Diocese’s settlement offer called unfair

A $45.7 million settlement offer from the Catholic Diocese of Spokane to fewer than half of the people alleging sex abuse by clergy has been called unfair and premature by others left out of the proposal.

Attorney Beth Bollinger, who represents five victims, said the settlement establishes a piecemeal approach that risks leaving insufficient funds to pay victims who were not included.

That would be unfair to her clients and runs counter to bankruptcy law, she wrote in an objection filed with the bankruptcy court.

The proposal is considered a breakthrough in the case, now 16 months old. The diocese has said settling these claims would speed the case along.

The Association of Parishes, representing the 82 Eastern Washington parishes in the case, formalized its criticisms of the settlement offer. The association’s objection stated concerns that the offer’s proposed terms – which includes $10 million due by the end of the year, followed by a $26.6 million balloon payment in October 2007 and then another $9 million due over the next three years – could end up in default and thus mean foreclosure of Catholic churches and schools to pay the debt.

The Association of Parishes said the offer is too dependent on the unknown, namely payouts from insurers, most of whom have not awarded cash to victims and are fighting diocese liability policy demands in federal court. A trial on the insurance matters is scheduled for the fall.

Joe Shickich, an attorney representing alleged victims who were not part of the settlement, said the settlement offer would dictate the diocese’s plan of reorganization instead of the other way around, which is how most bankruptcies are settled.

He said the settlement offer was unfair to other victims.

The 75 alleged victims now weighing the offer were among the key reasons Bishop William Skylstad sought Chapter 11 bankruptcy protection for his diocese. Among the victims included in the settlement offer are those who had filed lawsuits against the diocese.

All of the 75 people contemplating the offer must approve it according to the settlement terms. It averages out to $610,000 per victim, although the actual amount each collects would be negotiated within the settlement group.