Judge Rejects Camden Diocese’s $87.5M Settlement To Abuse Survivors

Patch [New York City NY]

September 1, 2023

By Josh Bakan, Patch Staff

The Diocese and the attorneys representing survivors of sexual abuse will renegotiate the terms of the agreement.

A federal judge rejected the Camden Diocese’s $87.5 million settlement to sexual-abuse survivors Tuesday, saying it would leave insurance companies on the hook for invalid claims and inflated attorneys’ fees.

The Catholic Diocese of Camden, bankrupted by sexual-abuse lawsuits, agreed last year to compensate more than 360 survivors as it navigates Chapter 11 bankruptcy. The plan called for some insurers to pay $30 million into a trust covering claims and expenses.

However, the Diocese’s insurers expressed concerns that loopholes in the proposal could leave them paying more than $30 million. In the coming weeks, the Diocese and the abuse survivors’ attorneys will renegotiate the settlement.

Attorneys representing the survivors said they respect the decision from Bankruptcy Judge Jerrold Poslusny Jr. and criticized the insurers.

“The Diocese paid its insurance companies millions of dollars in premiums over the years, but those same companies have turned their backs on this Diocese and are refusing to help cover its losses,” said Attorney Jay Mascolo, of Rebenack Aronow Mascolo LLP. “Despite its insurance companies acting in bad faith, the Diocese has done the right thing and has offered $87.5 million to compensate survivors.”

Poslusny didn’t agree with all of the insurers’ criticisms. But he singled out a “quick pay” option in which claimants could receive at least $2,500 through the filing of a nine-page questionnaire. The judge also determined that abuse plaintiffs would have too much influence over the so-called neutral third party who would value each sex-abuse claim.

Ultimately, Poslusny found the Camden Diocese’s plan lacked a mechanism for weeding out fraudulent claims.

“The court agrees because the neutral can directly impact the rights of insurers, it must be independent,” Poslusny said in the decision.

The Camden Diocese, which consists of parishes throughout South Jersey, intends to revise the plan as soon as possible.

“The Diocese remains hopeful that it will expeditiously exit the Chapter 11 process based on the roadmap provided through Judge Poslusny’s opinion,” Bishop Dennis Sullivan said in a statement. “Throughout this process, the Diocese has negotiated with survivors of abuse and all other parties in the Chapter 11 case.”

In February 2019, all Catholic Dioceses in New Jersey released the names of clergy who have been credibly accused of sexually abusing children since 1940. Fifty-seven of the 188 clergy listed were based in the Camden Diocese.

Several months later, the state passed legislation opening a two-year window that suspended the statute of limitation for civil claims concerning child sexual abuse.

The Camden Diocese filed for bankruptcy in October 2020, citing civil liability from abuse settlements and financial difficulties arising from the COVID-19 pandemic.

The Diocese serves Camden, Cape May, Cumberland, Gloucester and Salem counties.