Rochester diocese offers $148M in settlement

The Diocese of Rochester has proposed to settle its federal bankruptcy case by paying nearly $148 million to survivors of child sexual abuse.

In court papers filed Friday, the diocese asked a federal bankruptcy judge to approve an agreement with its insurance carriers to provide $107.25 million to settle all claims.

Under the plan, the diocese and its parishes would provide another $40.5 million to create a trust fund to compensate survivors of abuse.

"The Diocese strongly believes that the proposed settlements are in the best interest of survivors," according to a statement from a spokesperson for the diocese. "Should the Court approve the proposed settlements, the Diocese will be able to provide a concrete benefit to survivors who have already waited too long for recompense."

Attorneys representing roughly 475 abuse claimants blasted the proposal, calling it a "backroom deal" between the diocese and its insurers.

"By not engaging survivors in the bankruptcy process and colluding with the insurers, parishes and schools against the survivors, the Diocese effectively denies them a seat at the table where mediation has been underway with sincere attempts to forge a path to resolution," said Jeffrey Anderson, whose law firm represents 175 of the claimants against the Rochester diocese.

Anderson also argues that the diocese's contribution to the settlement amount is only a fraction of what it is able to pay survivors.

Just two months ago, in the first child sexual abuse trial under the New York Child Victims Act, an Erie County jury awarded one Boy Scout abuse victim $25 million for the harm he suffered.

The diocese's newest proposal would pay survivors roughly $311,000 each.

Jason Amala, an attorney who has represented thousands of sex abuse survivors across the nation, including in complex bankruptcy proceedings against other Catholic institutions and the Boy Scouts of America, says the proposal would let the diocese and its insurers take as little financial accountability as possible.

"If the Diocese genuinely thinks this is a good deal for survivors, it should immediately disclose the massive amounts of cash and property that are held by the Diocese and its parishes," Amala said. "The same is true of their insurers. If the Diocese wants to settle with its insurance companies, it should immediately disclose the value of its insurance policies. When people see how much these entities could pay, they will see this proposal is an absolute abuse of the bankruptcy process."

James Marsh, whose firm has represented hundreds of sex abuse survivors across New York under the Child Victims Act, says the claimants will oppose the settlement proposal.

"We will fight for a new plan that properly answers for the trauma these survivors have had to carry, and ensures the Diocese and its parishes are held accountable by paying fair compensation to those they injured," Marsh said.

The diocese made a similar proposal last summer, offering to contribute $35 million to a settlement fund. That proposal was rejected by U.S. Bankruptcy Court Judge Paul Warren.

On Monday, Judge Warren ruled that the cases that named individual parishes as defendants could have those claims proceed to trial in state court.

"The Diocese, the insurance carriers, and the Abuse Survivors have reached a point where a consensual resolution appears to be fading," Warren wrote in his decision.

Warren also noted that three of the abuse survivors who filed claims have died since the bankruptcy process began.

"Given the age of many of the Abuse Survivors, if enjoined from going forward with actions against the independent Catholic Corporations, it is likely that more will be denied the chance to seek justice because the sands of time are working against them," Warren wrote.

None of the cases filed in state court have advanced much beyond the filing of an initial complaint. There is likely much discovery to be conducted before any of the cases will be ready for trial. It will be many months or years before any of the CVA cases are presented to a jury.

Mediation process stalled

It has been more than 21/2 years since the Diocese of Rochester filed for bankruptcy protection, a move that was prompted by the swell of legal claims brought by survivors of child sex abuse.

To outside observers, it appears that little progress has been made toward resolving the two basic questions at the heart of the bankruptcy case: How much money will be paid to survivors, and where will it come from?

Last July, the parties appeared before Judge Warren, asking him to intervene and complaining that the other side was being unreasonable in the court-ordered mediation process. Warren chastised both parties and urged them to return to mediation and negotiate a settlement in good faith.

But the parties were back in court in late April to report that the efforts at mediation had once again stalled, with each side asking Judge Warren to intervene and resolve the stalemate.

Stephen Donato, the attorney representing the diocese, argued that the problem lay with the insurance carriers whose policies would pay a substantial amount of any settlement.

He told Judge Warren that there was a significant difference of opinion between the carriers and the creditors' committee, which represents roughly 475 abuse survivors who have filed claims.

"We are in active mediation with the carriers and with the committee, but the diocese is caught in the middle," Donato told Judge Warren. "We are doing everything we can to bring these parties together."

Ilan Scharf, an attorney for the creditors' committee, took a decidedly different view.

"Despite the efforts of Mr. Donato to paint the Diocese as the victim here, the diocese is not caught in the middle," Scharf argued. "They are the entity responsible for the abuse. They are the central figure that caused these problems. The survivors are the victims."

Scharf and the other lawyers representing the abuse claimants asked the judge to allow a handful of cases brought against individual parishes to proceed to state court, where a jury can examine the liability and set a dollar amount for damages. They have argued that this process would help establish some baselines that could resolve the central issues of the case.

This is the same solution that the claimants sought last year, and which the judge denied in urging them to return to mediation.

Scharf said that the fact the parties were back in court 10 months later "belies the argument that we can mediate without the pressure of litigation."

Meanwhile, the legal fees keep mounting: At the end of April, the diocese reported that it had spent over $6.6 million on legal and professional fees since the process began in September 2019.

Survivors decry lack of progress

For the last eight months, Carol DuPre has dressed in black from head to toe each day

"I feel like I have to take control of something in my life," she said. "And I kind of look at this whole thing as a mourning process that we're going through, because this is not a happy thing."

DuPre is one of hundreds of survivors who have filed claims against the Diocese of Rochester alleging that they were sexually abused as children by priests. She also serves on the creditor's committee, one of just a handful chosen to represent the interests of all of the survivors in the diocese's federal bankruptcy case.

"I'm mourning the loss and the death of compassion from the other side of all of this. Because there I don't sense any compassion towards us," DuPre said. "And so this is something I have control over and it almost sounds weird and strange and odd of me to be doing something like this, but it's my way of reminding myself what I'm in this for."

DuPre's attorney, Mitchell Garabedian, said that abuse survivors feel frustrated and re-victimized by the lack of progress.

"You can hear the frustration in the voices of victims caused by the delay in the settlement and legal processes and you can see it in their eyes, Garabedian said. "Delay which the Diocese and insurers embrace in their strategy of attrition. But, victims will not be denied validation."

John Bell, another member of the creditors' committee, said the proposed settlement between the diocese and the insurers was made "behind the backs" of survivors.

"Instead of working with the survivors on a path towards healing, the Diocese has chosen to work with its insurance companies," Bell said. "The hurt this causes is immeasurable and pours salt in the survivor's wounds, but it does not deter my fight for justice and accountability."

A bill that would provide adult survivors of sexual assault a one-year window to file lawsuits related to abuse allegations regardless of when they occurred, was approved by the state's legislature Monday night and signed into law Tuesday by Gov. Kathy Hochul.

The Adult Survivors Act would set aside the usual statute of limitations on civil lawsuits and is modeled on the Child Victims Act. The law will come into effect in six months.

Contact staff reporter Sean Lahman at [email protected]. Follow him on Twitter @seanlahman.

Includes reporting by The Associated Press.