Democrat and Chronicle [Rochester NY]
June 11, 2021
By Sean Lahman
The Diocese of Rochester has asked a federal judge to approve a $35 million settlement agreement with its insurers to help pay survivors of sexual abuse.
In a statement issued Friday afternoon, the diocese said the proposed agreement was with Lloyd’s of London and Interstate Fire and Casuality, who are among the major insurers involved in its bankruptcy case.
“We believe this settlement, if approved, is a significant step forward in our goal of achieving a fair and equitable reorganization plan — the vast majority of which will be funded by our insurers — that will compensate the survivors of sexual abuse who have filed claims in our Chapter 11 case,” the statement said.
A hearing has been scheduled for July 9 with U.S. Bankruptcy Judge Paul R. Warren.
The diocese filed for Chapter 11 bankruptcy protection in September 2019, saying it could not afford to pay the compensation being demanded in a flood of new civil suits alleging sexual abuse by its priests in past decades.
Roughly 475 claims were filed as part of the bankruptcy case, according to court records.
Rochester was the 20th American Catholic diocese to follow this path, all of them driven there largely by litigation over sexual abuse. Seven other dioceses have filed for Chapter 11 protection since Rochester, including the dioceses in Buffalo, Syracuse and Rockville Centre.
The announcement by the diocese that it was seeking for approval of a settlement with its insurers comes two days after a group of survivors asked the judge to let their cases be heard in state court, escaping a bankruptcy progress that they argue had stalled despite attempts at mediation.
“While the funding provided under this settlement is only a portion of the eventual “Survivors Fund” to be established to settle those claims, it is a significant and substantial one,” the diocese statement said. “The agreement seeks to overcome a halt in the mediation, and, if approved, will avoid further litigation between the Diocese and these specific insurers — legal proceedings that would be quite costly, reduce available funds for survivors and perhaps delay by years the conclusion of this process.”
In court papers, attorneys for 20 of the abuse survivors said the sides had reached an impasse during what it described as “months of halting mediations.”
“The Diocese and its insurers have failed to offer reasonable compensation to Sexual Abuse Claimants through mediation,” they argue in court papers.
Clearly, the diocese and its claimants have different opinions of what would constitute a reasonable amount of money to compensate the survivors who say they suffered for years after being sexually abused as children by priests, nuns, teachers or other church employees.
“The Diocese believes that continued dialogue and negotiation among the Diocese, its insurers and the Creditors Committee that is guided by reasonable and realistic expectations on the part of all concerned and a dedication to swift and just resolution for survivors is the best and proper course to benefit survivors,” the statement said.
Attorneys for survivors have suggested that the bankruptcy process has just presented survivors with another roadblock rather than moving these cases towards a conclusion.
“Historically, Catholic dioceses have used Chapter 11 bankruptcy as a shield to stop litigation and prevent jury trials, allowing the institution to continue business uninterrupted while maintaining its secrets, hiding assets, and silencing survivors,” said attorney Jeffrey Anderson, whose firm represents roughly 170 survivors in the diocese’s bankruptcy case.
A decision about the amount of money the diocese’s insurers would contribute to the settlement survivors is one of the major hurdles in the bankruptcy process, but likely not the last one. Still at issue is how much the diocese itself will have to contribute and the impact on individual parishes.
“We hope for the Court’s approval and we pray this settlement will be a catalyst for fruitful dialogue and progress in negotiations among the remaining concerned parties in the case,” the diocese said. “We are committed to all reasonable efforts to bring this Chapter 11 case to a conclusion for the sake of survivors and the continued mission of the Diocese of Rochester.”