Buffalo Diocese bankruptcy case shows more progress, but abuse survivors still wonder when it will end

Jay Tokasz, The Buffalo News, N.Y.Buffalo News

The Buffalo Diocese’s Chapter 11 bankruptcy saga finally appears to be showing some light at the end of the tunnel.

The Catholic Center Buffalo Diocese

The Buffalo Diocese's settlement trust fund has grown to $272.5 million after two insurance carriers agreed to pay $122.5 million.

Two insurers agree to contribute $122M to Buffalo Diocese abuse settlement, upping pot to $272M

Two primary insurers for the Buffalo Diocese have agreed to pay $122.5 million toward settling nearly 900 child sex abuse claims in federal bankruptcy court.

Now more than 5½ years old, the case will likely still end up being the lengthiest bankruptcy proceeding ever for a U.S. Catholic diocese. But a pair of insurance carriers agreeing to pay $122.5 million into a growing settlement trust for child sex abuse victims was a significant step toward the Buffalo Diocese’s goal of exiting bankruptcy with a global settlement that would protect parishes and other related Catholic entities from abuse lawsuits.

In addition, a federal judge last week confirmed the Syracuse Diocese’s $177 million settlement deal with 411 abuse victims, and the Rochester Diocese’s $246 million plan is expected to be confirmed on Friday.

The Buffalo Diocese’s settlement trust now stands at $272.5 million, and the diocese and a committee representing abuse survivors have at least another month to negotiate additional funds from other insurance companies that have yet to settle.

1010535197 abuse victim John Polvino KIRKHAM

John A. Polvino, who says he was molested by a priest when he was a child, is offended that parishioners in Western New York are complaining about parish funds going toward the settlement.

John A. Polvino sees a flicker of light in the deals with the settling insurers, Continental Insurance Co., which will pay $85 million, and Wausau Insurance, which will add $37.5 million. But like many abuse survivors, Polvino has watched the bankruptcy case drag on for so long that he’s not sure if it’s getting closer to a conclusion.

“I just want to see an end to this nonsense,” he said.

Polvino is among several claimants who alleged being molested by the Rev. Donald W. Becker when they were children. He said no amount of money will make up for the harm done to him by the priest in 1975, when Polvino was 13.

The Rev. Donald Becker

The Rev. Donald Becker, who has been accused of sexually abusing children in 30 Child Victims Act lawsuits, was one of 230 priests who worked in the Buffalo Diocese who have been accused of molesting children in the cases. Becker denied molesting children in a 2018 interview.

For 43 years, Polvino kept the abuse to himself, too ashamed to discuss it, until he finally reported it in 2018 and started seeing a therapist.

“There is no closure. I just want to see the deal concluded,” said Polvino.

At the start, lawyers predicted the Buffalo Diocese bankruptcy could take a year to three years to complete. The multiple delays and legal twists and turns have grated on survivors.

“What was going on in the process that made this such a long, cumbersome road for everybody?” he said.

There are some explanations. The Covid-19 pandemic started within weeks of the diocese’s Chapter 11 filing, throwing a wrench into the operations of the courts and legal offices. Then, nearly 900 claims were filed, hundreds more than in any previous diocese bankruptcy case, and some dating back many decades and implicating long-forgotten insurance policies. And finally, a Supreme Court decision that bankruptcy court observers had been waiting on for months upended the process dioceses had used in previous bankruptcies to protect their parishes from liability in sex abuse cases.

Buffalo Diocese cuts 18 jobs to reduce costs, meet terms of $150M sex abuse settlement

The cuts are across several departments and include administrative and administrative support positions in the diocese’s communications, education, development and purchasing offices, among others.

“While it has taken too long, I can see why it happened, because everywhere this case could go wrong in terms of delay, it went wrong,” said attorney Steve Boyd, who represents hundreds of abuse claimants against dioceses in New York State. “And most of that was out of our hands.”

The whole process of working through the bankruptcy was “paralyzed” by the length of time the Supreme Court took to issue its decision in Purdue Pharma, a ruling that forbids releases of liability for nondebtor entities (such as parishes), unless all claimants agree to the releases, Boyd said.

