TOWARD AN UNDERSTANDING 

OF THE CHURCH INSURANCE LITIGATION

Many people nowadays feel confused and bewildered by the seemingly incomprehensible mess of the litigation surrounding the Church Insurance Company. I count myself among this group. We feel overwhelmed and lost among the forest of unfamiliar legal maneuvers and impenetrable, arcane legalese. People want to know simply, What is going on here and what does it mean for the schism? I will try my hand at a simple explanation. My usual disclaimer--I am not a lawyer or a legal expert and what I offer here is only opinion.

That said, here is what I see in basic terms:

(1) What is the Church Insurance Company?

The Church Insurance Company of Vermont is one of three insurance companies under the auspices of the Church Pension Group, a function of the Episcopal Church. Find their webpage here . CIC-VT provides a variety of insurance policies.

(2) What is the mission of CIC-VT?

CIC-VT's Corporate Charter states:  to carry out the charitable and religious purposes of the Protestant Episcopal Church in the United States of America(the "Church")...

The Corporation shall accomplish these purposes by providing, or entering into arrangements with third parties who will provide insurance and reinsurance coverage for various property and casualty risks of the Church and its provinces, dioceses, parishes, missions, agencies, institutions and other entities connected with the Church.

In other words, the CIC-VT exists to provide insurance coverage for entities of the Episcopal Church. This makes it an in-house, or, "captive" insurance company. It does not exist for non-Episcopal Church entities.

(3) Does CIC-VT provide coverage for the Episcopal Church in South Carolina?

Yes. The schism occurred on Oct. 15, 2012 and was finalized by diocesan convention on Nov. 17, 2012.

The Episcopal Church in South Carolina adopted its name in January of 2013 and its coverage by CIC-VT began.

At first, CIC-VT denied payments to TECSC. Then, TECSC went to court to force the CIC-VT to provide payments to TECSC. 

In federal court, in Charleston, Judge Patrick Duffy ruled several times that CIC-VT was required to provide coverage to TECSC.

On December 3, 2014, CIC-VT and TECSC made a settlement. The terms were confidential. They have never been disclosed but obviously CIC-VT agreed to pay something for coverage to TECSC.

(4) Does CIC-VT provide coverage for the Diocese of South Carolina?

Yes, partly.

In 2013, some of the parishes in DSC that purported to be independent of TEC, claimed overage by CIC-VT. DSC kept this out of the news.

CIC-VT denied the coverage.

In 2015, the DSC parishes (apparently 17 of them) sued CIC-VT for breach of contract and bad faith claiming that they were covered by policies of CIC-VT. Again, DSC kept this out of the news (we learned of this only in 2019).

In November of 2015, CIC-VT made a settlement with these congregations. The terms were confidential. Under the non-disclosure, we do not know what CIC-VT agreed to pay but we do know they agreed to continue providing coverage to these parishes. Yet again, DSC kept this settlement secret. It was discovered by TECSC lawyers only this year.

So, yes, CIC-VT now says it is providing payments for insurance coverage to at least some of the DSC congregations.

(5) Why is TECSC now taking legal action against CIC-VT?

To recover damages that TECSC claims CIC-VT caused TECSC by making payments to their legal adversaries.

CIC-VT admits it has been paying money to some of the DSC congregations that are in court opposing TECSC.

TECSC points out that CIC-VT's actions are aiding and abetting entities not only outside of the Episcopal Church but in active legal opposition to the Episcopal Church diocese in eastern South Carolina.

(6) What does CIC-VT want from the court now?

This is where the matter turned really strange. 

In their Complaint of June 14, 2019, CIC-VT does not dispute TECSC's Complaint of June 11. Instead, it asks the judge to tell the Company what its coverage should be concerning the 17 breakaway congregations:  that it be granted a declaratory judgment advising it as to its rights and duties under each of the Policies, specifically whether it is required to provide a defense of the Underlying Action to any of the Disassociated Parishes...

Here's the problem. CIC-VT made a court settlement in 2015 in which it agreed to provide coverage for at least some DSC churches. At that time, CIC-VT refused to ask the court for a ruling on whether the Company was obligated to cover these congregations. They went ahead and made a (secret) legal deal with the DSC churches anyway. Now, the Company is asking the court to rule on whether it is obligated to cover these congregations that it has already agreed in a legal document to cover. This makes no sense to me. As I see it, CIC-VT is now asking the judge to tell them whether they did the right thing in 2015, four years after the fact. I do not see how the settlement of 2015, apparently a fully legal document can be undone at this time. To my knowledge, no one is now contesting the 2015 settlement. So, I do not understand on what grounds CIC-VT can expect the federal judge to rule on a settlement CIC-VT entered into four years ago.

So, TECSC is now in court asking the judge to make CIC-VT pay damages to TECSC because CIC-VT helped the opposition. Meanwhile, CIC-VT is in court asking the judge to tell them whether they are obligated to continue covering the 17 DSC congregations they are covering. In other words, TECSC and CIC-VT are not on the same page. TECSC is acting against CIC-VT and CIC-VT is acting against itself. This is hard for us non-lawyers to comprehend.

It seems to me there is a major problem in the Company. Its mission is clear: to provide coverage only for TEC. It has apparently failed in this as it is providing coverage for entities not in the Episcopal Church and is actually aiding and abetting these entities that are engaged in court actions against TEC. There is something wrong here, and the church authorities over this Company ought to find out what is wrong and put a stop to it.

The legal war between the secessionists and the Episcopal Church in South Carolina has been going on for six and a half years. It has taken many twists and turns and involved countless numbers of court actions. The Church Insurance business is one of the strangest sub-texts of all. So much of it just does not make any sense, at least with what we know now.

In my view, the CIC-VT ought to be ashamed of itself. It is a function of the Episcopal Church whose very reason for being is to help the Episcopal Church. Yet, it has been helping those at war against the Episcopal Church. In a civic state, aiding and abetting the enemy in war is considered treason and treated accordingly. In the end, I suspect there is much more to this story and I only hope we learn what that is in time.

It is my hope that you understand the matter of the Church Insurance Company a little more now. As to why it matters, that should be a bit clearer too. TECSC is fighting hard to rebound in South Carolina after the disaster of the schism. This has been the most traumatic event in the life of the diocese since the Civil War. It has taxed all of the Church's efforts, strength, and stamina to weather this devastating hurricane. CIC-VT is supposed to be helping the Episcopal Church side, and it is. However, it is also helping the anti-Episcopal Church side. This is what is so hard to wrap our minds around.

Anyway, the Insurance Company business is a curious sideline of the main features of the legal war, the battles for the local properties, in the state courts, and for the entity of the diocese, in the federal court. It is a distraction but it should not divert us from dealing with the crucial issues at stake.