Policy covers psychologist for failure to warn of future abuse by patient

By Donna Walter

St. Louis Daily Record-St. Louis Countian

An insurance company must provide coverage for a psychologist's failure to warn of a patient's propensity to continue sexually abusing his daughter, according to a decision handed down on Thursday by the 8th U.S. Circuit Court of Appeals.

American Home Assurance Co. sought in federal court a declaration that the company had no obligation to defend, indemnify or provide coverage to Dr. Bruce Strnad, a psychologist with Columbia Psychological Associates, who was sued in state court for not reporting Lester Pope's sexual abuse of his daughter, Kelly Pope, and for not warning anyone of the future harm Lester presented to Kelly. In its declaratory judgment action, American Home asserted that when Strnad failed to report that Lester was sexually abusing Kelly, the doctor violated Missouri law and therefore was not covered under a policy with exclusions for criminal acts.

Lester abused Kelly from 1980, when she was 4 years old, until 1989, when she was 13. In 1988, Nancy Pope, Kelly's mother, discovered the abuse. The insurance company's brief states that Nancy found pornographic photographs of Kelly, that she suspected Lester took the photos and that she called Dr. Joel S. Ray, a psychologist, who told her to come to Columbia Psychological Associates to visit with him and Strnad.

Ray denied that Nancy told him about the photographs or her suspicions of abuse; instead, he said he met with Nancy because she said she was having marital problems. The brief indicates Ray left the meeting before Nancy told Strnad about Lester's abuse of Kelly.

When Nancy told Strnad she thought Lester was sexually abusing Kelly, she also told him not to tell anyone about it and threatened to kill herself if he did, according to the brief. Strnad kept quiet.

Lester was counseled by Strnad at least three times, and he admitted in therapy to sexually abusing Kelly and taking pornographic pictures of her. He stopped his therapy and continued the abuse.

Kelly filed a civil lawsuit in the Boone County Circuit Court against the psychologists and her parents in 1991 through a next friend. A judgment was entered in favor of the defendants in 1994, but in 1995 the Missouri Court of Appeals, Western District, ordered the claim of failure to warn of future abuse to be reinstated. After several years of delays, the case was finally dismissed without prejudice in May 1998.

But in the following May, Kelly filed another civil lawsuit against the same parties. Kelly dismissed without prejudice the claims against her parents, and her lawyer, Danieal H. Miller of Columbia, confirmed she has no plans to pursue those claims.

In September 2003 a jury returned a verdict against Ray for $3 million for past non-economic damages and $2 million for future non-economic damages. Kelly dismissed her claim for punitive damages against the two psychologists. Miller had made a demand for prejudgment interest, so that judgment will likely be higher.

American Home Assurance Co. had agreed to defend the psychologists in the civil suit under a reservation of rights. According to the company's brief, in January 2002 Ray and Strnad's estate - Strnad had died during the first civil suit - demanded that American Home defend them without reservation and threatened, if the company refused, to enter into an agreement with Kelly in which they would consent to judgment against them if she would agree to seek recovery only from the insurance company. The insurance company then agreed to defend Ray without reservation but refused to defend or indemnify Strnad. Strnad's widow entered into that agreement with Kelly.

A three-judge arbitration panel determined the amount for which Strnad - or, rather, his insurer - is liable to Kelly to be $8 million, which is increased to $17 million when prejudgment interest is added, according to Miller.

What the 8th Circuit's decision means, said Miller, is that Kelly will get her money.

While the state case was still in litigation, American Home went to the U.S. District Court for the Western District of Missouri for a declaratory judgment that it wouldn't have to defend or indemnify Strnad. The District Court agreed. By failing to report the past abuse, Strnad committed a crime under Section 210.115 RSMo, and because the policy excludes criminal misconduct, Strnad is not covered under the policy. That was the reasoning of both American Home and the District Court.

