Another twist in long-running abuse suit

A woman who was sexually abused by her father for most of her young life is inching closer to collecting an $8 million arbitration award against a psychologist who failed to report the abuse.

In a case that began in 1991, Kelly Pope, now in her mid-30s, sued Dr. Bruce Strnad, who treated Lester Pope for the abuse but didn’t inform authorities, and Dr. Joel Ray, Strnad’s business partner.

In 2004, an arbitration panel awarded Pope $8 million in her case against Strnad, who had died several years earlier. But American Home Assurance Co. doesn’t want to pay the award and has been arguing in federal court since 2002 that it has no duty to defend or indemnify Strnad’s estate.

The malpractice carrier, which covered Strnad for “any actual or alleged negligent act, error or omission,” argued the psychologist knew he had a duty to report abuse and that by violating that duty he committed a “knowingly wrongful act” – for which he would not be covered.

Pope argued that the policy exclusion excludes only intentional acts and that, for the exclusion to apply, American Home would have to present evidence that Strnad intended to harm the girl or intended the harmful consequences of his act of not reporting the abuse.

On Monday, the 8th U.S. Circuit Court of Appeals found in Pope’s favor, saying that the insurance policy is ambiguous because the “knowingly wrongful act exclusion is reasonably subject to different interpretation.”

The 8th Circuit panel noted that the arbitration panel based its award on the psychologist’s negligence and that the insurance company didn’t challenge the arbitration on collusion or other grounds.

“They took the position, as we had been arguing all along to them, that you can’t give with one hand and take with the other,” said Jefferson City attorney Roger G. Brown, of Roger G. Brown & Associates, who represented the defendant ad litem for Strnad.

“Every negligent act, to some degree, has an element of knowledge,” he said. “Particularly in the area of professional negligence, a doctor has to be charged with a duty to know what his professional responsibilities are to his patients.”

The case isn’t over yet. The 8th Circuit sent it back to Western District federal court to determine whether Pope’s common law claim of failure to warn was the sole basis for the arbitration award and judgment. If conduct other than that alleged in Pope’s common law claim is found to be the basis of any part of the award and judgment, then the federal court must determine whether coverage applies to that conduct. That could affect how much of the award Pope actually receives.

Brown said there was no evidence presented to the arbitration panel – as well as to the jury in the trial of Strnad’s business partner – that Pope’s damages were caused by anything other than Strnad’s negligence.

The arbitration award could well total more than $20 million, including pre- and post-judgment interest, the lawyer said.

Brown said Pope’s lawyer, Danieal H. Miller, was in Kirksville for a hearing. He did not return a telephone message left at his Columbia office.

The case against Strnad’s business partner, Joel Ray, is awaiting trial in Boone County Circuit Court. A jury had issued a $5 million verdict against Ray, but that verdict was overturned because the jury received an exhibit about insurance coverage without receiving a limiting instruction.

The trial judge then entered an $8 million judgment, plus prejudgment interest, against Ray, basing the decision on Strnad’s arbitration award. Last September, the Missouri Court of Appeals in Kansas City ordered a new trial in the case. A trial date has not been scheduled.

In 2004, the verdict against Ray, the arbitration award against Strnad and prejudgment interest on both brought the total award to more than $27 million.

Pope, now in her mid-30s, was placed in foster care with Lester and Nancy Pope when she was 3 years old. Lester began molesting Kelly sometime in 1980, and he and Nancy adopted the little girl in 1981. Lester’s abuse of Kelly continued until 1989, when the couple divorced. Kelly was 13 at the time.

Lester Pope pleaded guilty to one count of sodomy and served five years in prison.

American Home’s lead attorney was Gerald L. Angst, of Sidley & Austin in Chicago. He declined to comment without permission from his client.

The cases are American Home Assurance Co. v. Kelly Pope, 08-2848 and American Home Assurance Co. v. C. Robert Buckley, appointed as legal representative of Bruce N. Strnad, a deceased individual, 08-2853.