Appeals Court Revives LDS Church Insurance Fight Over Abuse Settlements

A federal appeals court has revived an effort by The Church of Jesus Christ of Latter-day Saints to make two insurance companies help cover the costs of defending and settling lawsuits brought by survivors of childhood sexual abuse in West Virginia, Courthouse News reported.

On July 28 a unanimous three-judge panel of the U.S. Court of Appeals for the 10th Circuit reversed a lower-court decision that had favored National Union Fire Insurance Company of Pittsburgh and ACE Property and Casualty Insurance Company. The case will now return to federal district court in Utah for further proceedings.

The ruling does not decide that the insurers must ultimately reimburse the church. Instead, it allows the church to continue pursuing coverage under policies in effect during the years when Michael Jensen abused several children.

Lawsuits Alleged the Church Failed To Protect Children

The underlying litigation involved abuse committed by Jensen in Martinsburg, West Virginia, between 2007 and 2011.

According to the appellate opinion, Jensen’s parents and grandfather were prominent members of the LDS Church. After Jensen’s family moved from Utah to West Virginia, his parents assumed influential volunteer roles in their local congregation. His mother served as president of the church’s Relief Society and offered Jensen as a babysitter to other church families.

Jensen abused several children while babysitting and during other visits with church families. He was convicted of sexual assault and sexual abuse in 2013.

Survivors and their families later sued Jensen’s parents, church officials and the LDS Church. Their claims alleged that the church failed to report warning signs, protect children, properly supervise or train church representatives, and warn families about the danger Jensen posed.

The church settled with the remaining plaintiffs during a 2018 trial before a jury reached a verdict.

Insurers Refused To Cover Defense and Settlement Costs

After reaching the settlements, the LDS Church sought reimbursement from National Union and ACE for its legal defense and settlement expenses.

Both insurers denied coverage.

The church then sued them in Utah federal court, alleging breach of contract and seeking a declaration that the insurers were responsible for at least some of the costs.

The dispute centered on the policies’ definition of an insurance “occurrence.” Each policy required the church to pay a certain amount itself before insurance coverage would begin.

None of the individual settlements was large enough to cross that threshold on its own. Taken together, however, the settlements exceeded the policies’ retained limits.

That created a financially significant question: Did the church’s alleged failure to protect several children constitute one occurrence, allowing the settlement amounts to be combined, or did each survivor’s abuse represent a separate occurrence?

Lower Court Treated Each Survivor’s Abuse Separately

The federal district court concluded that separate instances of abuse involving different children, times and locations amounted to multiple occurrences.

Because no individual settlement exceeded the applicable retained limit, the court granted summary judgment to the insurance companies.

The LDS Church appealed, arguing that its alleged institutional negligence created a single dangerous environment that repeatedly exposed children to substantially similar harmful conditions.

Under that interpretation, the settlements could be treated as arising from one occurrence and combined for purposes of determining insurance coverage.

10th Circuit Finds the Insurance Policies Ambiguous

The 10th Circuit did not decide that the church’s interpretation was necessarily the best reading of the insurance policies.

Instead, the panel found that both sides had presented plausible interpretations of the term “occurrence.” Because the policy language was ambiguous, Utah law required the ambiguity to be resolved in favor of the insured party, the LDS Church.

Judge Gregory Phillips wrote that the church could plausibly characterize its alleged failure to take adequate precautions as one continuing harmful condition, even though separate children were abused at different times and places.

The ACE policies were especially important because they stated that repeated exposure to substantially the same harmful conditions could constitute one occurrence, regardless of how often the exposure happened or how many claimants were involved.

The panel therefore reversed the summary judgment ruling and sent the dispute back to the district court.

Insurers May Still Raise Other Coverage Defenses

The ruling does not guarantee that National Union or ACE will have to pay the LDS Church.

The insurers raised several other arguments that the district court had not yet resolved. National Union contends that its policy expired before much of the abuse occurred.

ACE has separately argued that settlements involving injuries across different policy periods cannot be combined, that certain emotional injuries may not qualify as covered bodily injuries, and that the company is not responsible for the church’s defense expenses.

The appeals court declined to decide those questions because the lower court had not addressed them first.

What the Ruling Means for Survivors

For the survivors involved in the West Virginia litigation, the ruling does not undo or change their settlements. It concerns how the LDS Church and its insurance companies divide the financial responsibility for legal costs and settlement payments already incurred.

More broadly, the decision illustrates why insurance disputes can remain active long after survivors resolve their underlying claims against a church or other institution.

When an organization has liability insurance, coverage may affect its ability to fund settlements and compensate survivors. Insurers may dispute whether a policy applies, whether claims arose during the covered period or whether multiple survivors’ claims should be treated separately.

In this case, treating the church’s alleged negligence as one occurrence could make insurance funds available because the combined settlement amounts cross the policies’ coverage thresholds. Treating every survivor’s case as a separate occurrence could leave the church responsible for all of the costs because no individual settlement exceeded those thresholds.

The ruling could therefore matter in future institutional-abuse cases involving multiple survivors and allegations that an organization repeatedly failed to respond to the same known danger. However, it does not establish that every series of abuse claims must be treated as one occurrence. The result will still depend on the wording of the particular insurance policies and the law of the state governing the dispute.

It is also important to distinguish this insurance ruling from a finding about the LDS Church’s underlying liability. Because the survivor lawsuits settled before a verdict, the 10th Circuit was not asked to determine whether the church was legally responsible for Jensen’s abuse.