Covington Diocese, Insurance Carriers Announce Settlement in Federal Case

By Brett Barrouquere
Associated Press, carried in Kentucky.com
January 9, 2006

http://www.kentucky.com/mld/kentucky/news/13585520.htm

[See also Diocese Abuse Suit Settled for $85 Million, by Peter Smith, Courier-Journal (January 10, 2006); Ky. Diocese to Pay Up to $120 Million to Sex-Abuse Victims, By Alan Cooperman, Washington Post (June 4, 2005); and the Doe v. Roman Catholic Diocese of Covington website.

BURLINGTON, Ky. - Attorneys announced a settlement Monday in a federal lawsuit that would lessen the total amount that could be paid out to alleged victims of sexual abuse in the Covington Diocese.

The settlement in the federal case would mean alleged victims of abuse would receive a total of up to $85 million instead of the $120 million first proposed in the state class-action case, attorneys said.

The federal suit was brought by the diocese against its insurers.

The announcement Monday was made during a hearing in Boone County Circuit Court in which a judge heard testimony on whether to accept a proposed settlement in the class-action suit. The suit accuses the diocese of a 50-year cover up of sexual abuse by priests and other employees.

The judge did not immediately issue a ruling in that case.

The diocese had originally agreed to pay up to $120 million to abuse victims, saying it would pay out $40 million and its insurance companies would pay up to $80 million. Stan Chesley, the attorney for the plaintiffs alleging abuse, said the original figure was based on an estimate that 700 to 800 victims would come forward.

Since there were only 361 valid claims - about half that amount estimated - the amount paid by the insurance companies was also cut in half, Chesley said.

The diocese sued its self-insurance plan to force it to contribute its share to the settlement fund.

The proposed $120 million would have made the Covington case the largest such settlement of church-abuse claims in the country. However, the $85 million amount would not be the largest. A larger settlement was reached in 2004 by the Diocese of Orange, Calif.

"This is an example of negotiating and hard bargaining," Chesley said.

The federal settlement in the insurance case calls for Catholic Mutual Insurance to pay $40 million and Fireman's Fund Insurance to pay $5 million, attorneys said Monday.

Catholic Mutual would put $15 million up in cash immediately, then pay the remaining $25 million over a maximum of five years, said Douglas Wyenzer, chief financial officer for Catholic Mutual. The company does not have $40 million immediately available, he said.

"We would be forced to liquidate investments," Wyenzer said.

While they announced the settlement in the state court hearing, no settlement documents had been filed in the federal case as of the conclusion of the state court hearing.

The diocese has already put up $40 million in cash, leaving an initial pool of $55 million available for payments, Chesley said. The goal in both the settlements was to not bankrupt either the diocese or the insurance company, Chesley said.

"Bankruptcy was not an option," Chesley said.

The Boone County court has received confidential forms from 382 people saying they were abused by a priest or other employee of the Covington Diocese. Twenty-one of those claims were rejected, but the rest from that group will be able to submit claims.

Victims would receive awards ranging from $5,000 to $450,000, based on severity of abuse, and those in the highest category would be eligible to apply to a special fund for extraordinary claims.

Three victims, two middle-aged women and a middle-aged man, testified briefly Monday, asking Judge John Potter to approve the settlement, even though it cannot compensate for their emotional turmoil. The names of the three were not released in court.

"It is my opinion that there is no amount of money that can compensate for our loss of innocence or our disappointment in the church," one of the women said.

Father Thomas Doyle, a Roman Catholic priest who has tracked abuse reports since the 1980s, said even though the 361 claims seems like a lot, a minority of victims likely came forward in this case.

"I believe sir, there are individuals out there you will never know about," Doyle said. "They will suffer in silence and shame and no amount of assistance will ever bring them out."

The class-action settlement comes on top of 58 cases settled by the diocese with other people who had claims of abuse, said Carrie Huff, an attorney for the diocese. The diocese paid $10.8 million to settle those cases, Huff said.

"This money is a significant sacrifice for the diocese," Huff said of the settlements. "We realize money can't fix this problem."