Milwaukee archdiocese filing includes more abuse victims in compensation plan

By Marie Rohde
National Catholic Reporter
August 25, 2015


Compared to preliminary reports, more sexual abuse victims will be compensated under the formal reorganization plan filed in bankruptcy court late Monday night by the Milwaukee archdiocese. But, too many are still excluded, according to the chairman of the creditors committee who said he is optimistic that the plan is still evolving.

According to the 103-page plan supplemented by nearly 300 pages of documents, about 330 victims of sexual abuse by clergy will receive more than $21 million. The plan also creates a $500,000 fund to provide therapy for all victims, including those who may come forward later. Each of the archdiocese’s 199 parishes is being assessed $2,500 to pay for it.

A hearing to confirm the plan is scheduled to begin Nov. 8.

While 33 victims were added to categories of those who will receive some payment, the creditors committee wants more included. Among those included are victims who had lawsuits dismissed in state court in the 1990s after the state Supreme Court found that the archdiocese could not be sued for negligence. The archdiocese filed for bankruptcy almost five years ago just as a number of other cases were about to go to trial after the same court said the church could be sued for fraud for not removing known pedophiles.

After the archdiocese released an outline of the settlement plan earlier this month, Charles Linneman, an abuse claimant and the chairman of the creditors committee, protested that the archdiocese statement did not match his understanding of the agreement. He told NCR he felt “duped” because some 70 claims were excluded while it was his understanding that they would receive something.

Monday night, Linneman said he was heartened by the archdiocese’s willingness to continue to adjust the plan and that he thinks an ongoing effort is needed. “There are things that we believe the archdiocese is making an effort to work with us on and resolve,” he said.

A key issue on the table is a large number of claims that the archdiocese asserts are unsubstantiated because the survivor could not name the priest. It is unclear exactly how many are in this group, but Linneman said there are about 30 more he wants added to the list of those who will receive something.

“These people know when they were abused and where it occurred,” Linneman said. “I don’t think any effort was put into tracking down the priest who [would have at that time been] at the church or school.” This might have revealed multiple complaints against a priest, Linneman said.

He said that others made claims of abuse against a priest but the archdiocese found them unsubstantiated because there were no other complaints against the priest. The archdiocese, Linneman said, compared the list of claims to the list of known offenders. Linneman said he looked at the “unsubstantiated” claims and found a number that named the same priests who were not on the list of known offenders.

“The number of [priests] accused but not named is in the double digits, between 10 and 30,” Linneman said. “I’m getting a lot of calls saying that the names of all those accused should be released.”

Neither the spokesman for the archdiocese nor its lawyer responded to email requests for comment Monday night.

The settlement asserts that 99 percent of the priests accused of abuse are no longer in the ministry. The vast majority — 70 percent — are dead; 20 percent have been laicized; 4 percent are restricted, 3 percent have retired and 2 percent left the ministry. Most of the complaints date back decades.

The plan is silent on the remaining 1 percent of priests who are still in the ministry, Linneman said.

The plan filed Monday, Aug. 24 adds six more victims to the group of 330 who will receive the largest settlements. Most are represented by lawyers who handle cases in state court and receive about 40 percent of any settlement. Those victims, would receive about $40,000 on average.

A total of 119 will receive $2,000 settlements if they agree to drop their legal claims. Originally, the archdiocese had deemed this group ineligible because their claims were unsubstantiated, but the creditors committee insisted they receive something, Linneman said.

Another 124 are in a category that will receive no monetary award. Linneman said he is not disputing those who received settlements earlier — many of them larger than what the claimants will receive in the bankruptcy — but some should be eligible for compensation.

The archdiocese also proposes a reserve fund of $250,000 for payments to people who were abused but did not file claims. They have six years from the date of the confirmation to file.

Already the archdiocese has relented on who is eligible for payments and how much will be placed in trust for victims. The archdiocese has steadfastly maintained that while it is not disputing the veracity of the claims, none of the legal claims are valid. In the first settlement proposal, the archdiocese offered $4 million to be shared by only 128 of the victims.

All are eligible for therapy paid for by a $500,000 fund established by a $2,500 assessment made on each of the 199 parishes in the archdiocese.

