Minnesota Catholic Diocese Declares Bankruptcy As 74 Child Sex Abuse Victims Cases Are Left Unpayable

St. Mary's 3
St. Mary’s Cathedral is shown Friday, Feb. 16, in St. Cloud.

St Cloud Times

“The outcome for victims of clergy sexual abuse as minors is uncertain after an announcement Wednesday the Diocese of St. Cloud plans to file for bankruptcy.

The diocese received more than 70 new claims of abuse after a state law temporarily lifted the statute of limitations for civil claims of sexual abuse against minors.

Other dioceses across the country have filed for bankruptcy facing similar sexual abuse claims, and outcomes for victims have varied, said Jeff Anderson. His firm, Jeff Anderson and Associates, specializes in civil litigation for victims of child sexual abuse.

His firm and Michael Bryant, a Waite Park lawyer of Bradshaw & Bryant, represent the vast majority of people with claims against the diocese.

The diocese reported 74 additional claims in 2016. Previously, the diocese had seen less than a dozen cases. The claims named 31 clergy members who served in the diocese and 30 parishes.

Most are individual claims, at various states of litigation. Some have not yet been filed, said Josh Peck, an attorney with Jeff Anderson and Associates.

“The biggest thing we want to keep an eye on is the survivors, getting them outcomes that’s fair for them,” Peck said. “It’s never going to erase what’s happened to them. But the goal is to come up with a fair plan to help the survivors get past the pain they had to deal with.”

If the St. Cloud Diocese files bankruptcy, the diocese, the victims and others owed money can come up with plans to distribute the remaining assets. The people owed money have to agree on a plan before it’s accepted. A judge may get involved if an agreement isn’t reached.

Representatives of the victims and the diocese have been working in the past month to lay the groundwork for a resolution or settlement, Anderson said.

“We’ve known for many, many months that we were headed in this direction,” Anderson said. “We were not able to reach a consensual settlement with them, largely because of the insurance companies. They have refused to … participate as we think they should.”

That’s been a pretty typical response from insurance companies, Anderson said

“A couple of insurance companies have been willing to take responsibility,” he said. “In St. Cloud, they have refused to take responsibility. They have taken what we consider to be an unreasonable and hard line. They forced this diocese into bankruptcy, frankly.”

Declaring bankruptcy means the diocese has to declare all of its liabilities. In these cases, that can mean confirming abuse or abusers previously denied or unconfirmed. If a court case continues, legal expenses can lessen the amount the diocese can use to pay liabilities, including claims by victims.

Bryant said the time a bankruptcy takes to finalize can be about a year, but it varies.

The Times contacted the diocese for additional comments to the news release put out Wednesday, but officials said that was all the information available to release.

Whether bankruptcy results in a good or bad result for the victims remains to be seen.

“In a lot of cases, survivors have done relatively OK” after a bankruptcy, Bryant said.

A total of 18 dioceses and religious orders have gone into bankruptcy related to sexual abuse claims, Anderson said.

“We’ve been involved across the country in most of them,” Anderson said. “In some of them, there was a fair and speedy resolution for survivors.”

Others have been more contentious with longer delays, such as a cases in the Archdiocese of Milwaukee, he said.

In Minnesota, three dioceses and a religious order have filed for bankruptcy, including the Archdiocese of St. Paul and Minneapolis, the Diocese of Duluth and the Diocese of New Ulm.

This is not the first bankruptcy related to sexual abuse cases that St. Cloud Bishop Donald Kettler has overseen.

Before coming to St. Cloud, Kettler was the bishop of the Diocese of Fairbanks, which also faced claims of abuse and payouts to victims in Alaska. That diocese declared bankruptcy before most victims saw any compensation, Anderson said.

“I can’t say … what influence that he had or will have,” Anderson said. There were factors involved in Alaska that don’t apply in Minnesota, he said.

In the end, the Fairbanks Diocese paid $9.8 million into a fund to compensate about 300 victims. The diocese also paid $2.5 million for legal fees, accounting and other services.

That’s roughly $33,000 per victim, if all funds were allocated equally, which they weren’t. Victims were compensated based on a number of facts, including the type and severity of the abuse, the vulnerability of the victim, the age of the victim and a statute of limitations.

“That’s considered one of the few bankruptcies where survivors really got ripped off,” Bryant said. “The concern is the bishop will do the same in St. Cloud.”

Other dioceses

Archdiocese of St. Paul and Minneapolis: The Archdiocese of St. Paul and Minneapolis filed for bankruptcy in January, 2015. Anderson said the archdiocese has taken a “hard line and combative attitude.”

The archdiocese created a plan without much involvement from survivors, Anderson said. As a result, there are two seriously competing plans. The court has sent the victims and archdiocese back into mediation.

“We’re working hard to bring it to a conclusion,” Anderson said. “But the Archdiocese of St. Paul and Minneapolis has taken a very combative, belligerent, I think, unnecessarily hard, attitude that has caused extraordinary harm and delay. We’re back at the table with them now, and we’re hopeful we’ll be able to make progress and I believe we are.”

Diocese of Duluth: The Diocese of Duluth filed for bankruptcy in December, 2015. The diocese and claimants are in litigation with insurance companies, Anderson said, with a result pending in federal court. They are also in mediation with the diocese.

Diocese of New Ulm: The Diocese of New Ulm filed for bankruptcy in March, 2017. The survivors and the diocese are exchanging information and in mediation, Anderson said. “

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