"AS THE PENDULUM SWINGS FROM CHARITABLE IMMUNITY TO BANKRUPTCY, BRINGING IT TO REST WITH CHARITABLE VIABILITY"
by MOST REVEREND THOMAS J. PAPROCKI, published in
JOURNAL OF CATHOLIC LEGAL STUDIES [Vol. 48:1]
...One might ask why a not-for-profit charitable institution
should be treated any differently than a for-profit entity when it
comes to corporate liability. This question can be answered on
different levels. On one level, unlike the for-profit world where,
if a for-profit company is rendered insolvent by its liabilities such
that it ceases to function, another will come along to take its
place (since nature abhors a vacuum and the dynamic of supply
and demand works to fill the void), the kinds of needs satisfied in
the case of charitable organizations are not subject to the same
dynamics. As the late Pope John Paul II recognized in his social
encyclical, Centesimus Annus,
the free market is the most efficient instrument for utilizing
resources and effectively responding to needs. But this is true
only for those needs which are “solvent” . . . and for those
resources which are “marketable” . . . . But there are many
human needs which find no place on the market. It is a strict
duty of justice and truth not to allow fundamental human needs
to remain unsatisfied, and not to allow those burdened by such
needs to perish.
Likewise, certain fundamental human needs might go unsatisfied if liability against charitable institutions (including the Church) is left unchecked.
At a deeper level, there is the very nature of the Church,
which is not simply another charitable institution, but whose
self-understanding is the Body of Christ. Thus, decisions about
leadership, authority, and discipline are not simple questions of
management and punishment, but must be understood in
keeping with the rights conferred by divine institution and
described in canon law, as well as in light of religious terms, such
as apostolic governance and apostolic succession from the time of
the foundation of the Church by Jesus Christ. This is where the
attempt to apply neutral principles of purely secular law to the
Church breaks down. As Father John Coughlin, Professor of Law
at Notre Dame University, has pointed out,
...The state has every right to encourage shareholders in a for profit corporation to change corporate leadership by holding the
corporation liable for negligence on the part of the corporate
executives and thus cutting into the enterprise’s profits. The
application of the same liability rules loses its claim to
neutrality when state law punishes a church for making what is
essentially a religious decision and compels the church to divert
funds from its charitable and educational purposes to
compensate victims (John J. Coughlin, Canon Law and Constitutional Law: The First Amendment, Anthropology, Separation, and Neutrality 50–51 (Notre Dame Law Sch., Legal Studies Research Paper No. 07-24, 2007)
…There have been roughly three phases in our culture’s
handling of allegations of sexual misconduct with minors over
the past half-century or so....prior to 1960, sexual
misconduct with minors was viewed primarily as a moral failure
to be dealt with spiritually, according to which penance,
absolution, and a firm purpose of amendment not to sin again
were the prescribed remedies. From 1960 to roughly 1990, the
approach was primarily therapeutic, for which treatment was the
apparent solution, after which offenders were often deemed
rehabilitated and recommended for return to ministry.
However, since 1990, the approach has been primarily legal, in
terms both of canon law and of civil law, with the imposition of
penalties on clerical perpetrators and the seeking of monetary
settlements and damages for alleged wrongs. As a result of our
highly litigious culture and relatively unchecked exposure to
liability, an undue burden has been placed on our free exercise of
religion guaranteed by the First Amendment of the United States
Constitution. This burden needs to be lifted.
While a full return to the complete charitable immunity of
the past is neither likely nor desirable, the civil law of our land
needs to reflect a reasonable balance between providing equitable
remuneration for those who have been harmed by agents of
charitable and religious institutions and respecting the
charitable intent of donors whose contributions have been given
in trust to be used for charitable and religious purposes. The
unlikelihood of returning to full charitable immunity is a political
reality, but full charitable immunity is also undesirable because
reasonable liability serves legitimate public purposes of
compensation and accountability. My point is that the pendulum
has swung from the complete protection of charitable immunity
to the complete exposure of charitable liability and, in some
cases, all the way to charitable bankruptcy. My hope would be to
restore some sense of balance, which I would call preserving
Charitable immunity came into existence because society felt
a need to protect the donative intent of charitable contributions
and to protect the institutions that such donations supported.
Society determined that these institutions provided services or
promoted values that fostered the common good. The doctrine
eroded because of the desire to provide just compensation for
those who have been harmed by the tortious conduct of
charitable institutions and their agents, as well as to serve as a
measure of public accountability for their wrongful or negligent
actions. Now we must ask whether we are seriously eroding the
charitable patrimony of American society that has done so much
to feed the hungry, to educate and care for children, and to
otherwise provide for the basic human needs of the poor. We
must also ask as a matter of public policy if society is prepared to
shoulder the cost of the increased demand for government to
provide such services if charitable institutions can no longer
afford to do so.
