Who's Paying for Clergy Abuse Settlements?
By Kody Leibowitz
November 15, 2016
It was reported for years that the Diocese of Altoona-Johnstown paid for settlements and fees involving alleged clergy abuse through insurance and investment profits.
The Associated Press reported in May 2004 that "the diocese said it will continue discussions with various insurance companies to recover the cost" of a 21-person settlement that cost the diocese millions.
"To provide for immediate payment, however, it will use the surplus from the Mutual Aid Plan, the deposit and loan fund for parish savings accounts," wrote the AP. "None of the parish deposits [or] interests will be use, just the investment profits that are owned by the diocese, according to the diocese' news release."
The release came in 2004 after the diocese settled with 21 people who claimed sexual abuse at the hands of clergy for $3.7 million.
The diocese acknowledged "there were minors who have been harmed and are entitled to be compensated," in a released statement.
"The settlement," the statement at the time read reported on by the AP, "reflects our deep desire both to aid the healing of victims of clergy abuse and to not incur the inordinate financial burden of lengthy litigation."
Since the release of the Diocese of Altoona-Johnstown grand jury report in March, 6 News Investigates began digging into past settlements of our local catholic church and looking into how the catholic church covers costs for child sex abuse allegations.
'The hardest thing is to come forward'
Paul Claar was a plaintiff in the 2004 settlement. He says he is a survivor of clergy sex abuse.
"For so long you think it's your fault. Is it something that I did? When in fact, you're being groomed and you're being molested," said Claar. "The hardest thing is to come forward."
Claar came out publicly more than a decade ago, accusing Fr. Bernard Grattan of molesting him in the late 1970s into the early 1980s.
Claar joined a lawsuit in the early 2000s with 20 others, suing Grattan, other priests, a school teacher, the diocese and diocesan leaders for alleged clergy abuse dating back to the 1950s.
"I was never after the money," said Claar. "I was after the exposure that the case would bring in hopes that if anyone else was out there that they would come forward."
The diocese ultimately settled in May 2004 for $3.7 million. It denied liability in the case.
Grattan was never charged, but the diocese laicized him in June 2004. The former Diocese of Altoona-Johnstown clergyman admitted to the abuse in 2015 as seen in grand jury testimony.
The grand jury concluded that the actions of Grattan and others named in the report were criminal.
"However, they cannot be prosecuted at this time," the grand jury wrote in its conclusions and recommendations. "The statute of limitations for many of the loathsome and criminal actions detailed in this report has expired."
6 News Investigates asked Claar who he believed paid for the settlement.
"Actually, it comes from the diocese, but it comes from the people of the diocese," said Claar. "To know or directly think about where it's coming from, I never to this day even gave it much thought."
The diocese filed a lawsuit in 2008 in Allegheny County against its insurance companies to reclaim money in nine of those cases it settled. The lawsuit was reported on by multiple news outlets.
One of the insurance carriers was the Ace Group. Ace is now known as Chubb Limited.
The nine claims, according to the lawsuit, totaled nearly $1.1 million. The diocese demanded Chubb pay more than $763,000.
In a statement to 6 News Investigates, Chubb wrote, "We will not be able to provide any additional information on this as we do not discuss matters that are or were in litigation."
It is unknown exactly how much Chubb paid.
So, what happened to the rest of the money?
The diocese alleged in the lawsuit that "ultimately, the Insureds demanded from ACE and/or ACE INA in excess of $763,268.74 in coverage for the claims; which sum represented the following portions of combined settlements and defense costs in each of the claims, subject to and net of the limits of liability of the INA policies, and net of contributions of settlements received from other entities the money came from the net of the limits of liability and contributions to settlements received by other entities."
6 News Investigates directly asked the Diocese of Altoona-Johnstown multiple times over the last eight months to show where it got the money to pay the victims of abuse. To this day, 6 News still has not been given an answer.
But many familiar with abuse claims and settlements have their opinion on the source of money.
"The parishioners are paying for the abuse," said Shaun Dougherty, a sex-abuse survivor who in recent months has been outspoken against his alleged abuser and the Catholic Church.
"Parishioners who are giving the money into the church every Sunday into the bucket and then it goes into the church," said Rep. Mark Rozzi (D-Berks).
"I'm not sure who's paying for [settlements], but I do know the parishioners put money in the basket every week and I don't know where that money goes," said Rep. Frank Burns (D-Cambria).
