Archdiocese reaches joint reorganization plan; $210 million for survivors largest settlement of its kind

The Archdiocese of St. Paul and Minneapolis has reached a consensual plan with a committee representing clergy sexual abuse survivors to resolve its bankruptcy, offering $210 million for restitution to claimants. The settlement is the largest ever reached in a bankruptcy case related to clergy sex abuse.

by Maria Wiering - Catholic Spirit

"By means of this consensual plan, the archdiocese and its parishes bring definitive resolution to this matter in a way that avoids further litigation and expense, and that allows the local Church to carry on with its mission of spreading and living the Gospel Jesus Christ,” said Archbishop Bernard Hebda during an afternoon press conference announcing the agreement May 31 at the archdiocese’s central offices in St. Paul.

Archbishop Hebda expressed gratitude for the survivors who have come forward.

“Without their courage and persistence, today could not be possible,” he said. “I’ve been humbled by their willingness to share their stories with me. To those of you who have done so, I thank you for that gift. I recognize that the abuse stole so much from you — your childhood, your innocence, your safety, your ability to trust, and in many cases, your faith. Relationships with family and friends, relationships in your parishes and communities were harmed. Lives were forever changed. The Church let you down, and I’m very sorry.”

At an earlier press conference May 31, St. Paul attorney Jeff Anderson, who represented most of the abuse survivors, also announced the settlement, calling it “a story of trauma to triumph.”

“This is some affirmation, as well as accountability,” he said of the plan while standing with several sexual abuse survivors, their advocates and other attorneys, many of whom wiped away tears throughout the press conference. “This all represents hope, help, healing, and … courage in the pursuit of truth.”

Speaking at Anderson’s press conference, Jamie Heutmaker, a survivor who is part of the Unsecured Creditors Committee, which represents survivors in the bankruptcy process, expressed his gratitude for people who have supported him in the nearly five decades since he was abused.

“Today is a great day for us and all survivors,” he said. “There’s still work to be done, but we’ve obviously done some really good work here, which I’m really proud of.”

The consensual plan includes more than $50 million in increased funding from the archdiocese’s previous plan of reorganization, which offered $156 million for restitution. The additional funds came from insurers, archdiocesan funds and parish contributions. The approximately $170 million contribution from insurers is the largest contribution from insurance carriers in the history of Catholic bankruptcy settlements, according to Anderson’s office.

Pending court approval, the plan’s $210,290,724 settlement, minus administrative expenses including unpaid attorneys’ fees, will be administered for survivor restitution through an independent trustee. As part of the plan, parishes will receive a channeling injunction which ends all litigation against them arising from this matter.

The funds will be available for distribution upon its approval by Judge Robert Kressel, who is overseeing the archdiocese’s bankruptcy proceedings.

Archdiocesan leaders hope the bankruptcy can be completely resolved within a matter of months.

Lengthy process

The consensual plan was the result of years of mediation between the archdiocese, insurers, parishes and representatives of survivors. The archdiocese filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in January 2015 amid mounting claims of clergy sexual abuse going back decades against priests and others associated with the Church in the archdiocese. Archdiocesan leaders said reorganization would ensure abuse survivors would be equitably compensated while the archdiocese continued its mission. Mediation began immediately.

In May 2016, the archdiocese filed a plan of reorganization, initially offering $65 million for abuse survivor remuneration. Over the following months, that amount increased to $156 million, primarily through additional insurance company settlements.

As part of its bankruptcy, the archdiocese sold its three chancery buildings on Cathedral Hill in St. Paul, as well as a fourth property it owned near Northfield. It later moved its offices to St. Paul’s Dayton’s Bluff neighborhood to rental property.

In August 2016, the Unsecured Creditors’ Committee filed a separate plan for the archdiocese’s reorganization, asserting that the assets of 187 parishes in the archdiocese’s boundaries, three Catholic high schools and the Catholic Community Foundation of Minnesota should be merged with the archdiocese’s assets in a plan for reorganization. Kressel later ruled that the other organizations’ assets did not legally require consolidation. The UCC appealed the ruling twice, but it was upheld by the U.S. District Court in December 2016 and the 8th U.S. Circuit Court of Appeals in April 2018.

While 11 other U.S. dioceses had filed for bankruptcy related to claims of clergy sexual abuse between 2004 and the archdiocese’s filing, the archdiocese’s reorganization was the first to include competing plans. In March 2017, both plans were sent to creditors, including abuse claimants, for a balloting vote. Abuse claimants voted overwhelmingly for the UCC plan, while other claimants voted overwhelmingly for the archdiocese’s plan. The decision for plan approval ultimately rested with Kressel.

In December 2017, Kressel denied both plans and ordered the archdiocese and UCC to return to mediation with the goal of reaching a consensual plan. In a memorandum explaining his decision, Kressel expressed concern about the eight abuse claimants who had died between then and when the archdiocese entered bankruptcy in January 2015, and about others who might die as the reorganization process “drags on.”

The archdiocese, insurance carriers, parish representatives and UCC returned to mediation, ultimately arriving at the consensual plan May 30.

Speaking at the archdiocese’s press conference, Tom Abood, chairman of the Archdiocesan Finance Council and the Reorganization Task Force, said that arriving at the consensual plan required more than18 full days of in-person mediation before final arrangements could be directly negotiated. He said the proposed plan would be finalized within the next several days, “turning this agreement into definitive documentation for Judge Kressel’s consideration.”

