Spokane Diocese Settles Sexual Abuse Claims with Two Insurers

July 10, 2006

The Roman Catholic Diocese of Spokane has reached agreements with two more insurance carriers on payments to cover sexual abuse claims as the diocese’s bankruptcy case heads into mediation.

In a statement issued late Thursday, Bishop William S. Skylstad said CNA Insurance had agreed to pay $3.5 million and the Washington Insurance Guaranty Association, which took over the policies of defunct Home Indemnity Co., $999,999.99.

Counting interest, Skylstad said in the statement, the settlements boost the total to more than $20 million from six insurance companies to help settle claims of sexual abuse by priests that led the diocese to file for Chapter 11 bankruptcy protection in December 2004.

A one-day mediation session was scheduled Friday before U.S. Bankruptcy Judge Greg W. Zive in Reno, Nev., but neither side was predicting a breakthrough. Parties to the case also have agreed to a weeklong session next month in Spokane.

The diocese serves about 90,000 Catholics in 82 parishes in 13 Eastern Washington counties. Land and buildings owned by the parishes are estimated to be worth about $80 million. In its bankruptcy petition, however, the diocese listed assets of $11 million against liabilities of at least $81.3 million, most from sex abuse claims.

In a key ruling last month, Senior U.S. District Judge Justin L. Quackenbush reversed a finding by U.S. Bankruptcy Court Judge Patricia C. Williams, who held that churches and schools were owned by the diocese. Quackenbush wrote that parishes own their churches and schools and returned the case to Williams for further proceedings.

Earlier, Williams rejected a $45.7 million settlement offer by Skylstad to a group of 75 people who claimed to be victims of sexual abuse by clergy, ruling that a settlement must cover all claimants. The bishop then formally withdrew the offer last month.

Ownership of parishes and their assets remains a crucial issue in determining how much money victims may receive.

Lawyers for those suing the diocese have argued that Quackenbush’s ruling means Williams must conduct evidentiary hearings and could even order separate trials to resolve the ownership dispute in each parish.

Lawyers for the diocese and parishes argue that the ruling left little possibility that the bankruptcy judge could rule that the diocese owns parish churches and schools.

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