Child Victims Act Abuse Claims Prompt Bankruptcy Filing for Catholic Diocese

Posted on Monday, November 16th, 2020 at 5:00 pm    

The Diocese of Rockville Centre on Long Island filed for bankruptcy in federal court on October 1, 2020. Bishop John O. Barres stated that for various reasons, including the burden of litigation expenses from the more than 200 lawsuits stemming from the Child Victims Act, the diocese “was not going to be able to carry out its spiritual, charitable and educational missions if it were to continue to shoulder the increasingly heavy burden of litigation expenses associated with these cases.” Barres also explained that the ministries of the dioceses would go on and that employee wages and benefit programs would not be affected. Since schools and parishes are separate legal entities, they are expected to operate as normal.

When New York’s Child Victims Act took effect in August of 2019, it temporarily extended the statute of limitations for survivors of childhood sexual abuse to file claims against their abusers and the institutions they represented, allowing for a flood of sexual abuse allegations. The Diocese of Rockville Centre tried to fight the law by arguing it was unconstitutional, but a state appeals court would not halt the lawsuits. The dioceses’ bankruptcy filing disclosed an estimate of up to $500 million in liabilities from lawsuits.

The coronavirus pandemic also added to the financial problems of the diocese, which serves about 1.4 million Catholics. Donations that it would typically receive on Sundays were slashed when Mass services were suspended or restricted. The Chapter 11 bankruptcy filing stated that about 40 percent of the dioceses’ annual revenue is gained through offerings from Mass attendees at its parishes.

Three other of New York’s eight Roman Catholic dioceses had also filed for bankruptcy previously as a result of the Child Victims Act. The Diocese of Rochester was the first, followed by the Diocese of Syracuse and the Diocese of Buffalo. Since the early 2000s, about two dozen dioceses or archdioceses throughout the United States have pursued bankruptcy protection while dealing with sexual abuse lawsuits.

Strategy of Filing for Bankruptcy

Declaring bankruptcy is a tactic used by other organizations that have been affected by the Child Victims Act and similar laws, such as the Boy Scouts of America. Bankruptcy will allow the Diocese of Rockville Centre to survive financially and work out the lawsuits in an orderly manner. Documentation of all of its assets and liabilities will be provided to the bankruptcy court, so it can decide how the lawsuits will be settled.

In a statement from Bishop Barres, he declared that the diocese believed that Chapter 11 bankruptcy protection would be a more just method to address the cases. “Our goal is to make sure that all clergy sexual abuse survivors, and not just a few who were first to file lawsuits, are afforded just and equitable compensation,” he said.

A Pennsylvania State University law professor, Marie T. Reilly, who has studied Catholic organization bankruptcies, said, “The whole goal of the diocese is to open a new chapter in its financial life, free of Child Victims Act claims.”

In a pending lawsuit, the diocese had previously sued its insurance companies to make certain they would pay survivors. Bankruptcy may motivate the insurance carriers to start negotiations with survivors and end up saving the diocese a considerable amount of money.

An attorney who has represented plaintiffs in bankruptcy cases of other Catholic organizations believes that bankruptcy proceedings are often used to deny jury trials and protect defendants from having to share private documents through discovery that would publically display their practices.

What Happens to Current Lawsuits?

Claims that have already been or will be brought against the diocese may be affected by the bankruptcy declaration. Any ongoing lawsuits will most likely be frozen and moved under the supervision of bankruptcy court. This means that current and future claimants will not have their cases litigated in court. Instead, they become creditors who are eligible for a portion of a settlement fund, and some plaintiffs could receive less compensation than a civil trial may have awarded. Other plaintiffs whose cases were moving more slowly through the system may receive more than they would from a civil court. Although survivors will lose their day in court to speak out, all viable claims will be paid.

Before the Child Victims Act existed, the Diocese of Rockville Centre had created a fund called the Independent Reconciliation and Compensation program to provide settlements to victims of clergy abuse whose cases could no longer be pursued legally. The diocese has already paid approximately $62 million to settle about 350 of these cases. A lawyer who represents a client who had signed a settlement through the program in the week before the bankruptcy filing said the payment may now be delayed.

The parishes and schools under the Diocese of Rockville Centre are not included in the bankruptcy filing, so lawsuits against them can continue separately. Once there are resolutions for the diocese claims, it is possible that cases against the parishes and schools could also be resolved, but bankruptcy does put them at a higher risk.

It is anticipated that the bankruptcy proceedings will last from 18 months to two years.

Getting Legal Help for a Childhood Sexual Abuse Claim

If you or someone you love experienced childhood sexual abuse, you have the right to pursue a civil case. Even if the abuse took place a long time ago, there is a window of opportunity until August 2021 to file a claim. Coming forward as a childhood sexual abuse survivor takes a great deal of courage, and you deserve to be supported and guided throughout the entire legal process.

Hach & Rose, LLP is here to do just that. We are determined advocates for survivors of sexual abuse, and we will work tenaciously to hold the negligent parties accountable. Our team will listen to you with compassion and offer sound legal advice and exceptional representation. We’ll help you seek the justice and compensation you deserve.

Please do not hesitate to get in touch with us to schedule a free and completely confidential case evaluation. Contact a religious institution sexual abuse lawyer – we’re ready to help. You can reach us by phone at (212) 779-0057 or by contacting us online.

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