Bankruptcy Compensation Won't Match Jury Awards
By John Finnerty
While the move by the Harrisburg Catholic Diocese to declare bankruptcy puts the brakes on civil lawsuits, it opens the door for other victims to seek compensation regardless of the state’s statute of limitations. The diocese has already paid out almost $13 million to 111 victims of child sexual abuse, but officials on Wednesday said church officials believe there may be another 200 victims who could seek compensation through the bankruptcy proceeding. Since the intent of the bankruptcy is to resolve all possible claims, it’s likely that the proceeding will allow victims to seek compensation even if the state doesn’t open a window to allow lawsuits for victims whose cases are beyond the state’s statute of limitations, said Richard Serbin, an attorney who has represented victims in several high-profile church abuse cases. “Victims will be compensated,” said Serbin. “The question is: ‘How much?’” The diocese told the court it has estimated its potential liabilities between $50 million and $100 million, with assets of less than $10 million. It listed creditors that include a $30 million loan from the Pennsylvania Economic Development Financing Authority and 12 blacked-out names that were represented by lawyers. All survivors of priest abuse in the Harrisburg Diocese are encouraged to submit a claim from the fund created as part of the bankruptcy process can do so by calling (866) 977-0992 or by visiting https://dm.epiq11.com/case/rcdh/info, said Rachel Bryson, a spokeswoman with the Harrisburg Diocese. Serbin said that regardless of the Harrisburg bankruptcy, the state should still open a window for lawsuits. For one thing, it’s not clear that all the state’s dioceses plan to enter bankruptcy, he said. Erie Bishop Lawrence Persico released a statement Wednesday saying that diocese does not intend to declare bankruptcy. Serbin represents two abuse survivors who have filed lawsuits against the Harrisburg Diocese and he has filed notices indicating he intends to file lawsuits on behalf of four others. Among his clients is Donald Asbee, a former Milton resident, who has sued the diocese over alleged abuse by two priests at St. Joseph Church in Milton in the 1960s. Asbee filed the lawsuit after rejecting an offer of $176,800 made through the diocese’s compensation fund. Serbin said Asbee likely could have gotten a larger award if his case had gone to trial before a jury than he stands to get from either the compensation fund or the bankruptcy proceeding. Serbin represented the victim who received the largest award ever given to a victim of priest sexual abuse in a civil lawsuit in Pennsylvania. In that case, a jury awarded the victim $2.57 million, including $800,000 in interest after the church refused to pay the initial award for years. Based on the church’s estimates in their legal filings that there are about 200 potential victims and $100 million in potential liability, the diocese is estimating that the average compensation per victim through the bankruptcy would be no more than an average of $500,000 per victim. The diocese joins at least 20 others across the United States in seeking protection from creditors through the federal bankruptcy system. It is the first diocese in Pennsylvania to take such a step. Some of the settlements from prior diocesan bankruptcies include: •In 2007, the Diocese of Spokane, (Wash.,) reached a $48 million settlement in bankruptcy court that provided compensation for about 150 people, who were due to receive payments ranging from $15,000 to $1.5 million, depending on the extent of the abuse, according to Bishopaccountability.org, a website tracking abuse lawsuits targeting the church. •In 2015, the Archdiocese of Milwaukee reached a $21 million settlement in bankruptcy court to settle claims from 330 victims. •In 2018, the Diocese of St. Paul-Minneapolis reached a $210 million settlement in bankruptcy court to pay claims to 400 abuse victims, according to the National Catholic Reporter. Victims there were due a minimum of $50,000 each. Serbin is also the attorney representing Renee Rice, a Blair County woman who alleges she was molested by a priest beginning in the 1970s. A Blair County judge threw out Rice’s lawsuit because the statute of limitations in her case had expired. But last summer, the state Superior Court revived her lawsuit, based on the assertion that Rice hadn’t been aware of the church’s role in covering up for her predator until the grand jury reports examining the Catholic Church were released. The Rice lawsuit, along with moves in neighboring states to open windows for lawsuits, were factors that diocesan officials considered when making the move to declare bankruptcy, Matt Haverstick, an attorney for the Harrisburg diocese told reporters Wednesday. “A lot of organizations, this diocese included, don’t have the capacity to absorb potentially massive liability like the Rice case allows for a diocese like this to have,” Haverstick said. The state Supreme Court has not yet weighed in on the Rice case, court records show. The size of the potential financial award isn’t the only reason that it would be better for victims to be allowed to sue in civil court, Serbin said. A civil trial would provide a public venue to disclose the wrongdoing of church leaders. There would be no similarly transparent opportunity provided in bankruptcy proceedings. And if a case goes through civil court, lawyers will have the chance to use discovery rules to gain additional access to the church’s secret archives to reveal the extent of the cover-up and who was involved, he said. Haverstick said the bankruptcy proceeding is the fairest path forward because it will allow the church to continue to operate and do charitable works while also providing a mechanism to compensate victims. “It’s the most responsible thing we can do for victims and survivors and to the people who are supported by diocesan charities and for all the faithful in this diocese,” Haverstick said. “It’s an attempt to try to do right by everybody, not short-shrifting one group over another group.”
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