Warning of bankruptcy, Albany diocese proposes abuse settlement plan

Times Union [Albany NY]

June 30, 2022

By Brendan J. Lyons

Diocese proposes court-supervised effort to compensate more than 400 victims of sexual abuse who have filed claims.

The city’s Roman Catholic Diocese on Wednesday announced an initial proposal to use a court-supervised mediation plan to compensate the more than 400 victims of sexual abuse who have filed claims against the diocese, individual clergy and others under the state Child Victims Act.

The proposal, which must be approved by a state Supreme Court justice, would seek to “maximize the monetary recovery for victim/survivors on a fair and equitable basis and to accelerate the payments,” according to a release distributed to dozens of attorneys on behalf of the diocese by Michael L. Costello, the diocese’s longtime attorney.

“The diocese seeks to avoid the costly expenses and prolonged delays that would otherwise be associated with continued litigation with plaintiffs and their counsel and insurers and their counsel or a Chapter 11 bankruptcy reorganization case,” the statement reads.

The statement adds that under the proposal, representatives of the diocese, as well as insurers and alleged victims of sexual abuse, would “participate in a mediation under the supervision of an agreed neutral mediator for the purpose of … creating a fund based upon negotiated contributions of the diocese, its affiliates, and insurers; determining and paying victim/survivor claims; and establishing protocols and remediation procedures to redress allegations of and prevent abuse.”

In a separate statement released Wednesday, Bishop Edward Scharfenberger, who took over leadership of the 14-county Albany diocese in 2014, said that “two divergent courses of action are shaping up in the diocese of Albany. One is the path of litigation; the other is to file for bankruptcy. … In either scenario, the amount of funds available to be disbursed to survivors is the same.”https://2a4d0c02ac2247df754db51da838b44d.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

“While I will continue to do all in my power to assist and accompany survivors and loved ones in recovery, including in their spiritual healing, I understand that my efforts are naturally difficult to trust,” Scharfenberger said in the letter. “It will be hard for many to believe that I am acting or speaking from my heart, or that what I do or say is credible. I still believe it is worth reaching out to survivors and their loved ones at this juncture to describe a path to justice for all survivors under the (Child Victims Act).”

The state legislation, signed into law in 2019, opened a “lookback window” for previously time-barred civil claims involving sexual abuse of minors. The initial one-year window for filing claims was extended to August 2021 due in part to the interruption in the courts caused by the COVID-19 pandemic. The civil actions filed as a result have led four New York dioceses — including Rochester, Buffalo and Syracuse — to declare bankruptcy.

Scharfenberger said the mediation plan took shape over many months and would ensure that “the greatest portion of the funds will go to survivors, and less for legal and court fees.”

He added that it would also prevent those “who sued first depleting them, leaving less or no funds for those who sued later.”

Neither Costello’s statement nor Scharfenberger’s letter mentions what if any transparency concerning the church’s handling of decades of abuse allegations might accompany its settlement proposal. An appellate court recently rejected the diocese’s efforts to keep secret the psychological treatment records of suspected pedophile priests — a ruling that could affect thousands of Child Victims Act cases across New York and not only in the 14-county Albany diocese.

The appellate panel also upheld state Supreme Court Justice L. Michael Mackey’s decision ordering the diocese to turn over the personnel records of at least 48 priests whom the church determined had been credibly accused of child sexual abuse over a period stretching from 1946 to 1999.

There’s no indication that ruling is connected to the mediation proposal, but it potentially impacts the pre-trial discovery process in hundreds of cases filed against the Albany diocese. It was also significant because there was little legal precedent in child abuse litigation prior to the enactment of the Child Victims Act.

Mallory Allen, an attorney who represents dozens of alleged sexual abuse survivors in Albany and across New York, denounced the proposal as “nothing but a last-ditch effort to avoid transparency and accountability with more false promises of fair compensation.”

“The diocese … has wasted years of time and millions of dollars fighting survivors in court and defending its bishops who allowed children to be sexually abused,” she continued.

Allen added their cases “are not going to go away because of yet another mediation program that is predestined to fail because it is funded by an entity that doesn’t want to be held accountable or pay fair compensation to survivors.”

The appellate division case in Albany was centered on a lawsuit in which the attorneys for an alleged abuse victim sought records outlining the “sexual deviancy” treatment received by the Rev. Edward Pratt and other priests. Pratt is a former vice chancellor who was once ex-Albany Bishop Howard J. Hubbard’s second in command. Hubbard also has been accused of sexually abusing children —  allegations he denies.

The alleged victim in the Pratt case, Michael Harmon, said he was abused in the 1980s by the former vice chancellor, including inside the chancery in a room across the hall from where Hubbard lived. Harmon has said that while the ex-bishop never abused him, Hubbard was aware that the boy would spend multiple nights each week in Pratt’s bedroom. 

The diocese had argued that the psychological treatment records of the priests were subject to patient-physician privileges, but Mackey had ruled that privilege was waived when the priests’ medical records were shared with Hubbard.

At that point, the court ruled, they fell into the realm of business records subject to disclosure to the plaintiffs.

The diocese also had fought against the release of information about alleged victims of suspected abusive priests or others. Attorneys for plaintiffs have argued that information on other alleged victims is critical to their ability to show what the diocese knew about abusive priests — including many who were returned to ministry after receiving treatment only to commit abuse again.