June 1, 2008

By Sam Hemingway
Free Press Staff Writer

Dorothy Whiston was upset when she first learned in 2006 that her Roman Catholic diocese in Davenport, Iowa, was filing for bankruptcy.

The Midwestern diocese announced it was taking the step after concluding it lacked the funds to resolve a mounting number of lawsuits filed by dozens of victims of clergy sexual abuse, including one claim that a former bishop had molested boys.

"It was very painful," recalled Whiston, a regular attendee at St. Thomas More Catholic Church in Iowa City, Iowa.

Today, a month after a federal judge approved a bankruptcy reorganization plan for the Davenport diocese and the 105,000 parishioners it serves, Whiston sees things differently.

"I think it actually was a good experience," she said. "At the time, I was very skeptical, but we needed to enter into this process."

That process has resulted in profound changes for the Davenport diocese, which had already paid $10.7 million to 45 clergy sexual abuse victims prior to its decision to seek bankruptcy protection.

In order to pay out $37 million more in claims to an additional 162 priest sexual abuse victims, the diocese had to sell off a number of assets, including the site of its headquarters and the bishop’s residence. The bishop now lives in rental housing.

The experience of the Davenport diocese might be helpful to Vermont’s Catholic diocese as it decides what to do after a jury last month awarded $8.7 million to a former altar boy molested in the 1970s by the Rev. Edward Paquette.

The award stunned the diocese. Bishop Salvatore Matano worried afterward about the "serious impact" the verdict would have on the diocese. Lead church attorney Tom McCormick said he would begin looking for ways to resolve the remaining cases.

Time is not in the diocese’s favor as it considers what to do, however.

The next clergy abuse trial is scheduled to begin in just nine weeks and will focus on similar claims by another alleged Paquette victim. Twenty-two clergy sexual abuse lawsuits are pending, including 17 alleging molestation of altar boys by Paquette.

Meanwhile, the diocese has appealed the $8.7 million award. The Vermont Supreme Court will likely not rule on the matter until late next year.

McCormick said last week the diocese is considering an array of options regarding its handling of the abuse cases, but said it was too early to discuss what the diocese might do.

"Everything is in flux right now," he said. "We’re brainstorming and considering various options."
Seeking solutions

Timothy Lytton, an Albany, N.Y., law professor and author of a new book on clergy sexual abuse litigation, said there are no easy ways for a diocese to resolve a priest sex abuse scandal.

"Bishops are understandably really nervous about the size of financial settlements and the unknown future liability issues," he said.

Dioceses in the United States have paid close to $2 billion to resolve an estimated 3,500 priest sexual abuse claims.

Lytton said a diocese seeking a permanent resolution of such claims has three choices. It can settle each case separately; settle them all together through a mediator or via a class-action lawsuit; or file for bankruptcy and let a judge oversee the settlement process.

The problem with settling cases one at a time — either through trials or by negotiation — is that the resolutions can favor those with the most aggressive lawyers or whose claims are addressed most quickly, Lytton said.

"The people who get in first can deplete church assets, and there may not be anything left for the people who get in later," he said. "The first-come, first-serve approach doesn’t work well."

Settlements with groups of clergy abuse victims can avoid such pitfalls, according to Terry McKiernan of BishopAccountability.org, a Massachusetts clergy abuse watchdog group.

McKiernan pointed to the case of the Covington, Ky., diocese, which in 2005 agreed to pay $120 million to more than 100 clergy sexual abuse victims represented in a class-action lawsuit.

"The Covington diocese had really one of the worst records for priest abuse in the country at the time," McKiernan said. "They came out of it as well as anyone expected."

McKiernan said the class-action lawsuit approach worked because the judge in the case was quick to validate that such a "class" of potential victims existed, which allowed more people to come forward with claims against the diocese.

"Everybody knew there were a lot more victims out there, so it was a good approach to take," he said. "It hasn’t happened that way elsewhere."

More often, he said, groups of cases are folded into each other, with mixed results. In Los Angeles, the diocese last year agreed to pay $660 million to settle claims with a group of 500 victims, several years after paying $114 million to 86 other claimants.

The settlement included a stipulation that the diocese release documents related to sexual misconduct by its priests but the disclosures have not occurred. The settlement also spared Los Angeles Cardinal Roger Mahony from having to testify in court about his role in covering up abuse by priests in the diocese.

"Nothing has come out yet," McKiernan said. "There is still a lot of fighting going on."
The bankruptcy option

Six dioceses — Portland, Ore., San Diego, Tucson, Ariz., Davenport, Spokane, Wash., and Fairbanks, Alaska — have chosen bankruptcy protection as a means of resolving the claims of clergy abuse victims.

Tom Reese, a Jesuit priest and a senior fellow at a theological research center connected with Georgetown University, said bankruptcy offers the cleanest way to extricate a diocese from a clergy abuse scandal, but it comes at a cost.

"Once you go bankrupt, you lose control," Reese said. "The judge decides who gets what. It’s not something a church wants to do lightly. Your books are totally open to the investigators, the judge, the plaintiffs’ attorneys. It’s all laid out there."

Shaun Cross, a lawyer who represented the Spokane diocese during its bankruptcy, said the process allowed the rural-oriented diocese to deal with victims fairly and finally put its painful scandal to rest.

"We had two serial pedophiles and a great number of claims, " he said. "The only way to get a final resolution was bankruptcy. A delay would have horribly re-abused the victims. These things needed to be resolved once and for all."

The bankruptcy process required the diocese to aggressively advertise in the region to encourage people with claims to come forward. Cross said the effort resulted in more than 100 new victims filing claims. The diocese agreed last year to pay $48 million to 170 victims.

Cross said the Spokane diocese, like Burlington’s, is mostly rural. Also like Burlington, the Spokane diocese was unable to locate the insurance policy that covered the period when most of the abuse occurred.

The matter was resolved, however, and the insurer ended up paying $20 million of the $48 million. The balance was obtained through parish fundraising and by liquidating assets, including the diocese’s headquarters and the bishop’s house, Cross said.

Not all bankruptcies go smoothly, said Kelly Clark, one of several lawyers who represented clergy abuse victims in Portland in 2004 when the Oregon diocese became the first in the country to seek bankruptcy protection.

The Portland diocese ultimately agreed to pay $75 million to 171 victims, and Clark said he expects the ultimate price tag will top $90 million, once a fund for potential future claimants and other costs are included.

Clark also said the Portland diocese could have saved itself millions of dollars had it chosen to work cooperatively with the victims years ago instead of denying their allegations and fighting with them in court.

"The church never misses an opportunity to miss an opportunity," Clark said.

Whiston, the Davenport parishioner, agreed. She said she helped found Concerned Catholics of the Davenport Diocese after learning about her diocese’s attempts to cover up allegations of priest sexual abuse of children.

"If our church was interested in saving its assets, it took absolutely the wrong course of action from the get-go," she said.

Whiston said the stance of the Davenport diocese changed dramatically when the Most Rev. Martin Amos became its bishop in late 2006. She credited Amos for moving quickly to wrap up the diocese’s bankruptcy case, settle with victims and put an end to its secrecy policy.

Through the diocese’s Web page, a person can now access an accountant’s review of the diocese’s assets. Whiston also said Amos has offered to accompany clergy abuse victims back to their churches to talk to parishioners about what happened to them.

"It’s been incredibly liberating," she said. "It shows how completely human the institution of the Catholic Church is. The church was inspired by God, but it’s run by humans."

Contact Sam Hemingway at 660-1850 or e-mail at shemingway@bfp.burlingtonfreepress.com