December 31, 2005 in City

Diocese offers abuse claim plan

By The Spokesman-Review

The Roman Catholic Diocese of Spokane proposed a new plan Friday to pay alleged victims of priest sex abuse and resolve its thorny bankruptcy case.

The new bankruptcy plan shows the diocese, stung by soaring legal costs and slow progress, may have double the money available to pay victims than the diocese’s initial estimates – $57.5 million without selling or mortgaging a single church or parochial school.

Diocese attorney Greg Arpin called the new estimate a “best case scenario” that anticipates successful litigation against insurers that would boost their payout from about $15 million to $43 million.

It also includes what the diocese hopes will be a simple and successful claim against a Catholic society called the Sulpicians, which trains clergy. Former priest Patrick O’Donnell, who was trained by the society and worked for the diocese from 1971 until he was removed from the ministry in 1985, has admitted sexually molesting more than a dozen boys.

The new bankruptcy plan also outlines a process to pay claims.

In the dense vernacular of bankruptcy court, this “compensable abuse matrix” is a way to stamp a dollar value on the sexual abuse of children by their priests.

Here’s how the proposed plan works.

A trust would be established to manage and administer money and claims. Two trustees would be named, and in turn would appoint three people to serve as claim reviewers.

One claim reviewer would be a doctor or psychiatrist, another would be a mental-health expert and the third would be a retired judge or attorney, said diocese attorney Shaun Cross.

They would work as an independent panel to quickly review sex abuse claims through the use of questionnaires and the study of materials including depositions and other credible evidence submitted by alleged victims and the diocese.

Once a claim is allowed, it would be put into one of five categories and valued. The five categories range from intercourse with children (which could award up to $1.5 million to a victim), to clergy showing pornography to a child (which could bring a victim $15,000 or more).

When the claim reviewers put a value on the claim, it basically would serve as a settlement offer. The victim or the diocese could reject it and send the claim to state court for trial.

Some victims have said they want their day in court as an opportunity to confront and cross-examine diocesan officials such as Bishop William Skylstad and others.

But there’s a catch that will draw the ire of alleged victims, said James Stang, an attorney representing them in bankruptcy court.

There’s a risk that the trust could run out of money before all the claims are paid – especially those that are determined by a civil trial.

The diocese has given no assurance that it can extract enough money from its insurers to cover all its potential claims. A trial on the policy payouts is due next October.

Furthermore, the diocese hopes to overturn on appeal a ruling by U.S. Bankruptcy Judge Patricia Williams that parish churches, schools and other properties may be sold or mortgaged to fund bankruptcy costs and claims.

The sums pooled in the trust could be quickly depleted as victims who choose to accept the claim reviewers’ offers are paid first.

The plan sets up a first-come, first-paid scenario, even though Bishop Skylstad stated emphatically on Day 1 of the bankruptcy that he wanted to halt “a race to the courthouse” and treat all victims equitably.

Since the early stages of the sex abuse scandal, victims have bonded together and forged a potent group dynamic. They have shared dark secrets, grief, prayer and experiences. Stang said any proposal that could pit victims against each other would be opposed.

“They would not support this plan,” Stang said.

He was complimentary of the expansive details in the plan, but criticized it as a failure to move the bankruptcy toward settlement.

“Rather, it sets up a protracted litigation schedule,” he said.

The Association of Parishes, which is seeking to have the parish property ruling overturned on appeal, credited the diocese with drafting a plan that should push the case along.

Parishioners have openly questioned the diocese bankruptcy strategy, an unusual move to handle the onslaught of lawsuits and claims that arose during the past few years when decades of priest abuse were exposed.

Ford Elsaesser, an attorney for the parishes, said his clients were pleased with a plan proviso that calls for the sale or mortgage of church property as a last resort.

The diocese proposes to sell and lease back the chancery and other property that the diocese clearly owns. That money, along with insurance proceeds, would be put into the trust right away. If that money is disbursed, the diocese will ask its parishioners – the 97,000 Catholics in Eastern Washington – for money.

If that isn’t enough and the diocese loses its appeals, then it may be forced to consider selling churches, schools and other properties.

An appraiser has been hired to determine the worth of 40 of the most valuable properties, including Our Lady of Lourdes Cathedral in Spokane.

The diocese can say little about the plan because of bankruptcy rules against soliciting support.

Elsaesser, though, called it an improvement that begins to deal with claims in case the sides fail to reach settlement.

Stang said neither the victims nor the diocese has made recent settlement offers. One settlement offer, reportedly $35 million made earlier this year, was rejected by victims.

People familiar with the case have said that settlement may require between $40 million and $50 million.

The diocese this month began a $160,000 advertising effort to encourage unknown victims to file claims. The ads will run in Parade magazine, inserted into West Coast newspapers.

The ads also are running in The Spokesman-Review, smaller daily and weekly newspapers, and Catholic newsletters. The advertisements name former, retired and deceased priests who the diocese asserts have been credibly accused of child sex abuse. Those still living are O’Donnell, James O’Malley, Reinard Beaver, Bernard Oosterman, Theodore Bradley, Arthur Mertens and Gary Boulden. Three deceased priests named in the plan are Joseph Knecht, Joseph Sondergeld and Joseph Pineau.

Several other priests and clergy in Spokane have been accused, though they were not considered agents of the diocese.

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