Bankrupt Catholic dioceses are buckling to child sex abuse victims’ payout demands by offering them valuable rights to directly sue church insurers, riling up questions about the legality of such deals, Bloomberg Law reported. Catholic dioceses in the last 20 years have struck nearly two dozen victim settlements with their insurers’ cooperation in trying to exit bankruptcy proceedings. But growing disputes over the value and validity of many legacy sex abuse claims have created a rift among the parties. The rift has forced some dioceses to negotiate with either victims or insurers instead of both, together. As a result, the dioceses’ insurers could be forced to shell out far more to sex abuse victims than they believe should be on the hook for. In two large cases this year, Catholic bishops have abandoned settlements with insurance companies when abuse survivors rejected the financial terms. In stunning reversals, the dioceses in Rochester, New York and Camden, New Jersey cut new agreements with victim groups, offering cash and valuable insurance rights, instead of a lump sum payment that includes contributions from church coffers and insurers. Insurers are waging fierce legal battles over what they say is a violation of their contract rights. But victims’ attorneys believe the settlement technique is supported by the law and could show other dioceses how to expedite bankruptcies when insurance companies refuse to budge.
