The Rochester, N.Y., Diocese’s novel strategy to exit chapter 11 bankruptcy by paying childhood sex abuse survivors $55 million and allowing them to sue the diocese's insurers for additional damages may provide a template for other bankrupt dioceses in New York, including Buffalo, according to legal experts, Buffalo News reported. Across the U.S., insurance contributions have been a backbone of most diocese bankruptcy settlement plans over the past decade, with insurance companies paying hundreds of millions of dollars to avoid litigation in sex abuse cases. But in Rochester, the diocese earlier this month worked out a settlement plan with sex abuse claimants that does not involve a contribution from insurance companies. Instead, the diocese will convey its coverage rights to a settlement trust on behalf of 475 sex abuse claimants, along with $55 million in diocese and parish funds. In exchange, the diocese and its parishes and schools will no longer have to defend against Child Victims Act lawsuits claiming sex abuse involving priests and other employees. The trust, using the diocese’s assigned insurance policies, will be able to sue the insurance companies to collect on those policies in abuse cases where it was clear there was coverage, legal experts said. The plan comes three years after the Rochester Diocese filed for bankruptcy protection, and must still be approved by U.S. Bankruptcy Judge Paul R. Warren. If Judge Warren confirms the plan, legal experts said it could become the path to future settlements between sex abuse claimants and other New York dioceses seeking to emerge from bankruptcy proceedings.
