Bankruptcy Judge Approves Rockville Centre Diocese $320M Sex Abuse Claims Fund
A federal bankruptcy judge has approved a Chapter 11 plan for the Roman Catholic Diocese of Rockville Centre, New York that includes a $320 million fund to compensate victims of clergy sexual abuse and settles insurance issues.
Judge Martin Glenn of the US Bankruptcy Court of Southern New York approved the plan unveiled in September under which the diocese, parishes and other related entities will contribute a total of $234.8 million. Insurance companies will contribute $85.5 million.
The total proposed settlement was reached after court-ordered mediation during which the insurance settlement was a major issue. Survivors agreed to the plan.
Among the settling insurers are Allianz ($59 million), London Market insurers ($25 million), Evanston ($1 million) and Lexington ($525,000). The insurers issued policies covering the time period from 1976 to 1986.
The settlement also resolves what the judge called “highly contentious and costly” sexual abuse litigation in district court against insurers and provides immediate funds so the trust may make payments to claimants “who have waited far too long for compensation.”
The participation of another insurer, Arrowood Indemnity (formerly Royal Indemnity), is unresolved as it is currently involved in liquidation proceedings in Delaware.
The diocese maintained that the agreement with settling insurers was an exercise of its business judgment much like the sale of any property to obtain funds and should be approved. The bankruptcy court agreed, turning away certain objections by the US Trustee of the Department of Justice.
Ecclesia Assurance Co. provided all insurance for the diocese for alleged sexual abuse that occurred after 1986. Ecclesia is a New York licensed captive insurer and reinsurer.
The Rockville diocese filed for protection under bankruptcy in October 2020 as it faced more than 600 lawsuits of alleged clergy abuse after New York State enacted the Child Victims Act in 2019. The law allowed survivors to file retroactive lawsuits and eliminates the statute of limitations for all future lawsuits based on childhood sexual abuse claims.
The Rockville Centre diocese has 132 parishes. Priests working at numerous churches within the diocese have been accused of sexually assaulting minors. The diocese’s filing for bankruptcy halted the abuse cases in state court subject to the church coming up with a plan with insurers and survivors and approved by the bankruptcy court to handle the claims.
The bankruptcy court had given the church until October 31 to come up with a plan. The diocese released the terms on September 26. If there has been no plan, the judge could have ended the bankruptcy process and returned the lawsuits to state court. The first trial was scheduled to start in just weeks.
In April 2024, the diocese proposed a $200 million settlement that was rejected by survivors. The bankruptcy court then ordered the parties to restart settlement negotiations.