Lawyers to Get Half of Church Abuse Cash
Settlement - the Spokane Diocese's Bankruptcy Plan Affects the Proposed Deal

By John K. Wiley
Oregon Live [Spokane WA]
February 4, 2007

About half of a proposed $48 million settlement would go to victims of clergy sexual abuse while lawyers get the rest, according to a bankruptcy plan filed by the Catholic Diocese of Spokane.

The diocese's 92-page disclosure statement in U.S. Bankruptcy Court said bankruptcy lawyers are owed about $7 million, leaving a $41 million pool to pay victims and their lawyers.

The diocese, led by Bishop William Skylstad, president of the U.S. Conference of Catholic Bishops, is one of four in the United States, including Portland, that have filed for bankruptcy protection in the face of a growing number of lawsuits and claims of sexual abuse.

Although the diocese plans to make available $48 million by the end of this year in the form of promissory notes, claimants will receive far less than that, said Michael Ross, an abuse victim who sued the diocese.

That's because individuals who retained lawyers to represent them in the bankruptcy will owe their attorneys 40 percent to 50 percent of whatever settlement portion they receive, Ross said.

When lawyer fees and other expenses are deducted, people who made claims figure to split about $22 million, Ross said. He said most victims have not seen the diocese's proposal.

"We didn't ask for this bankruptcy. This was not our idea. It was Bishop Skylstad's idea," he said. "We wanted to go to court. Bishop Skylstad changed the game plan" by filing for bankruptcy protection.

For the first time, the court documents detail the scope of abuse by priests and nuns in the diocese, dating back as far as the 1940s, but mostly in the 1960s and 1970s.

The court documents show that 208 individual sex abuse claims were filed against the diocese, but 24 of those were duplicates or disallowed by the court.

The diocese has reached settlements with 36 victims and one claim was filed for potential victims who make claims in the future. The disclosure statement said $1 million is set aside for future claims.

That leaves about 147 claims that qualify for payments under the diocese's settlement offer, the documents indicated.

If U.S. Bankruptcy Judge Patricia Williams approves the reorganization plan, the victims would vote whether to accept or reject it. They would also vote on which of five payment plans they prefer.

In its disclosure statement, the diocese urged victims to vote for the reorganization plan.

Molly Harding, a leader of the Spokane chapter of SNAP, a national advocacy and support group of people abused by clergy, said victims are angry that so much of the settlement pool is going to pay lawyers.

But people who sued the church did so more to find out about the conduct of church officials who failed to act on reports of abuse than to get compensation, she said.

"They filed it to get to the truth and have open and transparent disclosure. That hasn't happened here," she said.

A mediated settlement reached last month calls for Skylstad to publicly support eliminating statutes of limitations on child sex crimes and apologize to victims and their families.

But SNAP complains the settlement does not require Skylstad to make public diocesan records about abusive priests.

"We'd like something separate. We would like to see the diocese, on its own volition, turn over all documents and start over," said Ross, who also is a Spokane SNAP leader. "So they can say, 'We did come clean and we are interested in transparent and full disclosure,' which Bishop Skylstad has promised us from the start.

"It has happened in other dioceses," he said. "There's no reason that can't happen here."

Shawn Cross, a Spokane lawyer representing the diocese, said bankruptcy laws prohibit lawyers from advocating a particular plan. But he said the settlement reached in mediation was approved by lawyers representing all sides.

The statement said the diocese already has reached settlements totaling $614,800 with 29 people, while another seven settled tort claims for a total of about $1.13 million.

The disclosure statement is the subject of a March 8 hearing, while Williams has scheduled an April 24-25 hearing to confirm the diocese's reorganization plan, a crucial step for ending the case that has stretched over two years.

Lawyers for the diocese filed for Chapter 11 protection in December 2004.

The settlement money would come from nearly $20 million in insurance settlements, $18 million from the sale of the bishop's office building and other assets and contributions from other Catholic entities; and $10 million from the diocese's 82 parishes.

The diocese serves about 90,000 Catholics in 13 Eastern Washington counties.


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