Legislation extends timeframe for child sexual abuse lawsuits
What does this mean for churches, ministries and youth organizations?
By Max H. Herr
Church & Ministry Compliance Consulting
In 2019, the California State Legislature passed Assembly Bill 218 (AB 218), which was signed into law by the governor and went into effect Jan. 1. The law extended the time to file a civil suit – known as the statute of limitations – against a party who may have been responsible for a sexual offense.
This changed the previous statute from 10 years following the date of the last offense prior to age 18 to the later of either:
Age 40
or
Five years from the date of psychological “discovery” of the abuse
In addition, under AB 218, a victim could recover “treble damages” if the abuse was proved to have been “willfully covered up or concealed.” (“Treble” is a legal term meaning the amount of damages is multiplied by three.)
AB 218 also extended the time for victims of child sexual abuse (persons who were under age 18 at the time of the incident) by opening a new three-year window to file civil lawsuits against a responsible party, beginning Jan. 1, 2020. That window was scheduled to close on Dec. 31, 2022.
Further limitation extensions
Enter Assembly Bill 2777, which became law Jan. 1, 2023. The author of the bill, Assemblywoman Buffy Wicks (D-Oakland), wrote:
“Women may not define a victimization as a rape or sexual assault for many reasons such as self-blame, embarrassment, not clearly understanding the legal definition of the terms, or not wanting to define someone they know who victimized them as a rapist or because others blame them for their sexual assault.
“When the perpetrator is someone a victim trusts, it can take years for the victim even to identify what happened to them as a sexual assault.”
“For these reasons, it is self-evident that the unique nature of the emotional and psychological consequences of sexual assault, especially on women, can paradoxically permit wrongdoers to escape civil accountability unless statutes of limitation are crafted to prevent this injustice from occurring.
“Moreover, when these data are combined with widespread news reports of major companies being accused of covering up sexual assaults by their employees it is self-evident that statutes of limitation for sexual assault need to be crafted in a way that does not cause the covering-up company to enjoy the fruits of their cover-up solely because our statutes of limitation permit, and thus motivate, such behavior” (Author’s commentary submitted to the Senate Committee on the Judiciary considering AB 2777, June 2022).
Clearly, we recognize today that victims of child sexual abuse may feel shame, often blame themselves for their victimization, and frequently repress the memories of their abuse. Later in life, they may come to grips with the facts and recall the events as they happened. AB 218 and AB 2777 took these facts into account. Some organizations that had some connection to or actual involvement in incidents of abuse have been found to have concealed the facts or actively worked to cover them up.
AB 2777 carves out an additional three-years, until Dec. 31, 2026, for a person who was a minor-age victim of a sexual offense, to file a civil suit against a responsible party. However, this three-year exception applies only to a very narrow set of circumstances – those which occurred on or after Jan. 1, 2009, and in which a lawsuit was filed on or after Jan. 1, 2019, which would otherwise have been barred by the 10-year statute of limitations. There is no requirement for any criminal prosecution against a perpetrator to have occurred.
“The implication for churches and other ministry organizations is that there remains a window in which they can be sued by a victim of past sexual abuse that might be connected to their organization.”
Plaintiff attorneys seek out any and all “pockets” with money to settle a damage claim. Compared to most individuals, businesses such as churches tend to have relatively “deep pockets” lined with million-dollar liability insurance policy limits. Given the potential of a trial and the prospect of treble-damages, settlements tend to occur more frequently than jury trials.
Insured? But by whom?
The inherent problem for any given church is its history of insurance contracts. Unlike life insurance contracts that are written for many years into the future, property and liability insurance contracts, like auto and homeowner’s insurance, are written for one-year periods of time. Legal defense is always included in liability policies, but only provided by the company that might be contractually obligated to pay a claim. A claim for damages resulting from an incident that occurred ten or more years ago might or might not be covered by the current active policy, but it very well could be covered by the policy that was in effect at the time of the alleged incident. 1
But all insurance policies also include language that requires the insured to give timely notice of any loss or legal complaint – immediately is always best – but the policy might allow up to 30 or 60 days to give notice. Failure to notify the insurance company that your organization has been sued within the stated time period will usually absolve the insurer of all responsibility for the damages. This is true of most, if not all, commercial property and liability insurance policies. 2
“So which insurance company do we notify?”
If that’s the question you’re asking at this moment, you could be in trouble if you were sued today.
Churches are notorious for poor record keeping. If the church doesn’t have a record of its past coverage, it may face the consequences of a lawsuit without the protection it actually paid for, and the financial result could be devastating. It would have to pay its own attorneys and it would have to pay any damage award without the benefit of an insurance contract for which it likely paid thousands of dollars. 3
For these reasons, churches should always consider the value their insurance agent or broker represents before moving on to a different one. Maintaining a long-term relationship with one agent or broker has many advantages. They get to know their clients and their unique needs. They don’t play games with coverage, such as undervaluing the replacement cost of buildings and contents just to get a lower premium. They know what coverage requirements must be met in a policy. And, most importantly, agents and brokers are required by law to maintain records of the policies they sell or service. So even when a church might not have done a good job of record keeping, if it has used the same agent or broker for many years, there should be no problem determining which policy will apply to a claim.
What do I need to know today?
The statute of limitations to file certain civil suits for child sexual abuse under AB 218 was supposed to expire after Dec. 31, 2022. Although AB 2777 opened another new, small window of opportunity, it might not represent a problem for most churches. But, like King Belshazzar, you may reasonably foresee the handwriting on the wall. It’s possible that in 2025 another legislator will introduce yet another bill extending the statute of limitations again, and this could become a perpetual problem for all churches and other organizations that fail to treat sexual misconduct with children seriously or without due regard for the consequences.
This is just another reason, if you haven’t already done so, to take seriously the need for full compliance with AB 506 (2021) and begin proactively protecting the children served by your ministries.
Max Herr is president of Church & Ministry Compliance Consulting. He has more than 25 years of experience in insurance, financial services, compliance and governance, including more than 10 years as a church treasurer. Max served as the church compliance specialist for the California Southern Baptist Convention for six years.
Legal defense resources
If your California church or nonprofit needs to provide a legal defense related to sexual abuse, we recommend Daniel C. Zamora of Weintraub Tobin.
1 – Most commercial liability policies also include a “retroactive” provision that extends coverage under a currently active policy into the past provided there has not been a “break” in coverage in the interim.
2 – Property and liability policy applications – including renewal applications with the same company – ask if there are any known or expected claims or lawsuits that might arise. Failure to disclose the fact that an insured has been, or is expecting to be, sued almost always leads to recission of the insurance contract.
3 – A current insurer might provide a defense under a “reservation of rights” – a letter that notifies the insured defendant that if it loses the lawsuit, and it is determined that the current insurance company has no legal responsibility for the claim, the current insurer will ask the court to dismiss it from defending the lawsuit, leaving the defendant to cover all costs – damage awards, court costs, and the cost of attorneys for both sides.