Polvino worries there could be more delays ahead. He’s not certain the diocese and its parish will be able to come up with the $150 million they’ve pledged to the settlement. He’s also concerned some survivors might object to the diocese’s reorganization plan, as in the Archdiocese of New Orleans, which is facing a scenario where it could exit bankruptcy without its parishes being protected from lawsuits.

But Polvino is most bothered by the Catholic parishioners in Western New York complaining about parish funds going toward the settlement.

“Where is their compassion?” asked Polvino. “They’re saying, ‘Yeah, something terrible happened and was wrong, but somebody else should pay for it.’ And that’s offensive.”

Some Catholics have even sued the Buffalo Diocese in state court to prevent parishes from paying into the settlement until the Vatican rules on whether the parishes should be closed. The Vatican could take months or years to make such a determination.

Buffalo Diocese says parishioners' suit over abuse settlement could have 'devastating impact'

A judge heard arguments Tuesday about whether to halt payments from Western New York parishes to the Buffalo Diocese as part of a $150 million deal with victims of clergy sex abuse.

A ruling allowing the case to proceed could scuttle years of mediated settlement negotiations, a diocese lawyer told State Supreme Court Justice John J. DelMonte at a recent hearing.

The parishioners’ court case, said Polvino, “keeps ripping old wounds.”

“It’s just so disheartening that these people have been allowed to delay things by going to court,” he said. “This is an asinine case. I mean these parishes were bound under an agreement in bankruptcy that they would be excluded from litigation. In return, they had to put money up.”

Attorney Paul Barr, who represents several clients with claims against the diocese and has a claim himself, said he sympathizes with Catholics who want to keep their neighborhood churches.

But he also said the state court lawsuit was misguided.

“If these get litigated, the parishes are going to wind up bankrupt anyway,” said Barr. “The individual parishes have incentive to settle these cases, as well, and I think that’s important to understand, even from the parishioners’ point of view, the folks that are upset. These settlements were made on behalf of parishes, as well. It’s the strategy of the diocese to keep as many parishes open as they can.”

Q&A: Why Buffalo Diocese's $150 million plan to settle sex abuse cases relies heavily on parishes

The Buffalo Diocese’s plan to pay $150 million to settle child sex abuse claims in federal bankruptcy court became more tangible for area Catholics when they started learning a few weeks ago what amounts their parishes will be contributing toward the settlement. Here are answers to questions about how the diocese arrived at the numbers and where the bankruptcy process goes from here.

Insurance funds have been a major source of settlement trusts in many previous diocese bankruptcies, sometimes comprising as much as three-quarters of the total settlement amount.

In the Buffalo Diocese, sorting out insurance coverage has been complicated by the fact that prior to 1973, policies were held in parishes. The diocese maintained records of its policies after 1973, but any records prior to that were spotty.

The diocese and the creditors committee continue to negotiate with additional insurers, at least two of which covered policies under which a significant number of alleged abuse cases occurred. Several other insurers have a smaller number of cases.

If deals with the remaining insurers aren’t reached, it is possible for the diocese to file a plan of reorganization that would allow abuse claimants an opportunity to litigate their claims directly against those insurers, as has happened in some other diocese bankruptcies.

The Buffalo Diocese’s plan of reorganization – a document that will spell out in legal terms exactly how it will exit Chapter 11 – is due to be filed with the bankruptcy court by Oct. 1, after Judge Carl L. Bucki granted a 30-day extension.

In the Syracuse and Rochester diocese cases, some insurance carriers that initially opposed plans of reorganization eventually agreed to settle, increasing the settlement pots. In exchange, abuse claimants won’t be able to sue the insurance companies for damages.

While settlement of the Syracuse and Rochester diocese bankruptcies has no direct bearing on what happens in the Buffalo Diocese case, attorney Rob Kugler said recent movement in all three cases might be related to the fact that they’ve simply gone on for so long and “there’s just a certain amount of weariness that sets in that motivates people to want to bring it to a conclusion.”

If an insurance company settles in one bankruptcy case, it also could speed negotiations in another diocese that had the same insurer, as long as the policies and coverages were similar, he said.

“People can figure out what the average amount they’re willing to pay is,” said Kugler, who represented the creditors committee in the Syracuse diocese bankruptcy. “It can help the negotiation discussions to do kind of a comparative analysis.”