“We will do everything we can to bring this to a formal conclusion as soon as possible,” he said.

Besides the archdiocese, 14 U.S. dioceses and two religious orders have filed for bankruptcy as a result of abuse claims. Among them are the Minnesota dioceses of Duluth and New Ulm. Bishop Donald Kettler of St. Cloud announced in February that his diocese plans to file for bankruptcy in the future.

Focus on survivors, protecting children

During the archdiocese’s bankruptcy process, 453 people — 342 men and 111 women — filed sexual abuse claims against the archdiocese, according to Kressel’s December 2017 memorandum. Most claims were against priests, but some were also against religious brothers and sisters, deacons, and lay teachers and coaches. More than 67 percent of claims were from the 1960s and 1970s. Twenty people claimed they were abused in 1990 or later, with three claims of abuse that occurred after 2010.

In 2013, the Minnesota State Legislature passed the Minnesota Child Victims Act, which lifted for three years the statute of limitations on sexual abuse civil suits. In December 2013, the archdiocese disclosed the names of 34 priests with abuse claims against them; 30 of the claims had been substantiated. At that time, the archdiocese was facing 14 lawsuits involving 23 claimants alleging they were abused as a minor by a clergy member who at one time had an assignment in the archdiocese.

As of May 31, 2018, the archdiocese has listed 61 priests with substantiated claims of sexual abuse of a minor within the archdiocese. It also lists others who have served in the archdiocese with substantiated claims of sexual abuse elsewhere.

Among the first group’s names is Curtis Wehmeyer, a former priest of the archdiocese who sexually abused three brothers in 2010-11 while assigned to Blessed Sacrament in St. Paul. He was dismissed from the clerical state in 2015 and is incarcerated in Wisconsin for charges related to the abuse. In June 2015, the Ramsey County Attorney’s Office filed civil and criminal charges against the archdiocese, alleging it failed to protect children in the Wehmeyer case.

Ten days later, Archbishop John Nienstedt and Auxiliary Bishop Lee Piché resigned their leadership in the archdiocese, citing the need to give the archdiocese a new beginning amid its challenges. That day, Pope Francis named Archbishop Bernard Hebda to oversee the archdiocese as an apostolic administrator, later naming him its permanent archbishop.

The RCAO and the archdiocese reached a settlement agreement on the civil charges in December 2015, resulting in the archdiocese fulfilling certain child protection obligations under the ongoing oversight of the RCAO. At the time, Ramsey County Attorney John Choi called the mandated child safety policies “unprecedented,” and, according to the archdiocese, they continue to be the national standard for protecting children and vulnerable adults.

In June 2016, the RCAO dropped the criminal charges against the archdiocese and amended the settlement agreement. The archdiocese’s ongoing child protection efforts are being executed in collaboration with the RCAO and are reviewed every six months by a Ramsey County judge. At each review, the judge has found the archdiocese substantially compliant with the agreement, which includes routine audits of parishes employing safe environment procedures and protocols. At the most recent review in January 2018, the judge said she saw examples of the archdiocese “not only honoring the letter of the agreement, but the spirit of the agreement.”

Instrumental to the archdiocese’s child protection efforts has been its Office of Ministerial Standards and Safe Environment under the direction of Judge Tim O’Malley, who was hired to structure the fledgling office in 2014. He has worked closely with Choi, other RCAO officials and law enforcement as the archdiocese has implemented and adhered to its safe environment policies. During his press conference, Anderson commended O’Malley and his colleague, former Minnesota Bureau of Criminal Apprehension head Michael Campion, saying that their internal reviews “have never before been done in that way, with that kind of rigor.”

During the archdiocese’s press conference, Archbishop Hebda thanked Kressel; attorneys, including Anderson and his colleague Mike Finnegan, and the archdiocese’s attorneys at Minneapolis-based Briggs and Morgan; Magistrate Arthur Boylan and Paul Van Osselaer, mediators in the bankruptcy process; and Auxiliary Bishop Andrew Cozzens, the archdiocese’s priests, faithful, staff and volunteers, including Abood.

The resolution of the bankruptcy means another step toward providing justice to survivors, Archbishop Hebda said, but he emphasized that the archdiocese’s work to protect children is not complete.

“While today marks the end of a very difficult period for many, today really signals a new beginning,” he said. “The completion of the bankruptcy process allows pursuit of a new day that has many realities — atonement, healing and restoration of trust.”

He later added: “I sure hope that for those who have been harmed in the past, that this brings closure for them. We’ve been working with them really carefully to try to formulate this [plan] in a way that benefits them to the maximum. I’m hoping that it will. I know they’ve taken great comfort from the fact that we’ve done so much to do everything that we can to prevent that from happening to another young person. For most of the survivors I’ve met, that’s the No. 1 goal that they have — making sure that what happened to them never happens to another young person.”

In his comments, Abood thanked Archbishop Hebda for his leadership during the bankruptcy process.

“He set our course in this matter, he immersed himself in the detail, he kept us focused on a fair and just resolution to this matter,” he said. “He never lost sight of the objective of moving towards a day, another step toward healing, for both survivors and the Church.”