ALBANY — The Roman Catholic Diocese of Albany on Wednesday proposed mediated financial settlements for survivors of clergy sex abuse as an alternative to court battles or the diocese declaring bankruptcy.
The diocese is facing a potentially huge cost from the more than 400 claims pending against it in court, both in legal bills and judgments. In an open letter, it said mediation would result in a more equitable distribution of the finite pot of funds it has available for the purpose.
But a law firm representing two dozen people who claim to have been molested by Albany Diocese clergy decades ago called it a bogus and cynical maneuver to avoid transparency and accountability.
Three years ago in New York, the long-running clergy pedophilia scandal took a sharp turn from a shocking revelation about one of society’s most respected institutions to a major financial threat: The state Child Victims Act briefly allowed civil lawsuits for decades-old incidents that had been — and once again are — far beyond the normal statute of limitations for a civil lawsuit.
Four of New York State’s eight Catholic dioceses — Buffalo, Rochester, Rockville Center and Syracuse — subsequently filed for bankruptcy under the financial weight of potential legal settlements or trial verdicts.
The letter to abuse survivors released Wednesday by Albany Bishop Edward Scharfenberger put the prospect of a Chapter 11 bankruptcy filing by the Albany Diocese as well.
A diocese spokeswoman later said that bankruptcy is not an option the diocese is newly considering, or giving greater consideration to it now, it’s just one of the two options dioceses have in this situation: litigate the claims in court or file for bankruptcy.
Attorney Mallory C. Allen of Pfau Cochran Vertetis Amala, which represents 25 claimants against the Albany Diocese, said there’s a popular misconception that bankruptcy ends a plaintiff’s chance at recovering damages. She also represents clients against the four New York dioceses that filed for bankruptcy protection and those cases were not derailed, she said.
“People would not be zeroed out,” Allen said, though their cases would be delayed.
The implication of the Albany diocese’s message Wednesday seems to be that it will declare bankruptcy if survivors don’t agree to mediation, she said.
She questioned why the diocese has fought the claims “tooth and nail” at such great cost in time and money if it was going to declare bankruptcy, not to mention the emotional trauma for survivors forced to give depositions.
“The notion that this is to avoid time and expense, that ship has kind of sailed,” she said.
The diocese recently lost a major appellate ruling that will force it to turn over clergy personnel records that will show what it knew about clergy molestation and when, Allen added.
“The timing is suspect,” she said. “It feels to me more like an attempt to avoid accountability and transparency.”
Several of her cases are very close to going to trial, she added.
The Albany diocese concurrently faces another potentially huge financial liability: A lawsuit filed last month by the state Attorney General’s Office seeking to recover an estimated $55 million in pension benefits lost by 1,100 former employees of the old St. Clare’s Hospital, which the diocese played a critical role in operating, though it did not actually own the Schenectady hospital.
Litigation previously filed on behalf of pensioners has been progressing slowly.
The diocese said it would make public a detailed proposal for mediation soon, but it issued a summary Wednesday.
Representatives of the diocese, its affiliates, its insurers and victims and survivors would meet with an agreed neutral mediator to:
- Create a fund with negotiated contributions from the diocese, affiliates and insurers;
- Determine and pay victim/survivor claims;
- Establish protocols to redress allegations of past abuse and prevent future abuse.
The objective, the diocese said, is to accelerate and maximize payments to victims/survivors on a fair and equitable basis.
In his letter, Scharfenberger presented mediation as preferable to the two options the diocese currently has: litigation or bankruptcy.
“In either scenario, the amount of funds to be disbursed to the survivors is the same,” he wrote. “A third option, however, would secure the greatest portion of these finite funds for all, not just a few, survivors who have filed claims under the CVA.”
Under that third option, mediation, less money would be spent on court and legal fees and awards in the earliest cases to be heard would not deplete the funds available to settle subsequent claims heard subsequently.
Scharfenberger also wrote that he understood his efforts would be difficult to trust, and that “offending institutions” are not owed trust, credibility or faith. A thorough and unbiased audit of available diocese audits would be undertaken, he said, and participants in the process could seek advice of counsel and assistance from the diocese assistance coordinator.
The bishop added that the process will go beyond money, and include a vigorous program of child protection in all church settings and a range of pastoral and spiritually healing options for those who have survived abuse and those who love them.
“For my part, I remain a pastor who cares very much for survivors,” Scharfenberger wrote, “seeking to walk with them, to listen and to learn, so that no one may be on this journey towards healing alone.”
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