Insurance company not liable in lengthy legal proceedings
By Aaron Bailey
The Daily Record
An insurance company won a round this week in a 20-year-old legal saga centering on a psychologist who didn't report a child abuser to the authorities. A state court and an arbitration panel previously awarded a woman who was subjected to years of abuse as a child more than $27 million in damages and prejudgment interest. But an order of summary judgment this week in a federal case stemming from the ordeal sided with the insurance company defending the psychologist and his business partner who were ordered to pay the damages.
In the late 1980s, Lester Pope admitted to a psychologist that he was sexually abusing his minor daughter. The child's mother and Lester Pope's wife, Nancy Pope, discovered the abuse and agreed not to alert the authorities if he received counseling. The psychologist, Dr. Bruce Strnad, agreed to counsel Lester and not notify law enforcement or other child protection authorities about the situation, according to court documents.
After about four sessions, Lester quit the counseling and continued sexually abusing his daughter. The child had endured about nine years of abuse until 1989 when a social worker discovered the situation. Strnad never alerted the authorities as required by Missouri law. After a criminal investigation, Lester was charged with multiple counts of sodomy and rape.
He eventually pleaded guilty to one count of sodomy and spent about five years in prison, according to court files. Strnad, who is now deceased, received immunity in exchange for testifying against Lester in the criminal proceedings. In 1999, the daughter filed a civil suit against her parents, Strnad and his business partner Dr. Joel Ray, but the cases were eventually separated.
In 2003, a Boone County jury awarded the daughter more than $10 million against Ray. American Home Assurance Company, which insured Ray's and Strnad's business, is appealing that award and judgment. Strnad agreed to arbitrate the claims against him in 2004. The arbitrators awarded the daughter $8 million in damages and about $9 million in prejudgment interest. That decision is also being appealed. But the insurance company filed a federal suit in 2002, arguing that its policy didn't cover Strnad's actions since he willfully disregarded the law.
The case was decided twice by summary judgment, but overturned twice by the 8th U.S. Circuit Court of Appeals. The first summary judgment went in favor of American Home, but the appeals court ruled Strnad's conduct could be covered by the insurance. The district court then granted summary judgment for the daughter in terms of the coverage, but that decision was reversed because the court did not “conclusively decide the indemnification issue.”
On Tuesday, U.S. District Judge Scott O. Wright sided with the insurance company again, finding that since Strnad's conduct was “knowingly wrongful,” the insurance company's policy exclusion applies. American Home's attorney Douglas Schmidt, of Husch Blackwell Sanders, was pleased with the decision but noted a likely appeal and pending appeals of the state court award means the ordeal is far from over. The daughter's attorney, Jefferson City-based Roger Brown, could not be reached for comment.