Insurance Coverage of Acts of Molestation

An offender’s homeowner’s insurance policy will not cover such acts.

Church Law and Tax 1997-11-01


Key point. The homeowner’s insurance policy of a child molester cannot be tapped to pay for victims’ injuries or the molester’s legal fees.

! The Supreme Court of Ohio ruled that a convicted child molester’s homeowner’s insurance policy did not cover acts of child molestation. Three minor girls were molested by a former neighbor and friend they called “grandpa.” The incidents occurred on several occasions over a period of three years. The victims sued the molester, who referred the lawsuit to his homeowner’s insurance company. The insurer claimed that the molester’s actions were not covered under the homeowner’s policy because of an exclusion for “intentional injuries.” The molester admitted that he abused the girls, and that his actions were considered morally wrong by his church. He insisted, however, that at the time of his actions he did not know that his acts would cause emotional injuries to the girls, and that he never intended to harm them. The state supreme court rejected the molester’s argument, concluding that “intent to harm is properly inferred as a matter of law from deliberate acts of sexual molestation of a minor.” The court added that “a person who sexually manipulates a minor cannot expect his insurer to cover his misconduct and cannot obtain such coverage simply by saying that he did not mean any harm.”

Application. This case illustrates an important point-church workers who molest minors should not assume that their homeowner’s insurance policy will cover their wrongs. This means that their homeowner’s insurer will not provide them with a legal defense if they are sued, and will not pay any portion of a judgment rendered against them. Church workers who molest children sometimes look to their homeowner’s policy after learning that the church’s insurance policy does not cover them. Gearing v. Nationwide Insurance Company, 665 N.E.2d 1115 (Ohio 1996). [ Negligence as a Basis for Liability—Defenses]

Retirement plans

Key point. The civil courts are prohibited by the first amendment guaranty of religious freedom from resolving lawsuits brought by dismissed clergy challenging a loss of their retirement benefits based on their dismissed status, especially if the resolution of such a dispute would require consideration of ecclesiastical matters.

! The South Carolina Supreme Court ruled that the civil courts could resolve a dispute over a dismissed minister’s right to pension benefits. A minister served from 1952 until he retired in 1986 in churches of the Church of God (the Church). During his 33—year active ministry, he made the required monthly contribution to the Aged Ministers Pension Plan Fund of 4 percent of his gross income from the ministry. Following his retirement, he began receiving payments from the Fund. Payments from the Fund are governed by the Minutes of the Church of God, which provide that “any aged minister receiving benefit from the Aged Ministers’ Fund whose ministry has been revoked shall cease to draw compensation from the fund.” The Minutes further provide that “the license of a minister must be revoked when found guilty of adultery or fornication.” In 1989 the Church revoked the minister’s license after he confessed to adultery, and he stopped receiving pension payments. The minister sued the Church claiming that although the Church revoked his pastoral “license,” the Church did not thereby effectively revoke his “ministry.” He also argued that the Church could not have revoked his ministry by revoking his license because once he retired he had no “ministry” to revoke. A trial court agreed with the minister that his pension benefits had been wrongfully terminated by the Church, and awarded him $71,000 in damages. The state supreme court disagreed. It began its opinion by identifying the following three principles that emerge from a reading of decisions by the United States Supreme Court:

(1) courts may not engage in resolving disputes as to religious law, principle, doctrine, discipline, custom, or administration; (2) courts cannot avoid resolving rights growing out of civil law; and (3) in resolving such civil law disputes, courts must accept as final and binding the decisions of the highest religious judicatories as to religious law, principle, doctrine, discipline, custom, and administration.