Victims who dispute either the category they were placed in or their being deemed ineligible for any compensation may contact the judge, Susan V. Kelley, who will consider their pleas at a hearing at 9:30 a.m. Sept. 30.

The settlement in summary
The total amount of the settlement for victims:
  • $21.25 million plus a possible $284,500 if an insurance claim is approved
  • $500,000 for therapy funded by a parish assessment
How it will be divided:
  • Currently 119 victims of priests not on the list of substantiated abusers or persons abused by a religious order/lay employee “working at an entity that is not a Catholic entity” will receive $2,000 each.
  • A $250,000 reserve fund for those who have not come forward but may in the future
  • The remainder will go to the 336 victims. More may be added to this category later.
  • All claimants, even those who receive no financial award, may be eligible for therapy.
Where the money is from:
  • $11 million from insurance settlements
  • A claim against an insolvent insurance company for $569,000
  • The Cemetery Trust Fund will contribute $16 million: $5 million for past cemetery care expense, $8 million contribution to settle pending litigation and a $3 million loan.
  • $1.4 million of the approximately $2.8 million currently in the St. Aemilian Trust, which was established for welfare, treatment and rehabilitation services for orphans and other children
Legal fees:

Total: $19,396,712 plus

  • Lawyers for the archdiocese have billed $10,422,313 of which $3,400,045 has not been paid.
  • Bankruptcy lawyers for the creditors $7,849,531, $2,661,817 unpaid to date
  • Other professional fees totaling $1,124,869 of which $305,436 has not been paid

The figures do not include about $4 million paid to represent the Cemetery Trust Fund in litigation that grew out of the bankruptcy.

If the claimants do not vote to approve the plan, the archdiocese is asking Kelley to approve it anyway, a move called a cram down. The alternative would be what is known as Chapter 7 bankruptcy, a procedure that would lead to the liquidation of all assets. In the corporate world, that would put a corporation out of business; none of the other dioceses have moved to Chapter 7 bankruptcy.

The results would be dire, the archdiocese argued.

The archdiocese argued in its plan that if the much disputed Cemetery Trust Fund — some $60 million that was transferred from the general coffers to the trust to cover the perpetual care of nine cemeteries owned by the archdiocese — were liquidated to pay debts, the cemetery trust would become a claimant, and the cost of perpetual care exceeds $246 million.

For the first time, the archdiocese acknowledged that it has already spent $4 million on litigation over the trust fund, and that if the settlement is not reached, an appeal to the U.S. Supreme Court could proceed at a cost of an additional $12 million and that the Wisconsin Attorney General could be compelled to intervene to fulfill his obligation to protect charitable trusts. “That appeal will be expensive, and if the Cemetery Trust is successful, no proceeds would be available to creditors,” according to the document.

The some $11 million in insurance settlements would be lost and could not be used to compensate victims, the archdiocese argued, and there would be no money for the parish-funded therapy fund.

“With declining church attendance and the impact of the sex abuse scandals, there is some concern that the Reorganized Debtor will be able to maintain that level of charitable giving that it has received historically,” the archdiocese said in its plan.

Already the archdiocese has cut 40 percent of its staff, and income is projected to be level. The archdiocese projects that for the next few years it will just break even financially, according to the document.

Linneman said he believes the plan — if some of the changes he has proposed are made — should be approved.

“Given the circumstances, we’re getting the best we could get,” Linneman said. “Compared to a cram down plan, it’s better. Compared to other bankruptcies in the country or what we could get if we were able to go to court, it’s much worse.”

Besides victims of abuse, the archdiocese has a number of other creditors, many considered “priority claims” — those with liens against debtor owned property, salaries, wages, taxes and contribution to employee benefit plays. Those priority claims will be paid in full and include money borrowed from a bank as a mortgage on the archdiocesan headquarters; priest retiree medical and pension plans; the cemeteries worker pension plan; and the lay employee pension plan.

Also included in this is a $246,433,002 claim for the perpetual care of nine cemeteries. Another group of claims amounting to $3.85 million, which were not individually delineated, will receive the amount of the claim or $5,000, whichever is less.


Any original material on these pages is copyright © 2004. Reproduce freely with attribution.