Diocese of Greensburg and Archdiocese of Philadelphia.
Without response from the local catholic church, 6 News Investigates reached out to two other Pennsylvania diocese: Diocese of Greensburg and the Archdiocese of Philadelphia. Both faced clergy abuse allegations over the years and both publish their finances online.
Diocese of Greensburg provided us with details on how it pays for clergy abuse claims. All costs -- settlements, counseling fees and legal fees -- are paid from its Self-Insurance Fund. It is funded, in part, by parishes and schools.
A statement was provided by Jerry Zufelt, spokesman for the Diocese of Greensburg:
“The Diocese of Greensburg’s Self-Insurance Fund provides for a wide range of coverages for the diocese, its parishes, schools and affiliated agencies — property; liability; automobile; life; worker’s compensation; long-term disability; health insurance, which includes health, prescription medications, dental and vision; and counseling fees, legal fees and settlements. Funding for the Self-Insurance Fund is derived from the parishes and schools and from charges to the Pastoral Center and Bishop Connare Center budgets.”
The Archdiocese of Philadelphia is very similar. It has a risk-insurance trust.
The trust and the self-insurance fund are not only for clergy abuse settlements, but also a wide-range of coverages, according to Diocese of Greensburg and Archdiocese of Philadelphia.
Ken Gavin, director of communications for the Archdiocese of Philadelphia, said in a statement that the trust "charges premiums to parishes and other archdiocesan-related entities for the insurance coverage that is provided to them. [...]Regarding lawsuits, any disbursed funds for that purpose is covered by the Risk Insurance Trust."
"In connection with the publication of our audited financial statements for the fiscal year ended June 30, 2012 (this publication occurred in July 2013) we disclosed a shortfall of $30.4 million in our insurance fund. Effective July 1, 2014 the Archdiocese of Philadelphia Risk Insurance Trust was created and replaced the insurance fund. During the fiscal year ended June 30, 2014 a portion of the proceeds from our long-term lease and outsources management agreement with StoneMor, LP ($11.6 million) was used to fund this shortfall.
"During the fiscal year ended June 30, 2015 a portion of the proceeds from our transaction with Center Management regarding the Archdiocesan nursing homes ($19.6 million) was used to fund the balance of this shortfall. The Risk Insurance Trust charges premiums to parishes and other Archdiocesan-related entities for the insurance coverage that is provided to them. These premiums are reflected in the financial statements under the caption, “Premium Income from Insurance Programs.”
"The purpose of the Risk Insurance Trust is described in the published audited financial statements, which have been provided to you.
"As to your question regarding lawsuits, any disbursed funds for that purpose is covered by the Risk Insurance Trust."
When asked if parishioners are paying for settlements for child sex abuse allegations, Gavin said, "The information is not tracked in such a manner that I'd be able to answer your remaining query with any definition or specificity."
"The people support everything the church does. Everything comes right from the people," said John Nesbella, a former priest for the Diocese of Altoona-Johnstown, who has been outspoken about his own abuse allegations at the hands of a priest at the diocese.
The Diocese of Altoona-Johnstown again denied our request in November to speak with Bishop Mark Bartchak about who's paying for settlements.
Tony DeGol, a spokesperson for the diocese, said that, "No one could speak on finances and abuse allegations due to the ongoing grand jury investigation."
6 News Investigates received only one response from the diocese when we asked about financials. It was in August from Eric Anderson, a Pittsburgh-based attorney who represents the diocese.
He spoke to us in a phone interview about the 2008 lawsuit.
"I know we didn't get all of [the money the Diocese of Altoona-Johnstown asked for in the 2008 lawsuit]," Anderson said. "I don't know if [the rest of the payment] comes from parishioners. I don't know where it comes from, actually. You would have to talk to the diocese."
Anderson would not do an on-camera interview, because of ongoing litigation involving the diocese.
The Diocese of Greensburg has disclosed more than $667,000 in settlements for clergy abuse since 1951. Forty percent of those payments came in one payment. Zufelt said there has not been a single settlement for clergy abuse in the last five years.
The Diocese of Altoona-Johnstown has disclosed at least $5.3 million in two cases involving clergy abuse since 1994: the Francis Luddy trial and the 21-person settlement. The total does not include how much the diocese paid for alleged clergy abuse involving Brother Stephen Baker, legal fees in any of the cases or potential other settlements.
The Archdiocese of Philadelphia has not disclosed how much it has settled in clergy cases alleging child sex abuse.