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Keeping clergy counseling suits from tearing at the cloth.

Keeping Clergy Counseling Suits From Tearing at the Cloth

When parishioner Kenneth Nally stepped into the closet and shot himself in the head, Grace Community Church probably expected the grief but not the lawsuit. Mr. Nally's parents claimed that he was the victim of incompetent pastoral counseling and sought $1 million in damages. Likewise, St. Stephen Church of Kingsville, MD, braces for a lawsuit which charges a former rector with sexually abusing a learning-disabled child during counseling sessions.

Once restricted to doctors and lawyers, the malpractice lawsuit explosion now threatens churches and clergy. No church administrator, or risk manager for that matter, likes to think about counseling malpractice, but claims in this area continue to persist and have high loss potential. Counseling programs, especially lay counseling, raise new liability concerns for church administrators.

Recent claims by Jessica Hahn against James Bakker and his church have spurred public interest in clergy sexual misconduct. But beyond the gossip of tabloid headlines lies troubling data with serious risk management consequences for church administrators. Jason Berry, a New Orleans-based writer known for his articles in the National Catholic Reporter, observes that since 1985 scores of pedophilia cases involving clergy have been recorded throughout the United States and Canada. Furthermore, U.S. dioceses have borne steep losses from lawsuits, and insurance coverage for such actions has evaporated.

These liability fears persist despite a 1988 California Supreme Court decision in Nally v. Grace Community Church denying damages to Mr. Nally's parents. Although the impact of this case is limited to California, counseling malpractice claims continue to be filed. However, there may be nationwide repercussions if the U.S. Supreme Court hears an appeal being planned by Edward Barker, attorney for the Nally family.

Even groundless claims are costly to defend. Other attorneys, with nothing to lose, may think they have a better case, a better client, a better legal climate or they are just plain better lawyers than Mr. Barker. This should not induce paranoia, but church administrators should not be lulled into a false sense of security in thinking that the counseling malpractice hazard will disappear.

How can church risk managers and administrators guard against counseling claims? How can they structure their insurance programs for maximum protection against claims that are spiritually shattering and financially draining? And, finally, how can church administrators involve themselves in the claims handling process?

Church administrators can address the exposure of counseling malpractice by avoiding counseling programs, controlling the risk through prevention, transferring the exposure, normally through insurance, and retaining the risk. Avoiding counseling programs altogether is unrealistic for vibrant churches working to meet their pastoral responsibilities. Retaining the risk is dangerous, unless it is done with knowledge of the financial consequences if an incident occurs.

Counseling the Counselors

The first stage of any loss control plan should involve the careful selection of lay counselors. They should be emotionally and spiritually mature. Thorough screening will protect churches from claims that they were negligent in selecting lay counselors. Once lay counselors are selected, they must be properly supervised, according to Dennis Kasper, an attorney with Caldwell & Toms in Los Angeles who specializes in defending churches. He suggests that if non-clergy are engaged in counseling, ministers should periodically sit in on sessions and have regular meetings with counselors to monitor quality.

Procedures and guidelines for lay counselors that are clearly written may also prevent claims. Since sexual misconduct is alleged in many counseling that they must avoid physical contact. Says Aaron Liberman, president of Health System Reviews Inc., "Innocent gestures like hugging can be misinterpreted as a come-on on the part of the minister. There should be no touching beyond a handshake or a pat on the back, or else counselors are flirting with serious consequences."

Mr. Liberman also recommends that counseling take place only in church offices and not in the counselor's or patient's home. He says counselors should avoid statements that could be interpreted sexually. Additionally, Mr. Liberman says ministers must explain to patients right away that their counseling relationship is in a different context than when the minister speaks from the pulpit.

A counselor should know when to refer a patient and be trained to recognize people who invite malpractice claims such as suicidal patients, psychotics and other persons who pose a threat to others. John Cleary, general counsel for Church Mutual Insurance Co., which underwrites clergy insurance, observes, "Claims usually arise because churches aren't properly screening people. If they've got someone who needs help, they must be appropriately referred." Mr. Cleary says it is important for clergy to form relationships with other community professionals such as psychiatrists, psychologists and social workers.

Indeed, failure to refer can create new liability exposures. Mr. Kasper explains that the biggest risk for clergy lies in them being over their heads and not realizing the need to refer profoundly troubled patients.

Finally, clergy must not overrepresent counselors' credentials or make misleading claims. Statements such as "Our lay counselors are as good as any psychologist" should be made only if counselors have the credentials to back them up.

Insurance Can Help

Most churches react to counseling malpractice concerns by relying solely on insurance. If this is the case, church administrators should read their insurance policy carefully to make sure counseling liability is, in fact, covered. Insurers are often reluctant to cover the exposure, and some policies exclude it. Administrators should not assume that because a policy covers a pastor for his activities that the same insurance umbrella covers lay counselors. They must also make sure the policy covers counseling liability of employees as well as volunteers.

