With the passage of New York’s Child Victim’s Act (the “CVA”) and similar revival statutes around the United States, there have been literally thousands of formerly time-barred actions commenced against institutions such as churches and other religious organizations, schools, camps, and other groups working with children for damages on account of sexual abuse by their employees, volunteers or agents allegedly occurring years or even decades in the past. When these institutions turn to their insurers seeking coverage under old insurance policies for injuries occurring during the relevant policy periods, they are often confronted with the defense that, because the institution may have been aware of an alleged perpetrator’s “propensity” to commit acts of abuse, the resulting injury was “expected and intended” and, therefore, excluded from coverage.
Abuse claims generally allege that the institution failed to use due care to protect children from abusive perpetrators for whom the institution is alleged to be responsible. Sexual abuse complaints typically allege that, as a result of the policyholder’s negligence in hiring, retention, supervision, or training, the claimants suffered bodily injury for which the policyholder is legally liable. In resisting coverage for sexual abuse claims, insurers typically assert that, if the institution knew of a perpetrator’s “proclivities” or “propensities,” then the injury arising from child abuse should not be deemed an “occurrence” because it should be considered “expected or intended” from the standpoint of the insured.
Negligent conduct is insurable
These arguments ignore the very high burden insurers must carry on such a defense. Like environmental litigation that preceded it, the insurers attempt to use a modern lens to evaluate policies and procedures adopted many decades earlier. While a church might have at one time believed that a perpetrator could be safe to return to the care of children after an intensive religious retreat and/or psychiatric treatment, one would be unlikely to find any now holding similar views. Thus, what might now seem outrageous, should be seen as negligent (and eligible for insurance coverage) in light of the understanding at the time the conduct occurred.
This is the approach adopted by New York courts. As an initial matter, New York holds that negligence in hiring or retaining an employee who commits a sexual assault can constitute an “occurrence” that is not “expected or intended” from the standpoint of the insured. See RJC Realty Holding Corp. v. Republic Franklin Ins. Co., 808 N.E.2d 1263 (N.Y. 2004). In the context of a suit against a massage parlor, the court explained that, although the assault was not an “accident” from the masseur’s point of view because he expected and intended it, the masseur’s expectations or intentions were irrelevant in determining the applicability of the insurance policy to his employer. Under New York law, the perpetrator’s abusive conduct is not imputed to his employer. Judith M. v. Sisters of Charity Hosp., 93 N.Y.2d 932 (1999). Instead, the institution is only liable for its own negligence in hiring or retaining such perpetrators. Accordingly, the court did not ascribe the masseur’s expectations or intentions to his employer in determining the applicability of the insurance policy. Id. See also Jewish Cmty. Ctr. of Staten Island v. Trumbull Ins. Co., 957 F. Supp. 2d 215, 233-34 (E.D.N.Y. 2013) (following the RJC court’s interpretation of “accident” in the context of sexual harassment and assault of children at a community center); NYAT Operating Corp. v. GAN National Insurance Co., 46 A.D.3d 287, 287-88 (1st Dep’t 2007) (“[it] does not avail [the insurer] to argue that the assault was foreseeable.”).