BUFFALO (NY)
Buffalo News [Buffalo NY]
October 20, 2023
By Jay Tokasz
Rory Lott was just 8 years old when a priest allegedly molested him as he laid in a hospital bed with injuries from a car accident.
Lott healed from his physical injuries long ago, but he said he’s never been able to escape the mental torment over the abuse in 1966.
“It just changed me. I can’t describe it,” said Lott. “That scar is still there. It’s been with me over 50 years.”
Lott was also among an estimated 850 people who filed abuse claims against the Buffalo Diocese in its Chapter 11 bankruptcy case.
More than three years since the claims were filed, none of the abuse victims has been compensated as the diocese, its parishes and insurance carriers attempt to negotiate a settlement with abuse victims.
“I just want this over,” Lott said. “Everything’s at a standstill.”
All parties in the mediated talks are under a confidentiality agreement, so it’s difficult to know how far apart they are. But court papers and a recent court hearing suggest that insurance coverage continues to be a major sticking point.
The Official Committee of Unsecured Creditors, which represents childhood sex abuse survivors, is seeking a court order to force insurers to turn over their records of policies issued for the diocese prior to 1972.
The diocese’s lawyers have maintained from the start of bankruptcy proceedings in 2020 that insurance coverage would be a major asset in a negotiated settlement to pay an estimated 850 abuse claims. The diocese filed for bankruptcy protection after being named as a defendant in more than 200 Child Victims Act lawsuits.
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The diocese has since hired a law firm specializing in insurance and a so-called “insurance archaeology” firm to track down such historical policies. Those archaeology efforts so far have come up short, according to an attorney for the Official Committee of Unsecured Creditors.
The committee now is asking U.S. Bankruptcy Court Judge Carl Bucki to intervene, over the objections of multiple insurance companies.
“At this stage in this case, we can’t mess around anymore. We need this information from the insurers,” said creditors’ committee attorney Brittany M. Michael.
The committee wants the ability to issue subpoenas to at least eight insurance brokers and carriers for a variety of internal documents related to policies and coverages for the Buffalo Diocese.
Lawyers for the diocese said in a recent court hearing that they have no problem with the committee’s request.
But insurance companies argue that such a request would be costly and overly burdensome for minimal gain, while distracting from the ongoing mediated talks.
“Let’s be clear, we’re talking about when Lyndon Johnson was president, JFK, and a little bit of Nixon’s period. This is a very, very, very long time ago,” attorney Tancred V. Schiavoni, who represents Aetna and other insurers, said at a hearing this week.
While the diocese has a pretty comprehensive record of insurance policies after 1973, its policies before then were held in parishes, and those records are far less detailed.
The diocese was able to find handwritten notes about policies in annual operating reports submitted by parishes from those years, although in most cases, no policy number was mentioned, said Schiavoni.
Insurers already ran searches based on the information gleaned from the annual reports, he added.
“And in some cases, we found policies, in which case we produced them, and in other cases we didn’t find anything,” Schiavoni said. “To look, it’s literally like looking for a needle under five haystacks to have a name and no policy number. But we looked. We made a legitimate effort.”
Schiavoni accused the committee of using its broad request for private information from insurers to gain an advantage if litigation resumes in the case. He also suggested that granting such a request would open the door for insurance companies to seek records they need for litigation, if mediation falls through.
“We have things we’d like to know, as you’d guess, information about the claims. It would be useful to have that. We’ve held our fire, so to speak,” said Schiavoni. “This would derail effectively the mediation going forward.”
Unless earlier policies are located, Lott’s case is among many claims that would fall outside the coverage of known policies issued after 1973, potentially limiting the exposure of insurance companies.
In a Child Victims Act lawsuit, Lott said Monsignor Francis Hanna, a chaplain at Emergency Hospital in Buffalo, was the priest who fondled and sodomized him in a hospital room during his recovery from a car accident.
Ordained in 1942, Hanna served in four parishes before his assignment as chaplain at Emergency Hospital from 1955 to 1959 and from 1960 to 1972, according to Official Catholic Directory records. Emergency Hospital, operated for many years by the diocese, was renamed Sheehan Memorial Hospital in 1977. The hospital later was part of the independently run Sheehan Health Network that closed in 2012.
Hanna died in 1996.
Lott grew up near Emergency Hospital and spent a week there after a car accident in 1966.
Lott said he didn’t tell his parents or anyone else about the abuse, until confiding in a counselor many years later.
Attorney Mitch Garabedian said he first notified the Buffalo Diocese about Lott’s case in April 2018. In addition to the bankruptcy claim, Lott filed a Child Victims Act lawsuit against the parishes where Hanna had served prior to being assigned to the hospital, alleging they knew he was a threat to children and were negligent in not preventing the abuse.
Garabedian described Lott as “a courageous survivor who is in this matter for the long haul.”
The diocese has often been at odds with the committee of unsecured creditors over a variety of issues in the bankruptcy proceedings. But during the hearing this week diocese attorney Stephen Donato expressed support for the committee’s request to subpoena insurance records.
Donato said he doesn’t think the committee’s request “is that much of an intrusion” and should have no impact on mediation talks, which are scheduled to resume on Oct. 25.
“The diocese supports the idea of having as much broad, fulsome approach to finding any policies that could assist in the recovery for the survivors in this case,” he said.
Over the summer, the diocese and creditors committee put out a joint plea asking for the public’s help in locating proof of insurance in parishes before 1972.
In a news release, the two sides said they were trying to locate anyone who worked decades ago at an insurance carrier or agency and might know of such historical coverage for the diocese.
Under New York law, coverage may be available even if a copy of the actual policy is never found, the news release noted.
Evidence that a policy was issued can be used to prove coverage. Such evidence might include notes in business records, canceled checks, accounting ledgers or policy numbers or the memories of people who worked for the diocese, parishes or insurance companies or brokers, according to the release.
“We know the Diocese owned property before 1972, and that it would have been insured. The question is what companies insured the Diocese in those years,” Ilan Scharf, an attorney for the committee, said in a statement.
The Buffalo Diocese is under growing pressure to get a deal with child sex abuse survivors following announced settlements this past summer in the Catholic diocese bankruptcy cases in Rochester and Syracuse.
The Syracuse Diocese announced in July abuse victims would get $50 million in diocese funds, $45 million from parishes and $5 million from other Catholic entities. That does not include any money from insurance companies, which the diocese and the creditors committee said they will pursue later.
In Rochester, the diocese agreed to pay $55 million in diocese and parish funds, while also conveying its insurance coverage rights to a settlement trust on behalf of 475 sex abuse claimants. Subsequent deals with four insurers brought the negotiated total up to $126 million for abuse survivors.
In both instances, the settlements, if approved by the court, mean those dioceses and their parishes and schools will no longer have to defend against Child Victims Act lawsuits.