Diocese reaches $320 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, which calls on the Catholic church to pay out more than $320 million in a trust. Terms of the final reorganization plan are expected to be filed with the courts by Oct. 7.

The announcement comes following more than four years of negotiations, in which both parties have remained steadfast in maintaining their demands.

In a statement on behalf of the diocese, a spokesperson said, "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. 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 spokesperson, the total proposed settlement amount is more than $323 million and includes insurance contributions, Diocesean assets and sale proceeds from Diocesan property and 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. 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."

James Stang, one of the lead attorneys representing survivors with the law firm Pachulski, Stang, Ziehl, and Jones, told the Herald that with the amount of time that had passed and mounting legal fees, they seem 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. "Everyone would have liked to have more money. With the Arrowood [claims] on top, it should be viewed as a fair settlement." 

The settlement amount will likely increase, based on the claims covered by Arrowood Indemnity, an insurance company that entered liquidation in November 2023, and was not included as part of the settlement. 

Stang said that once a reorganization plan is filed, 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. 

He said for now, 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 short months after Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York 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, thereby extending the statue of limitations for sexual abuse claims.

Survivors’ represented by a Committee of Unsecured Creditors, proposed a Chapter 11 reorganization plan for the diocese in January 2023, offering to settle its claims for a $450 million sum. 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.

The $200 million proposal, which the diocese later referred to as its “best and final” attempt at a settlement, was ultimately rejected by a supermajority vote of survivors in April, finding 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 bring in mediation in an effort to avoid remanding the individual cases to the state courts, which, if handled on a case-by-case basis, could potentially have yielded large payouts in the early goings, putting the diocese at risk of having no money for the hundreds of other survivors.

Adam Slater, a founding and managing partner of Slater, Slater, Schulman LLP, a law firm representing approximately 100 of the survivor claimants, said the majority of their clients, who are in their 60’s and 70’s, 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.”

Stay tuned to LIHerald.com for more.