MILWAUKEE -- The Archdiocese of Milwaukee announced Tuesday that it will pay $21 million to compensate victims of childhood sexual abuse under a settlement agreement -- a deal that clears the way to ending its nearly 5-year-old bankruptcy.
Of the 575 men and women who filed sex-abuse claims in the bankruptcy, 330 would receive financial settlements.
The proposed deal, which will be part of a reorganization plan submitted to a bankruptcy court later this month, was to be reviewed by a judge overseeing the case at a Nov. 9 hearing. Archbishop Jerome Listecki called the settlement a "new Pentecost," but an attorney for the victims, along with advocates for those abused by clergymen, decried the settlement as a paltry amount.
It's not known how many additional millions of dollars will go to pay fees of attorneys and other professionals hired by the archdiocese and its creditors committee over the course of the case.
A $500,000 fund will be created to help abuse survivors obtain counseling and other therapy they might need. Parishes will contribute to that fund.
The settlement came after three days of talks in mid-July among the archdiocese, the creditors committee and attorneys for abuse survivors.
Milwaukee is one of 12 Roman Catholic dioceses nationwide to file for bankruptcy in the past decade over a flood of abuse claims. The settlement announced Tuesday is among the smallest per-victim payments yet in these cases. The actual amount each victim receives will be determined by an appointee of the bankruptcy court.
"Today, we turn the page on a terrible part of our history and we embark on a new road lined with hope, forgiveness and love," Listecki said in a statement.
He said the church will continue to remember those who have been harmed, "keeping them in our prayers, supporting them through therapy and healing, promising never to forget the evil that has been done, and working diligently to ensure this never happens again."
But attorney Jeff Anderson, who represents people who have filed 350 of the 575 sex-abuse claims in the bankruptcy, called the archdiocese's treatment of abuse victims "harsh and hurtful."
"This process has been heartbreaking for many who have been treated so unfairly by hardball legal tactics," Anderson said. "The survivors continued to stand up for what was right, what they believed in, and to make sure the truth was brought to light. Because of them, children are better protected."
The deal also was criticized by David Clohessy, director of the Survivors Network of those Abused by Priests, an advocacy group for survivors of clergy abuse. He called it "the largest mass betrayal of child sex abuse victims we've ever seen by one diocese. And it's the most cunning exploitation of the advantages of bankruptcy rules by Catholic officials we've ever seen."
Peter Isely, Midwest director of the advocacy group, predicted when attorneys' fees are subtracted, the average settlement amount per victim will be $44,000. He said the average settlement amount in all other U.S. church bankruptcy cases, minus attorneys' fees, is $300,000.
Money to pay the claims will come from various sources, including insurance settlements worth $11 million and financial arrangements with the cemetery trust fund.
The agreement settles a related lawsuit filed by Listecki to protect an estimated $70 million the archbishop oversees in a trust established in 2007 to maintain the archdiocese's eight cemeteries. It also ends separate lawsuits against its insurance companies.
The Milwaukee bankruptcy charted unprecedented legal territory and has drawn national attention in part because of the involvement of Cardinal Timothy Dolan of New York, who led the archdiocese from 2002 to 2009. Dolan, who publicly raised the specter of bankruptcy as early as 2006, created the cemetery trust in 2007 with Vatican approval, saying it would help protect those funds from legal liability, according to court records.
The agreement comes as lawyers prepared for a grueling three months of motions and hearings in advance of a Nov. 9 confirmation hearing on the revised reorganization plan.
Listecki announced the Chapter 11 filing Jan. 4, 2011, saying there were "financial claims pending against the archdiocese that exceed our means." The archbishop said at the time that it was the best way to "fairly and equitably fulfill our obligations" to victims with unresolved claims as well as "carry on the essential ministries of the archdiocese."
The filing came as a dozen lawsuits involving 17 victims were moving toward trials in state courts. Those suits were automatically stayed by the bankruptcy.
Victim advocates and attorneys criticized the Chapter 11 as a ploy to protect the church from revelations likely to emerge in trials, and to continue delaying justice and closure for victims.
The filing initiated a pitched battle that has played out on four levels of the federal court system -- bankruptcy, district, appellate and most recently the U.S. Supreme Court, where Listecki has filed a petition asking for a ruling on whether the First Amendment and a federal law aimed at protecting religious liberty can be used to shield the cemetery trust.
Ultimately, some 575 men and women filed claims alleging they were sexually assaulted as minors over the years by priests, nuns, teachers and others affiliated with the local church. The lawsuits alleged the archdiocese defrauded victims by moving abusive priests from post to post without telling families about their sexual histories.
The archdiocese does not dispute the abuse allegations, church lawyers have stressed repeatedly in court. But it has argued from the beginning that it had no legal liability because the cases were beyond the statutes of limitation; involved teachers, religious order priests or others it did not consider its direct employees; came from victims who already had received settlements; or involved victims who could not prove the church knew about the abuser before the assault occurred.
At the time it filed for Chapter 11, the Archdiocese of Milwaukee was the ninth Catholic entity -- eight dioceses and one Jesuit religious order province -- to seek bankruptcy protection in the face of sexual-abuse liabilities. All of the debtors that filed before Milwaukee reached multimillion-dollar settlements or confirmed their reorganization plans, or both, in less than three years. Two settled in less than a year. And two that filed after Milwaukee also have settled.
The Milwaukee case was combative in part because of Wisconsin's legal landscape, which put parish assets off-limits and made it impossible for the archdiocese to tap its insurance policies for an abuse settlement. But it was also contentious because the case evolved more like a bitterly fought lawsuit than a Chapter 11 proceeding, said Temple University law professor Jonathan Lipson.
"Bankruptcy is not supposed to be litigation in a different venue. It's supposed to be a forum in which the parties engage in good-faith negotiations to compromise and settle their differences," said Lipson, who teaches bankruptcy law and has written on church bankruptcies. "In this case, the parties were unusually adversarial and hostile to one another, and I think they brought that into the bankruptcy court."
From the beginning, the two sides charted divergent legal strategies. The archdiocese filed motions to throw out every sex-abuse claim, a first for a Catholic Church bankruptcy. And the creditors committee, which is composed of abuse victims but represents all creditors in the case, pursued church assets to fund a potential settlement.
In every church settlement to date, proceeds from insurance policies have been a major component. All but two of the 10 that have settled included significant contributions, ranging from $14.4 million to $118 million.
Information for this article was contributed by Annysa Johnson of the Milwaukee Journal Sentinel and by Scott Bauer, Jeff Baenen and Rachel Zoll of The Associated Press.
A Section on 08/05/2015