However, the 8th Circuit said the doctor's criminal misconduct has nothing to do with his failure to warn of future harm. "Even though the policy may have excluded the coverage of the criminal misconduct claim, American Home did not show that any exclusion applied to Kelly's claim that Dr. Strnad breached a common law duty to notify any of Kelly's caregivers, including her mother, that Kelly's father posed a future risk of sexual abuse to Kelly. Thus, American Home has an obligation to provide coverage under Dr. Strnad's policy," wrote Senior Circuit Judge Myron H. Bright for the unanimous panel.

The insurance company argued that Kelly did not adequately present this argument to the District Court. But, said the 8th Circuit, Kelly alleged the cause of action in the state court action, and she presented the issue in her brief in support of her motion for summary judgment in the District Court.

In addition, the appellate court said, the insurance company's brief also suggests Kelly raised this issue. The court quoted from a footnote in American Home's brief: "In addition to alleging that Dr. Strnad intentionally and willfully failed to report Lester's sexual abuse of her to the appropriate authorities, Kelly also claimed that Dr. Strnad had failed to warn either her or others responsible for her care about Lester's propensity to abuse her both during and after counseling."

The court further found that the criminal act exclusion does not bar coverage to Kelly's common law claim that Strnad failed to warn private individuals of the abuse. Section 210.115 criminalizes a psychologist's failure to report abuse to state authorities, but it doesn't touch claims of failure to warn of future harm, said the court.

The court also cited Bradley vs. Ray, the appellate decision that reinstated Kelly's state court claim of failure to warn of future harm. That case - one of first impression in Missouri - recognized the common law duty Strnad owed Kelly. The 8th Circuit quoted the holding of Bradley: "that when a psychologist or other professional knows or pursuant to the standards of the profession should have known that a patient presents a serious danger of violence to a readily identifiable victim, the psychologist has a common law duty to take such protective actions as may be reasonable under the circumstances to warn the intended victim or to communicate the existence of such danger to those likely to warn the victim, which may include notifying appropriate law enforcement authorities."

"It's hard not to be pleased," said Miller, "because with the issues that were raised in that case, and you take the portion of the court's ruling that wasn't appealed by the insurance company along with the 8th Circuit's ruling, and they owe a bunch of money.

"That takes care of that chapter, but the book ain't done yet," Miller added. "Ironically, on the same day that the 8th Circuit handed down that ruling, Judge [Ellen] Roper handed down her final judgment incorporating the arbitration award into the judgment."

It still remains to be seen what the final award will be, he said.

According to Miller, Kelly's case demonstrates the importance of allowing this common law claim. "Quite frankly, the whole case underscores why it is that somebody who gets the benefit of making a bunch of money with a professional license and is in the unique circumstances that they are has to do something because if you just turn a blind eye, you get in the machinations of people who really aren't very healthy folk, who are out making, either through neglect or affirmatively, very poor decisions that hurt people who can't do for themselves," he said.

Kansas City attorney Carlton Drew Callenbach, who represented the insurance company, was unable to reach his client and could not comment by press time.

Circuit Judge Michael J. Melloy and Senior Circuit Judge David R. Hansen concurred with Bright's opinion.

American Home Assurance Co., plaintiff-appellee, vs. Kelly Pope, defendant-appellant, Donna Strnad, defendant ad litem appointed as legal representative of Bruce N. Strnad, Ph.D, a deceased individual and psychologist d/b/a Columbia Psychological Associates; C. Robert Buckley, defendant ad litem for Bruce Strnad, deceased, defendants; No. 03-2815; American Home Assurance Co., plaintiff-appellee, vs. Kelly Pope; Donna Strnad, defendant ad litem appointed as legal representative of Bruce N. Strnad, Ph.D, a deceased individual and psychologist d/b/a/ Columbia Psychological Associates, defendants, C. Robert Buckley, defendant ad litem for Bruce Strnad, deceased, defendant-appellant; No. 03-2816; handed down March 11.