Diocese counters Committee's offer with $200M proposal

Less than a week after a $450 million settlement was proposed by lawyers representing more than 600 people who filed claims of sexual abuse against the Diocese of Rockville Centre — a group known as the Committee of Unsecured Creditors — the diocese has put forward a reorganization plan in the hope of resolving the claims and emerging from bankruptcy.

“To demonstrate its commitment to move forward, the Diocese has proposed a plan that it hopes provides a framework for a timely resolution of this bankruptcy case for survivors, the Diocese, and its parishes,” the diocese said in a statement. “The Diocese, which has continued to work towards a global settlement, believes that the extensive and needlessly expensive litigation path chosen by the Unsecured Creditors Committee’s proposed plan would only continue to financially erode assets of the Diocese, parishes, and other co-insureds that would otherwise be used to fund the settlement.”

The diocese filed for Chapter 11 bankruptcy in October 2020, after hundreds of lawsuits were filed under the Child Victims Act approved by Gov. Andrew Cuomo in 2019. The measure lifted the statute of limitations on sexual abuse cases, allowing for decades-old cases to be brought. The period to file such claims closed in August 2021, by which time there were more than 500.

Under the diocese’s latest proposal, the diocese, its parishes, co-insured parties and other ministry members estimate that its contribution would be between $185 million and $200 million, not including payouts from third-party insurance companies.

The plan the committee’s lawyers proposed offered the diocese two options. The first would be to settle all claims against the diocese for the full amounts, and the second would include both the diocese and its parishes. Under both options, survivors could continue to pursue claims for the alleged abuse in state court.

“The Committee filed its own plan because the Diocese of Rockville Centre continues to refuse to respond to a Committee settlement offer that was made more than two months ago,” Richard Tollner, chair of the Committee of Unsecured Creditors, said in a statement. “The Diocese forced the Committee’s hand when the Diocese abdicated its responsibility as a party to Court-ordered mediation and as a fiduciary to all creditors. Tragically, some survivors who started with us have passed away, but their stories and their courage have reinforced the Committee’s dedication to achieve a fair and reasonable settlement that includes protections for today’s children.”

While the diocese says its settlement plan compares favorably to recoveries under similar bankruptcy plans, attorneys representing the survivors feel the total is too small for one of the largest and wealthiest dioceses in the country.

Lawyers for the committee referred to the diocese’s proposal as “business as usual,” claiming that it provides only a minimal financial contribution of $11.1 million from the parishes and affiliates, and relies largely on the assignment of potential insurance policy settlements that the carriers who sold those policies are actively disputing in four separate lawsuits.

The attorneys stated that the diocese has taken a “scorched earth approach” to resolving the situation by starting the process of objecting to survivors’ claims.

“The Diocese has adopted a litigation path that ultimately will fail and will have wasted millions of dollars,” James Stang, a bankruptcy attorney representing the committee, said in a statement. “The (Diocese) has fought the Committee at almost every turn. The members of the Committee have devoted hundreds of hours over more than two years to getting the right result for all survivors. This case poses the unique challenge that the (church) refuses to negotiate with the Committee and is attempting to bully survivors into submission.”

Sean Dolan, the diocese’s director of communications, said in a release that the diocese believes that survivors deserve and expect a settlement now, and he hopes that all parties can work together to complete an equitable, and unprecedented, settlement offer.

“The alternative litigation path advocated by the Committee will take years, and wastefully drain resources that would otherwise be directed toward compensating survivors,” Dolan said. “The litigation path also jeopardizes the common good of Long Island, particularly for those families that depend on the Diocese to deliver compassionate health care, housing, education, food security, substance abuse, mental health and grief counseling, immigration services, religious and spiritual care.”