After thousands of pages of documents, millions of dollars in legal fees and dozens of contentious court hearings, the Archdiocese of New Orleans is finally facing a central question in its four-year-old bankruptcy case: What compensation should be paid to people who were raped or sexually abused by clergy decades ago? And how will the church come up with the money?
In competing legal documents Friday, lawyers for the local Roman Catholic church and a committee representing some 550 victims of clergy sexual abuse offered opposing views on how the nation’s second-oldest diocese should resolve claims against it.
The difference between the two is nearly $900 million. Under the archdiocese’s plan, people with credible allegations of clergy sexual abuse would receive $62.5 million, or about $114,000 each. The settlement proposed by court-appointed lawyers for abuse victims would get them $994 million, or $1.8 million each.
The task for lawyers on both sides over the next few weeks will be to reach some kind of agreement under the supervision of mediator U.S. Bankruptcy Judge Meredith Grabill, who has been presiding over the case since Archbishop Gregory Aymond filed for Chapter 11 bankruptcy protection in 2020.
The financial gulf between the two plans is large, but lawyers with experience in church bankruptcy cases said Monday that it could be bridged now that both sides have made public their settlement offers.
“Once these plans are made public, the two sides can finally come together and hopefully merge,” said Leander James, an Idaho lawyer who has represented abuse victims in several church bankruptcy cases since 2007. “If plans are filed, both sides will be exposed to publicity and criticism, which could create pressure.”
History of settlement
Since 2002, 37 Roman Catholic church organizations in the United States have filed for Chapter 11 bankruptcy protection as a way to resolve dozens, if not hundreds, of clergy sex abuse claims.
To date, 24 cases have been resolved, according to Marie T. Reilly of the Pennsylvania State University Law School, who studies and tracks church bankruptcies and has developed a road map for how church bankruptcies play out.
Most importantly, these cases provide insight into the scope of compensation for horrific acts of abuse. In cases that have been resolved, the median settlement amount per victim is $310,460, but the range has increased over time. Victims in Fairbanks, Alaska, received about $34,000 each. In San Diego, victims received about $1.4 million each.
One of the biggest questions that must be answered in the local lawsuit is how much, or whether, the church’s five insurers will contribute to the settlement.
The archdiocese’s plan would give the trustees the power to sue the insurance companies on behalf of the survivors, a lawsuit that, if successful, could significantly increase the church’s proposed settlement of $62.5 million.
That’s exactly what happened in the Archdiocese of Camden, New Jersey, where the church settled a three-year-old lawsuit for $87.5 million earlier this year, though one of the insurers is still fighting it. The Archdiocese of Rochester is grappling with a similar situation.
In New Orleans, a $994 million compensation plan proposed by lawyers for survivors includes $777 million from insurers, some of which the survivors have not agreed to.
“Insurance companies usually push back,” James said. “That’s just how they operate.”
Lawyers for the archdiocese declined to comment beyond what Aymond said in a letter to the faithful on Friday.
Soren Gisleson, an attorney whose firm represents about a third of the abuse victims, said his clients fully support the commission’s plan, even though “no amount of money can compensate us for the archdiocese’s actions.”
How do I pay?
Some dioceses have been forced to sell valuable church-owned real estate to pay for abuse allegations.
In the Archdiocese of Boston, where a priest sex-abuse scandal broke two decades ago, the church sold the archbishop’s 75-year-old Italianate mansion to settle claims worth $85 million, but the settlement was reached without bankruptcy.
The Archdiocese of Minneapolis and St. Paul also sold the archdiocese’s residence and headquarters building to settle its 2018 bankruptcy, ultimately paying out more than $467,000 each to the survivors.
In Santa Fe, New Mexico, the archdiocese held an online auction of property to raise $132 million in a settlement.
Other dioceses are dipping deep into their reserves, including the Archdiocese of New Orleans, which has already sold about $13 million worth of property, including a former office building at 1000 Howard Street, but says it can only sell up to $20 million in bonds unless it refinances $40 million in bond debt at less favorable interest rates.
As a result, the company’s plans include only a handful of properties for sale beyond those already listed, including four warehouses on Old Gentilly Road, the former Holy Guardian Angels Church in Bridge City, a priest’s vacation home in Covington and a vacant lot on Oak Harbor Boulevard in Slidell.
The bulk of the $62.5 million the archdiocese is providing will come from cash reserves of more than $81.6 million as of June 30 and the sale of part of its investment portfolio of more than $260 million.
The competing plan submitted by the survivors committee lists more than 60 properties owned by church parishes that aren’t technically bankrupt, and the committee believes selling them could raise the bulk of the settlement money.
The plan also lists more than 500 pieces of art, antiques and jewelry for possible sale. Treasures include old carnival ball pins, an 18-karat bishop’s ring and a stained-glass window from St. Louis Cathedral.
At hearings later this fall, the two sides will likely battle over the details of the property sale and what constitutes a fair trade and what isn’t, experts say.
“At some point there’s a hearing, and there’s usually a contest, which sometimes triggers an objection from the U.S. Trustee,” said Mike Finnegan, an attorney with Jeff Anderson & Associates, who has represented hundreds of abuse victims across the country. “The hearing can last a few days, or it can go on for weeks.”
What about the parish?
Another big question hanging over the Archdiocese of New Orleans case, as well as other church bankruptcies across the country, is the U.S. Supreme Court’s recent decision in the bankruptcy of opioid manufacturer Purdue Pharma.
In that case, the Sackler family, owners of Purdue, agreed to pay $6 billion in an opioid settlement in exchange for immunity from future lawsuits brought against them personally. The Supreme Court ruled that the agreement was inadmissible and threw out the settlement, because the so-called affiliates could be sued even if they resolved their bankruptcy cases with opioid victims.
Church bankruptcy experts say the ruling has implications for affiliated entities – church parishes and charities that are not technically bankrupt but have paid settlements in exchange for immunity from future lawsuits.
In Rochester, the archdiocese was nearing completion of bankruptcy proceedings, but a recent ruling has scrapped the process.
“No one knows what’s going to happen,” Finnegan said. “Everything is up in the air.”