Saturday, November 21, 2009

ONGOING COVERAGE: SPOKANE DIOCESE BANKRUPTCY

Diocese issues payout plan

Amounts will depend on form of abuse

John Stucke
Staff writer
March 27, 2007

A person raped by a priest as a child can receive a settlement of up to $1.5 million from the Catholic Diocese of Spokane, Bankruptcy Court records show.

The diocese has released its payment plan, or matrix, that describes the legal process necessary to assign dollar amounts to specific acts of sexual abuse. The payments are part of a diocese plan to emerge from bankruptcy protection and settle claims of priest sex abuse dating back decades.

The matrix has four main categories that include a variety of sexual acts, such as intercourse, masturbation, touching a clothed child, phone sex and playing sexual games, such as strip poker.

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Dozens of victims have already met with court-appointed claims reviewer Kate Pflaumer – a former U.S. attorney in Seattle – to give sworn statements and present evidence. Pflaumer will decide first whether a claim is credible, and if so, where the victim fits on the claims matrix. That action determines how much money the diocese will pay the victim.

Though the matrix gives her a financial guideline, the document also provides room for aggravating factors such as age of a child when the abuse occurred, the frequency of abuse, and physical and psychological trauma that has affected the lives of victims into adulthood.

The lower end of the matrix calls for minimum payments of $15,000, for abuse such as a priest exposing himself to a child. At the top end – acts of intercourse – the payment range is $750,000 to $1.5 million.

There are 140 people who could have their sex abuse claims fed through the matrix. The diocese has already reached settlements with 36 other victims. Another 15 claims have been disallowed because they were either duplicate filings or alleged sexual abuse that was not committed by diocesan priests, such as actions by Jesuits or priests in other parts of the country.

The diocese has agreed to pay $48 million as part of a sweeping bankruptcy settlement proposal with all parties, including victims, insurers, vendors and the Association of Parishes.

Creditors, including abuse victims, have received ballots and are reviewing the settlement and bankruptcy plan. U.S. Bankruptcy Court Judge Patricia Williams will hold a confirmation hearing April 24 and will take the creditors' mail-in votes into account when deciding whether to approve the plan. People on both sides expect the consensual deal to pass.

After professional fees and certain service-related claims – loans, money owed to venders and the like – are paid, the money left over will go to victims based on the matrix valuation of their claims. That's likely to be around $38 million to $40 million.

Some victims could receive payment by the end of the year, though the payment schedule from parishes and complexity of the review process makes that unlikely.

The $48 million is a firm number, said diocese attorney Shaun Cross. If the claim awards outpace the funds available, the claims will be paid on a proportional. It works the other way, too. If the claim awards fall short of the settlement funds, the extra money will be split on a proportionally among victims.

Some victims may seek mini-trials called adversary proceedings within the bankruptcy case. Any verdict, however, must still be calculated by Pflaumer so that one large jury award cannot deplete the settlement funds for other victims.

In other developments, attorneys for the diocese and creditors have asked that Seattle attorney Gloria Nagler be appointed trustee.

Nagler would manage the $48 million trust established by the diocese and ensure that money is paid to victims and that the diocese complies with its fundraising commitment. Parishes are being asked to contribute at least $10 million; four large parishes will contribute another $6 million. Contributions will be secured by parish property.

Nagler runs her own bankruptcy law practice in Seattle called Nagler & Associates. She earned a bachelor's degree from the University of California at Berkeley in 1975 and a law degree from the University of Washington in 1982. She has practiced law in Washington since 1983.

Also, two elderly priests who the diocese admitted had sexual contact with children say in court filings that they are owed money through priest retirement contracts. James O'Malley claims he is owed $5,309, and Theodore Bradley is seeking $200.

No one has objected to those claims, which are included in the bankruptcy settlement plan.