Judge-ordered mediation ‘a continuation’ of collaboration, attorneys say

| January 21, 2015 | 0 Comments

The Archdiocese of St. Paul and Minneapolis will enter into mediation toward a settlement with insurance companies and victims/survivors of clergy sexual abuse with claims against the archdiocese, a U.S. Bankruptcy Court judge determined Jan. 20.

Judge Robert J. Kressel was clear he wanted the parties not to waste time or resources by prolonging the settlement process. “I want to start this now,” he told lawyers gathered in a Minneapolis federal courtroom.

The first-day motions hearing was the archdiocese’s first court appearance after filing for Reorganization under Chapter 11 of the U.S. Bankruptcy Code Jan. 16. Kressel approved all five of the archdiocese’s motions to allow it to continue business as usual after the filing.

The archdiocese and victims/survivors’ attorney Jeff Anderson committed to retaining Arthur Boylan, a retired chief magistrate judge for the State of Minnesota, to supervise the mediation.

Charles Rogers, an attorney with Twin Cities-firm Briggs and Morgan who represents the archdiocese, called the hearing “an extremely positive day for the faithful.”

“We’re very pleased,” Rogers said. The anticipated mediation “is just a continuation of what we’ve been doing with Mr. Anderson. … We look at this as a very positive development, and it’s time to get all parities to the table.”

He agrees with Kressel’s urging to reach a settlement as quickly as possible, he said.

“The one thing that defeats the purposes of all is a prolonged bankruptcy that would eat up the resources of the archdiocese on professional fees, and make less available to victims, or less available to the continuation of the mission of the Church,” he said.

Anderson, a St. Paul attorney who represents most of victims/survivors with sexual abuse claims against the archdiocese, called Kressel’s order that the parties pursue a mediated settlement  “really smart.”

“It avoids contention,” he said.

With mediation, a settlement could be reached in weeks or months, not years, Anderson said.

“The judge realizes the importance of getting a resolution for the benefit of the archdiocese, the community of faith (and) the survivors, and doing it efficiently and effectively,” he said. “I’m delighted and grateful that Judge Kressel sees the magnitude of this and the importance of collaboration, cooperation and mediation that can lead to a resolution sooner rather than later. The longer this goes on, the longer the suffering goes on, the longer the uncertainty goes on to nobody’s benefit.”

Anderson and attorneys for the archdiocese reached an agreement to work together for the best interest of victims/survivors in October 2014 with the settlement of the “Doe 1” litigation, a claim made by a man abused in the 1970s by Thomas Adamson, a priest of the Diocese of Winona who was assigned to parishes in the archdiocese.

Since the initial settlement, the archdiocese has instigated new protocols for protecting young people and helping victims/survivors, hired a new assistant director for ministerial standards and safe environment, and partnered with Canvas Health to provide round-the-clock professional assistance for victims/survivors.

Joseph Kueppers, the archdiocese’s chancellor for civil affairs, said it was the archdiocese’s goal to move the case along quickly “so we can take care of the victims and move on with the mission of the Church, and take care of our ministries, which is why we exist.”

“It was a just ruling by the court,” he added.

Choosing Reorganization

The archdiocese is the 12th U.S. diocese to file for bankruptcy protection in the face of mounting claims of clergy sexual abuse. In 2013, the Minnesota Legislature lifted the civil statute of limitations on claims of child sexual abuse for a 3-year period. The archdiocese is facing 21 pending clergy sexual abuse cases, representing more than 125 victims/survivors. It anticipates additional claims to be made before the window for historical claims closes in May 2016.

Archdiocesan leaders said they deliberated their course of action for months and determined that Reorganization would allow the archdiocese to distribute resources to victims/survivors while continuing to offer essential services to fulfill the mission of the Church.

“It is our express intention, when it comes to the victims/survivors, we want to do the most, for the most,” Father Charles Lachowitzer, vicar general and moderator of the curia, said in a Jan. 15 interview on the Reorganization.

In a Jan. 16 press conference held after the filing, Archbishop John Nienstedt said Reorganization “is the fairest and most helpful recourse for those victims/survivors who have made claims against us.”

“This action will not in any way avoid our responsibilities to those who have been affected by clergy sexual abuse,” he said. “This is not an attempt to silence victims or deny them justice in court. On the contrary, we want to respond positively in compensating them as best we can for their suffering.”

The filing did not include Catholic parishes, schools or other organizations, which are legally distinct from the archdiocesan corporation.

The archdiocese’s liability insurance coverage may cover part of the clergy sexual abuse claims, but it indicated at the time of the filing that its carriers may not be able to pay every claim or the full amount of each claim for various reasons. In November, the archdiocese filed a federal lawsuit against 20 of its insurers as it worked with Anderson to arrive at a settlement for abuse victims/survivors.

Reducing tuition benefit

The archdiocesan corporation reported in November that its last fiscal year ended in June with deficit of $9.1 million in operating revenue. It made several large expense cuts in the months ahead of the Reorganization filing, including a round of layoffs in November.

Archbishop John Nienstedt announced Jan. 20 that the corporation plans to reduce a Catholic school tuition benefit available to parents and grandparents of school-age children. The program, called the “Archbishop’s Scholarship,” previously contributed 60 percent of a student’s tuition.

This school year, the archdiocese spent nearly $150,000 on the program. Starting in Fall 2015, the archdiocese is capping program spending at $75,000, which it estimates will be about 40 percent of the tuition costs.

“This change, like all other recent changes, is difficult, and I hope that early communication of this change will allow your families time to plan accordingly for the 2015-2016 school year,” Archbishop Nienstedt wrote in a memo to the archdiocese’s staff.

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