Boy Scouts reach record $1.9B deal to settle abuse claims
BSA's agreement with The Hartford and LDS Church is the largest sex abuse settlement fund in U.S. history and could double by year-end.
On Sept. 14, the Hartford Insurance Co. and the Church of Jesus Christ of Latter-day Saints agreed to settlements of $787 million and $250 million, respectively, to release sexual abuse claims involving the Boy Scouts of America.
Paired with the BSA’s $850 million settlement approved by Chief Judge Laurie Selber Silverstein in August, the total amount earmarked for survivors as part of the BSA’s Chapter 11 plan in the District of Delaware now stands at just under $1.9 billion, making it the largest sex abuse settlement fund in U.S. history.
With negotiations still underway with other BSA insurers and chartered organizations, attorneys for abused scouts estimate the final settlement amount could double by the end of the year.
“We’re on our way to building the type of funding we wanted to build from the beginning. We’re trying to build the largest fund possible,” said Ken Rothweiler, co-founder and shareholder of Eisenberg, Rothweiler, Winkler, Eisenberg & Jeck, which represents about one in five claimants. “I’d say we’re probably about halfway there.”
The new settlements aren’t a total hit with victims’ attorneys, with the official tort claimants’ committee arguing neither is high enough. In a press release, the committee, represented by Pachulski Stang Ziehl & Jones, said each of the 82,500 childhood sexual abuse survivors would get approximately $9,500 from The Hartford and $3,000 from the church if the money were divided evenly. However, the committee noted that that amount doesn’t match the liability the insurer and church face.
“As each month passes in this bankruptcy case, the Boy Scouts’ bankruptcy becomes less about the survivors and more about how the Boy Scouts will exit bankruptcy at the expense of survivors,” committee vice-chair Doug Kennedy said. “It will be up to the tort claimants’ committee to continue advancing the interests of survivors because the Boy Scouts, local councils, chartered organizations, and their insurers are unwilling to do the work necessary to reach a resolution that is fair to survivors.”
The settlement agreement does stipulate the settlement money from the Mormon church would only be distributed to those who have claims against both the BSA and the church — a subset claimants’ attorneys estimate to be 10,000 victims maximum — rather than lumped in with the rest of the settlement funds that will be split across the entire class. If that’s approved, those claimants could get around $25,000 each from the church.
Attorneys expect to reach settlements with additional churches that have chartered with the BSA, including the Catholic, Methodist and Episcopal churches, which could similarly direct settlement funds to other subsets of claimants.
The Hartford initially offered a $650 million settlement, which was rejected as too low by BSA’s attorneys in part because a most-favored nations clause in the original deal would have diminished that number by an estimated one-third.
That clause has been omitted in the new settlement, making the proposed difference between the two significantly larger than the $137 million difference on its face. The difference could end up growing more, as The Hartford has agreed to put up $137 million after the settlement’s approval, rather than waiting for a final unappealable order, giving those handling the funds additional time to potentially grow them through investments.
Rothweiler said more settlements in the case could be reached within a matter of weeks, with some BSA insurers having proposed settlements already.
“This settlement with Hartford, which is really historic, is going to start a waterfall from all of the other insurance companies,” he said. “When the big insurers like Hartford settle, the smaller insurer companies, we think, will follow.”
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