurrence, under the contracts, the insurance companies owed the Church money.

So what is an “occurrence”? It’s not a legal term; rather, it is defined in the insurance contracts.

This is a good example of legal concepts that depart from "common sense," but are nonetheless sensible in their own sphere.

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I’m not going to go into a lot of detail about what exactly they say, because if I were to do that, you might as well just read the opinion (and you should probably read the opinion anyway). The important thing:

1. The Court says the insurance companies’ reading—that “occurrence” means each separate time a child was abused—is absolutely a plausible interpretation under the contracts’ language.
2. But also, the Church’s reading—that “occurrence” meant all of the sexual abuse of children by the same person, even if it happened at different times and different places—was also a plausible reading.

So if both parties present a plausible reading, what happens? The Court says that, under Utah law, in the case of ambiguous language in an insurance contract, courts resolve the ambiguity in favor of the insured. Why? Because insurance contracts are contracts of adhesion. That is, the parties don’t negotiate the contracts. Insurance companies draft the contracts, present the contracts, and the insured can take or leave the contract. And where the insurer has had control over the language of the contract, the insurer had the power to not include an ambiguous term. The insurer doesn’t get to benefit from ambiguity that it created.

Or, as the Court wrote: “Ambiguous provisions thus carry a high price. To avoid that high price, insurance-policy drafters can clarify those provisions—to the benefit of the insurer, the insured, and the courts.”

This is quite right.  

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Conclusion

Honestly, that’s about it. The insurance companies raised a couple other defenses, including that the Church’s interpretation didn’t make any sense. But the Court read Utah law as “tell[ing] us to examine the policy language, not common sense.”

The insurance companies raised a couple other defenses, but the issues weren’t addressed by the district court, and courts of appeals generally don’t rule on issues that weren’t raised at the trial court level.

So is the litigation done? Not necessarily. The district court granted summary judgment (basically saying that the insurance companies won on the law, so there was no need to dig into the facts). The 10th Circuit reversed that legal ruling and sent the case back to the district court to continue the process. My assumption is that the insurance companies can see the writing on the wall and will settle with the Church for some or all of what it is asking for, but that’s not a forgone conclusion.

What has become a forgone conclusion, though, is that all of the abuse is a single occurrence under these contracts, and so, if the insurance companies are required to pay up, only one retained limit will apply.

And this point of law has nothing to do with the Church being a religious organization.

Thanks,

-Smac

[Calm]

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And where the insurer has had control over the language of the contract, the insurer had the power to not include an ambiguous term. The insurer doesn’t get to benefit from ambiguity that it created.

Or, as the Court wrote: “Ambiguous provisions thus carry a high price. To avoid that high price, insurance-policy drafters can clarify those provisions—to the benefit of the insurer, the insured, and the courts.”

I find this to be quite sensible.