The Church in a Litigious World
Civil lawsuits against churches were once very rare. Most states, including South Carolina, recognized the doctrine of charitable immunity, which shielded churches and other charitable organizations from many claims. However, South Carolina abolished that common law doctrine in 1981. In 1994, the South Carolina General Assembly passed legislation that limited the amount that can be recovered from a charitable organization for private or civil wrongs other than breach of contract. The statute also granted some protection to employees of the charitable organization who did not act in a reckless, willful, or grossly negligent manner. However, this statutory protection is much more limited than the charitable immunity doctrine it replaced. Churches now face the threat of civil lawsuits much to the same extent as secular businesses.
Given this reality, church leaders should consider how to protect their churches and congregations. This involves not only claim prevention but also how to respond to claims when they occur. This article is the first in a series that addresses how churches can better insulate themselves from liability in a litigious society.
Focus on Prevention. “An ounce of prevention is worth a pound of cure.” That saying holds true as the best way for a church to protect itself from legal liability. Some of the most serious potential claims modern churches face involve sexual misconduct, unsafe methods of transportation, and misuse of funds. These types of claims can often be avoided by simply putting common sense precautions into practice.
Many sexual misconduct claims—and the tragic circumstances out of which they arise—can be better avoided by implementing simple precautions such as using security patrols during church services, adequately screening staff and volunteers, prohibiting children from being left in the care of just one adult, requiring nursery workers during a session to be unrelated, and mandating that children never be left unsupervised. With regard to transportation, churches should avoid using 15-passenger vans. In 2002, the National Transportation Safety Board (NTSB) released a safety report finding that 15-passenger vans are involved in a higher rate of single-vehicle accidents involving rollovers than are other passenger vehicles. Vans do not meet federal school bus safety standards, and churches and other entities are prohibited by law from transporting preprimary, primary, or secondary school students to or from school, school-related activities, or child care in any vehicle that does not meet those standards. Finally, claims related to the misuse of funds can usually be prevented by implementing a system of checks and balances, such as by requiring two signatures on checks and having separate staff members oversee receipts and disbursements.
Obviously, this is a non-exhaustive list of the possible claims churches face and potential safeguards against them, but it serves to illustrate the relatively simple and common sense precautions that can help protect churches from legal liability.
Incorporate. The importance of church incorporation has been addressed in previous articles. [See “Why Should a Church Incorporate?” Focus, Winter 2008. See also “The Incorporation Process,” Focus, Spring 2009.] The law treats an incorporated church as a legal entity. Church members who do not actually participate in the wrongdoing that leads to a claim are generally shielded from the liabilities of an incorporated church in much the same way shareholders of publicly traded corporations are protected from corporate obligations. However, the law treats an unincorporated church as an unincorporated association, meaning that any individual member may be held liable for a judgment entered against the church. Incorporation is a relatively simple and inexpensive way to protect innocent church members from liability.
Carry Adequate Insurance. Liability insurance is the first line of defense against many claims. Churches should make sure they have all necessary policies and that those policies provide adequate limits of coverage. When a covered claim is made against an insured church, the insurance company that issued the policy typically assumes two duties to the church: the duty to defend the church from the claim and the duty to indemnify (i.e. reimburse) the church for the amount of any judgment or settlement up to the limit of coverage. In discharging the duty to defend, the insurance company usually retains an attorney to defend the church and pays the attorney’s fees and related litigation costs and expenses, which can be considerable.
Seek Professional Advice. Like other entities and organizations, churches should seek legal and risk prevention advice from qualified professionals. All churches need a good insurance agent who is experienced in working with churches. Once an agent is selected, he or she should be made aware of all of the church’s activities and ministries because some policies provide no or limited coverage for certain activities. For example, many standard policies do not provide coverage for sexual misconduct claims, while others do so on a limited basis. Churches should also develop a relationship with a knowledgeable attorney, preferably one experienced in handling claims against churches and other charities. Churches often need immediate advice when potential claims surface and searching for an attorney can be time consuming.
Respond Quickly. When a church leader learns of an event that could lead to a claim, he or she must react quickly. In many circumstances, especially those involving sexual misconduct, the appropriate authorities must be notified immediately. The church’s insurance carrier should be contacted as soon as possible following the procedure specified in the insurance policy. Insurance policies often exclude coverage for claims when the insurance company is not promptly notified, particularly when the delay prejudices the defense of the claim. Churches should fully cooperate with their insurance company in the investigation and defense of the claim.
Learn and Adapt. Last but not least, churches must be able and willing to adapt to changing circumstances and conditions, learn from their mistakes, and take remedial measures to ensure that the events that gave rise to a claim are not repeated. Mistakes are often unavoidable, but the lessons learned should never be forgotten.
While a church can never fully eliminate the risk of legal claims, following these and other common sense rules can lessen that risk. In coming issues, we will focus on some of the more common legal concerns churches face.
Robert T. Strickland and Matthew G. Gerrald
Tom Strickland has practiced law with the Columbia firm of Barnes, Alford, Stork & Johnson, LLP since 1984. He has represented and advised many churches and religious organizations throughout South Carolina on a wide range of issues. He also serves as Chairman of the Richland/Lexington Disabilities and Special Needs Board.
Matt Gerrald is an attorney with the Columbia firm of Barnes, Alford, Stork & Johnson, LLP. He is a member of the Christian Legal Society and has been commissioned as a Blackstone Fellow by the Alliance Defense Fund.