The Hartford agrees to pay $650M in Boy Scouts bankruptcy

DOVER, Del. (AP) — Insurance company The Hartford has agree to pay $650 million into a proposed trust fund for victims of child sexual abuse as part of the Boy Scouts of America bankruptcy case.

In exchange for the payment, the Boy Scouts and its local councils would release The Hartford from any obligation under policies it issued to the BSA and the councils dating back to 1971.

The settlement agreement and release was submitted to the court on Friday by a panel of mediators that is working with the BSA, abuse victims and other parties in the bankruptcy to try to fashion a global resolution of more than 80,000 sexual abuse claims.

“Our agreement with The Hartford is an encouraging step towards achieving a global resolution that will promote the BSA’s efforts to equitably compensate survivors and continue the mission of Scouting,” the organization said in a statement. ”... We are committed to continuing our mediation efforts with all parties and look forward to sharing additional updates as these discussions progress.”

According to the court filing, The Hartford’s payment will be reduced if, after the agreement is signed, the BSA or the settlement trust enters into an agreement with another insurer, Century Indemnity Company, and Century’s settlement amount is less than two times The Hartford’s settlement amount.

Even without the possible reduction in The Hartford's payment, attorneys representing abuse victims in the bankruptcy were appalled by the settlement.

“It’s outrageous.... Their real liability is in the billions of dollars," said Paul Mones, who represents hundreds of abuse victims, including members of the official tort claimants committee that is charged with acting as a fiduciary for abuse victims in the bankruptcy.

“This is just business as usual for the Boy Scouts — paying lip service to their supposed understanding and concern for their horrific legacy of sex abuse ... but not doing anything substantive,” Mones added.

Jim Stang, an attorney for the tort claimants committee, or TCC, said there are at least 24,000 sexual abuse claims subject to The Hartford’s policies. The actual number is likely significantly higher, given that many victims did not include the dates they were abused on their claim forms, he noted.

“We think their exposure is $8 billion for the 24,000 claims,” Stang said, adding the committee will be objecting to the settlement. “They’re not even paying 10% of what we think they’re on the hook for.”

The agreement with The Hartford was announced after the Boy Scouts filed a revised reorganization plan earlier this week after gaining little support for a previous proposal.

The previous plan called for a $300 million contribution by local councils to the settlement trust, about $115 million in cash and noninsurance assets from the BSA, and the assignment of BSA and local council insurance policies. In return, the BSA, its 253 local councils and hundreds of sponsoring organizations such as churches and civic groups would be released from further liability. Any insurance companies that agree to pay specific settlement amounts into the trust also would be shielded from further liability.

The new plan increases the contribution from local councils to $425 million but keeps the national organization’s contribution at $115 million. More than half that amount consists of the estimated value of the BSA’s art collection, including several Norman Rockwell paintings.

Should abuse victims not approve the new plan, the BSA — which says it needs to exit bankruptcy by late summer — would turn to an alternative BSA-only plan. Under that plan, the settlement trust would be funded only by the BSA, and only for claims made against the national organization, not local councils. The councils and local sponsoring organizations such as churches and civic groups would make no contribution to the settlement trust and would have no protection from liability for abuse claims.

Depending on which plan is used, the BSA estimates the amount of money to be available for abuse victims at between $2.4 billion and $7.1 billion, including insurance rights.

The official tort claimants committee estimates the value of some 84,000 sexual abuse claims at about $103 billion.

The Boy Scouts of America, based in Irving, Texas, sought bankruptcy protection in February 2020 in an effort to halt hundreds of lawsuits and create a compensation fund for men who were molested as youngsters decades ago by scoutmasters or other leaders.

Attorneys for abuse victims have said from the start that they would go after properties and assets owned by local councils to contribute to a settlement fund. The local councils, which run day-to-day operations for local troops, are not debtors in the bankruptcy and are considered legally separate entities by the Boy Scouts, even though they share insurance policies and are considered “related parties” in the bankruptcy.