Archdiocese Outlines $75 Million Settlement, Costing Insurers Almost $52 Million

Insurance Newsnet [Portland OR]
December 19, 2006

The Archdiocese of Portland late Monday revealed details of a $75 million plan to pay off more than 150 priest sex-abuse accusers and get out of bankruptcy.

Insurance companies will pitch in nearly $52 million. The rest of the money will come from assets controlled by the archdiocese -- other than parishes and schools.

The settlement also sets up a $20 million fund for those who came forward after a deadline to file a claim in the bankruptcy, as well as for accusers who have not yet come forward.

The 100-plus-page settlement plan was filed just before 11 p.m. Monday in U.S. Bankruptcy Court in Portland.

The archdiocese filed for bankruptcy protection in July 2004 on the morning that a $135 million priest-abuse lawsuit was scheduled to go to trial. Although it had spent $56 million settling more than 150 claims during the previous 50 years, the archdiocese faced dozens more lawsuits.

The Portland Archdiocese was the first Roman Catholic archdiocese to seek bankruptcy protection from sex-abuse litigation. Churches in Tucson, Ariz.; Spokane; and Davenport, Iowa, have followed.

Two years of bankruptcy wrangling resolved little between the Portland Archdiocese and accusers of sexual abuse by priests as the two sides battled over how much the archdiocese was worth.

A hotly contested issue was ownership of a handful of Catholic schools and 124 parishes in Western Oregon. The archdiocese said it held them in trust and could not sell them to settle abuse lawsuits. Accusers said the church owned the buildings and bank accounts.

U.S. Bankruptcy Judge Elizabeth L. Perris had largely ruled in favor of the accusers, but her decision was on appeal. A federal judge in Spokane had ruled for the diocese there.

The settlement resolved that dispute without answering the ownership question. Last week, one of the mediators who helped forge the settlement said no schools or parishes would be used as collateral for settlements.

At this point, about 150 cases are part of the settlement. Twenty remain, although a mediator expressed optimism that all would eventually accept a deal. Still, claimants who do not settle have the right to a trial by jury.

Earlier this year, Perris said she would allow cases to go to trial to give the two sides an idea what it would take to reach a settlement. Then in August, she appointed U.S. District Judge Michael Hogan and Lane County Circuit Judge Lyle Velure as mediators.

Hogan and Velure, known for their hard-knuckled style, brokered the settlement during more than three months of secret talks. Hogan said last week that the gag order he issued during the negotiations still prohibits parties from talking publicly about the plan until it is affirmed, probably sometime next spring.

Erin K. Olson, an attorney representing more than two dozen sex-abuse accusers, has appealed the gag order to the 9th U.S. Circuit Court of Appeals, saying it violated the free speech rights of her clients.

The deal comes on the heels of a $60 million agreement announced Dec. 1 between the Archdiocese of Los Angeles and 45 sex-abuse claimants.

Other large settlements include $100 million paid to 87 claimants last year by the Diocese of Orange in Orange County, Calif., and $85 million paid to 552 claimants in 2003 by the Archdiocese of Boston.

Steve Woodward of The Oregonian contributed to this report.


Any original material on these pages is copyright © 2004. Reproduce freely with attribution.