An insurance agent, broker or consultant should be able to assist church officials with these matters. If ambiguities remain, church administrators should take their queries directly to the insurer and try to negotiate inclusion of lay counselor liability coverage into the insurance renewal. Are specific claims, such as sexual misconduct, subject to the limits of insurance? If they are, church officials may have purchased less coverage than they think. Diocese administrators also need to know whether legal fees reduce the policy limits, since defense costs can render an insurance cushion paper-thin.

Many insurers specialize in writing coverage on church activities. A few of the best known are Church Mutual, Preferred Risk, Atlantic Mutual and Brotherhood Mutual. Church coverage is a competitive market, and some companies write policies only in certain states. Church administrators should work with an insurance broker to shop the marketplace and find the best deal on price, scope of coverage and service.

Some churches ask volunteers to provide their own insurance coverage. However, volunteers may be unable to find individual policies and may be forced to "go bare." Alternately, if a therapist counsels under the aegis of the church, the therapist may list the church as an additional insured on his or her policy. According to Mr. Kasper, it may cost more premium to add the church to the policy. As a solution, the church can pay for the additional premium.

In dealing with insurers, administrators should insist that their consent be obtained on any settlement. Policies normally do not confer this right, but it may be added by a special endorsement. A counselor's professional reputation is at stake, and likewise, the church may be concerned about the precedent of an ill-advised settlement. Doctors have long had a say in settling their malpractice claims. The insurer may seek extra premium for this, if it considers the request at all.

Pre-notification on settlements provides a fallback for churches unable to set veto power over settlement from insurance companies. A way to attain this is to ask for prior notification of settlements. The last thing a church official wants is to learn after the fact about a questionable settlement. If the insurance policy requires notification prior to a contemplated settlement, a church administrator is guaranteed a chance to plead the case with the adjuster. Still, the final say rests with the insurer in paying or defending a claim.

When a Claim Occurs

When an incident is reported to the insurer, church personnel should send as much background information as possible. Adjusters may have little knowledge of counseling procedures. The counseling procedure manual and other brochures describing the program may help them understand the service and assess liability. The church official should give the adjuster a written narrative about the incident and, if appropriate, a recommendation for resolving the claim.

Churches should report notices of claims or potential claims to the insurance company as soon as possible. Some church officials believe they have no obligation to report a groundless claim, which is a dangerous and expensive misconception. Delay in reporting a claim or potential claim may negate insurance coverage. If an insurer thinks the delay has hurt its ability to investigate and defend the claim, coverage may be denied when the matter becomes a full-blown lawsuit. Mr. Liberman, who runs an insurance program for Scottsdale Insurance Co., says, "We encourage members to report to us whenever a person looks at them cross-eyed."

Clergy and counselors should cooperate fully with their insurance carrier during a claim investigation. Insurers have an obligation to investigate every claim, whether or not it is considered ridiculous. Church clergy and administrators should make themselves available for any statements the insurance adjuster needs. They should provide the claims person with needed records. Most courts have ruled that once a person has made a claim, counselors are not bound to confidentiality vis-a-vis their insurance carrier.

Insurance companies set aside claim reserves for the expected sums needed to settle or defend claims. Church administrators should question a reserve that seems too high because this figure affects the insurance premium. Understaffed and overworked adjusters may not give a claim reserve the attention it warrants. On the other hand, an adjuster's inexperience or ignorance regarding your counseling program may also produce an unrealistically high reserve. If a minor claim is reserved for $250,000, for instance, the church should find out why and try to persuade the carrier to drop or reduce the reserve.

Church risk professionals should also determine if claims are being adequately supervised. The insurance premium entitles them to a periodic loss run of claims. Cases remaining open on several loss runs with no reserve or payment changes may reveal inattention on the adjuster's part.

Once a church or diocese reports an incident to an insurer, its status should be monitored regularly. The church should designate one person in its administration to act as liaison with the insurer on claims-related matters. This administrator will work with the adjuster and follow up periodically to stay abreast of the status of the case. Requests should be made for copies of all reports from the adjuster or defense attorney. Like any service provider, insurance claims departments function better if they know they are being watched. Churches should take an active role in the claim and be unafraid to ask questions.

In the final analysis, a church cannot totally insulate itself from the potential of counseling liability suits, whether or not they are justified. Using an intelligent risk management approach to these delicate issues can reduce the odds that the counselor and parishioner will meet in court.

Kevin M. Quinley is vice president of claims for Hamilton Resources Corp. in Fairfax, VA.
COPYRIGHT 1990 Risk Management Society Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Quinley, Kevin M.
Publication:Risk Management
Date:Mar 1, 1990
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