Diocese reaches $323 million settlement with survivors

This story has been updated.

The Diocese of Rockville Centre has reached a historic settlement with the survivors of more than 600 child sexual abuse allegations filed by a Committee of Unsecured Creditors, which will require the diocese to pay out more than $323 million in a trust.

The announcement comes after more than four years of negotiations, in which both parties have maintained their demands.

“The Diocese of Rockville Centre and its related ministries are grateful that preliminary terms have been agreed upon for the settlement of our bankruptcy case,” a statement from the diocese read. “For the sake of survivors and the Church’s mission on Long Island, we pray that the plan is approved and completed as quickly as possible.”

According to the statement, made after the settlement was announced on Sept. 20, the payout includes insurance contributions, diocesan assets and the proceeds of the sale of diocesan property, as well as contributions from parishes and other related entities.

“All participated in order to help offer equitable compensation to survivors and move this difficult ordeal towards a conclusion,” the statement continued. “Part of the settlement plan involves all parishes entering into an abbreviated Chapter 11 with the approval of the court and the parties to the case in order to secure a release from liability for the parishes. It is expected that parish Chapter 11s will be resolved within 48 hours of filing and will not interfere with parish work and ministries. No parishes are closing as a result of this process. The Diocese’s goal has always been the equitable compensation of survivors of abuse while allowing the Church to continue her essential mission. We believe that this plan will achieve those goals.”

The terms of the final Chapter 11 reorganization plan must be filed in federal bankruptcy court by Oct. 7.

James Stang, one of the lead attorneys representing the survivors, told the Herald that despite the time that had passed and mounting legal fees, the committee seems to have hammered out a deal with the diocese that will be mutually beneficial for both parties.

“The best settlement is one that nobody’s happy with. I think Judge Glenn alluded to that in court,” Stang said, referring to U.S. Bankruptcy Court Judge Martin Glenn. “Everyone would have liked to have more money. With the Arrowood (claims) on top, it should be viewed as a fair settlement.”

Stang explained that the settlement amount will likely increase, based on the claims covered by Arrowood Indemnity, an insurance company for the diocese.

Once a reorganization plan is filed, Stang added, it must go back to the Committee of Unsecured Creditors for a final vote. To proceed with the plan, the church is required to receive the approval of 75 percent of the creditors.

For now, he said, the creditors’ legal team will continue looking through the legal documents to make sure everything being presented in a final plan is reflective of the recent negotiations.

The settlement comes only a few months after Glenn appointed two high-powered mediators — U.S. Bankruptcy Court Judge Shelley Chapman and attorney Paul Finn — to help iron out a deal after numerous failed attempts to reach a solution that both sides deemed equitable.

The diocese, the eighth-largest in the nation, first filed for bankruptcy in October 2020, after hundreds of lawsuits were filed against it following the approval of the Child Victims Act in 2019 by Gov. Andrew Cuomo, which extended the statue of limitations for sexual abuse claims.

The survivors proposed a Chapter 11 reorganization plan for the diocese in January 2023, offering to settle their claims for $450 million. The diocese countered a month later with a $200 million offer, with contributions to be made by the diocese, its 132 parishes, co-insured parties and other members of the ministry, not including insurance payouts.

That proposal, which the diocese later described as its “best and final” attempt at a settlement, was ultimately rejected by a supermajority vote of survivors in April 2024, who said that it did not provide adequate compensation for their suffering and lacked any child-protection measures.

In response, the diocese sought to dismiss the case, prompting Glenn to move to mediation to avoid remanding the individual cases to the state courts, which could potentially have yielded large payouts in the early going, putting the diocese at risk of having no money for hundreds of other survivors.

Adam Slater, a founding and managing partner of Slater, Slater, Schulman LLP, a law firm representing roughly 100 of the survivor claimants, said that the majority of them are in their 60s and 70s and have waited decades for justice.

“We are extremely pleased to reach this settlement on their behalf,” Slater said in a release. “Importantly, this is the largest Diocese settlement in the history of New York State and the first Diocese settlement to be reached nationwide following the Supreme Court’s recent ‘Purdue Pharma’ decision relating to non-consensual third-party releases. We hope it will serve as a model for other pending cases around the country.”

Jason P. Amala, an attorney with the firm Pfau, Cochran, Vertetis, Amala, represents more than a dozen survivors.

“The timing of this settlement speaks volumes,” Amala said in a news release, noting that the announcement came only two weeks before the first jury trial was scheduled. “We commend the survivors and Judge Glenn for staying the course, making the deal happen, and sending a strong message that even the most powerful entities can be held accountable.”