The court concluded that the first amendment did not prevent it from resolving this case, since it was not being asked to adjudicate a matter of religious law, principle, doctrine, discipline, custom, or administration.” Rather, it was being asked to resolve a contractual dispute: “The issue here is the effect of the revocation of [the pastor’s] ministry on the pension agreement he had with the Church. This case simply requires the application of neutral principles of contract law and very little inquiry into religious law.” The court noted that the Church’s Minutes were “very clear” that if the pastor’s ministry was revoked he was not entitled to draw compensation from the Aged Ministers’ Fund. The court refused to address the former pastor’s claims that as a retired minister he had no ministry to “revoke,” and that revocation of a license to preach is not the same as revocation of ministry. These claims were “foreclosed by the fact that a court must accept the doctrinal and administrative determinations of the highest ecclesiastical body of the Church.” The court concluded that “because the [Minutes] unambiguously allowed the Church to discontinue [the former pastor’s] pension payments as a result of the revocation of his ministry, the trial court should have directed a verdict in favor of the Church.” Pearson v. Church of God, 478 S.E.2d 849 (S.C. App. 1995). [ Termination, Judicial Resolution of Church Disputes]

Sexual harassment

Key point. Churches may be liable for sexual harassment if they do not respond promptly and effectively to employee allegations of sexual harassment.

! A federal appeals court ruled that a church—operated school was guilty of sexual harassment as a result of its failure to address its principal’s offensive behavior with several female employees. A denominational agency operated a residential school for emotionally and physically impaired children. Over the course of several years, the principal of the school was accused on many occasions of sexual harassment by female employees. There was substantial evidence that school officials were aware of many of these complaints. In 1993, school officials launched an investigation into the sexual harassment charges. They found that there was a significant basis to the harassment complaints. The school suspended the principal for five days without pay, ordered him to submit to a psychological assessment and placed him on three months’ probation. It also invited an outside consultant to conduct several days of seminars on sexual harassment. Even after this corrective action, there were several instances of inappropriate behavior involving the principal. During this same year, the principal was given a satisfactory performance evaluation and a raise. Several female employees who had been harassed by the principal sued the denominational agency on the ground that it was legally responsible for the principal’s acts because of its failure to respond adequately to the accusations against him. The women claimed that school officials “moved slowly” in dealing with the principal because he was African—American, and they were concerned about being sued for racial discrimination. In fact, the principal threatened on numerous occasions to file a discrimination complaint with the Equal Employment Opportunity Commission. A trial court ruled in favor of the women, and awarded them $300,000 in damages.

A federal appeals court upheld this ruling. It referred to the “long—term, ostrich—like failure” by denominational and school officials to “deal forthrightly with [the principal’s] treatment of female employees.” The court observed that “the jury was entitled to conclude that [the agency] not only looked the other way for many years but that its corrective action was woefully inadequate, as demonstrated by [the principal’s] later conduct.”

Application. This case illustrates the importance dealing promptly with complaints of sexual harassment. Letting years pass without addressing complaints of harassment will only increase significantly a church’s risk of liability. The agency finally acted in 1993-by suspending the principal for five days, ordering a psychological assessment, imposing a three—month probationary period, and inviting consultants to conduct sexual harassment training. These acts may seem thorough and adequate, but the court concluded that they were not sufficient to avoid liability for sexual harassment, because (1) the complaints against the principal had occurred over so many years; (2) the principal’s acts of harassment were so pervasive; (3) the agency waited years before acting; (4) the agency’s response was insufficient, since the principal continued to engage in harassment even after he was disciplined; and (5) the principal received a satisfactory employee evaluation and a raise during the same year that he was disciplined for harassment. These are “warning signals” that church leaders should heed. Also, note that the court acknowledged that the agency had “moved slowly” in responding to the complaints against the principal out of a fear of being sued for racial discrimination. However, the court not only rejected the relevance of such a concern, but suggested that it helped prove the victims’ claims of harassment. The lesson is clear-employers should not delay responding to allegations of sexual harassment on the ground that the alleged offender is a member of a protected group. Jonasson v. Lutheran Child and Family Services, 115 F.3d 436 (7th Cir. 1997). [Title VII of the Civil Rights Act of 1964, Application of Federal Labor and Discrimination Laws to Private Schools]

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