Whether intended or not, the current legal reality of
complete liability exposure is undermining the charitable works
and the religious freedom of the Church and other religious and
charitable organizations. This is an important issue. We should
not be passive, but take considered, compassionate, and
constructive steps to address it. Some of these devices to help
preserve charitable viability are under our own control, such as
forming parishes as separate not-for-profit corporations or
express trusts in order for their structures to more closely reflect
their status in canon law as separate juridic persons that are
distinct from the diocese. Others may be pursued as legislation
or may be decided by the courts themselves as a natural
evolution of the doctrine of charitable immunity.
Recognizing that it is not realistic or desirable to return to
the former notion of charitable immunity, we might want to look
to reforms that have already been enacted or are under
discussion in various states that have put some limits on medical
malpractice liability. Just as those reforms seek to preserve the
provision of medical services, this revised approach might
appropriately be termed preserving charitable viability, which
seeks to strike a balance between preserving the ongoing
existence of the charitable activities for which funds were
donated, while providing reasonable compensation for those who
have been harmed by the charitable institution.
Some possible approaches to preserving charitable viability
that merit serious discussion:
• Lobbying the state legislatures to enact legislation
that limits tort recovery against a charitable
organization to the extent of the organization’s
annual aggregate liability insurance, but that also
requires that the organization maintain a minimum
level of insurance coverage.
• Mandating appropriate state regulation of insurance
• Capping compensatory damages at predetermined
levels, given that insurance may not be available.
• Eliminating punitive damages in cases involving
• Placing caps on attorneys’ fees when suing a
• Providing statutes of limitations that are consistent
in their application and meaningful, rather than
subject to questionable notions such as “recovered
memory” and ambiguous terms such as when the
harm is “discovered.”
• Requiring that the charitable institution have actual
knowledge of a perpetrator’s previous wrongdoing in
order to be liable for any subsequent harms.
• Requiring that indemnification be provided in
conjunction with government grants and contracts for
the provision of social services.
• Mandating conciliation or arbitration of claims.
• Providing that any damages that are awarded are
actually used to help victims and prevent future
harm, rather than intending punishment as the
primary objective of awards....
(end of excerpt)
In our NEXT POST:
we analyze this very interesting piece of writing.
the first thing of note is the audience Bishop Paprocki was speaking in front of:
the occasion was the annual meeting of the National Diocesan Attorney's Association, from last year. here I would like to make a special request to all the lay Catholic apologists out there who say things like "oh, the abuse scandal was very sad...but that's ancient history. The church used to be in denial, but they've come a long way".
Folks, how about re-thinking that? Paprocki's address to the diocesan attorneys was LAST YEAR, as in 2008, and his published remarks are from 2009!
it will be recalled that we last encountered this group of attorneys when Springfield Diocese Attorney Jack Egan tried to have the law firm of Nixon Peabody thrown out of the 8.5 million insurance suit. elsewhere (in Chapter Four of the 8.5 study) I wrote this:
in the event, Egan did not prevail, and Nixon Peabody was kept in the suit.
In all of these cases the role of the diocese as employer was crucial. But, even more interesting, the question of how dioceses share information among themselves and their lawyers became a flashpoint for a significant part of the Springfield suit. I am referring to Paper 50, where the Diocese asked to have opposing counsel dismissed because of a perceived conflict of interest.
They argued that since Nixon Peabody, the firm representing one of the insurers, also represented several dioceses, that the lawyers opposing the Diocese might come into confidential information from their colleagues that would undermine the Diocese's case. In other words (if you use words like a lawyer) the lawyers from Nixon Peabody might be guilty of practicing "simultaneous representation of adverse interests". Here I learned that one of the meanest things one lawyer can say to another, apparently, is "…you have no standing…", which was a retort from Mr. Tanski (representing Nixon Peabody) to Mr. Egan (representing the Diocese).
But, to back up his claim, Mr. Egan noted that both he and Mr. Tanski were members of the National Association of Diocesan Attorneys [sic], and that the organization sponsored an e-mail list-serve to share information about combating common problems, one of which was insurance litigation in connection with sexual abuse. Egan stated in P.50 that "…given the magnitude of the claims underlying this action, Plaintiff will be hesitant to avail itself of the benefits provided by the NADA knowing that attorneys from the law firm representing one of its principal opponents in this case have access to that organization's information…"
it is my contention that Paprocki's remarks take on an added significance if we keep his audience in mind. could his remarks be a blueprint for what the church plans to do next?
next time, we discuss his remarks and what they reveal about the church's attitude toward the discredited doctrine of charitable immunity.