Insurers say majority of Scout abuse survivors' claims don't meet tort standards
The insurers argue the survivors’ attorneys formed the Coalition of Abused Scouts for Justice to take control of the case.
A group of insurers have accused attorneys of seeking out as many sex abuse claims against the Boy Scouts of America as possible in order to have more leverage in bankruptcy proceedings.
In objection filings unsealed Friday, 19 insurers said many of the 82,000 claims involved have not been sufficiently vetted, with attorneys signing off on the claims determined to file as many as possible in an effort to secure what could be billions in contingency payments.
The sealed version of the objection, which asserts both those who have brought valid abuse claims and the insurance companies themselves would face the financial brunt of the plan as-is, was filed prior to last week’s announcement that an updated settlement agreement had been reached among claimants, but the major points raised are generally applicable to the plan before and after its revision.
“They drafted proofs of claims, often with those same attorneys (rather than the purported claimants) signing the forms,” the 110-page objection claims. “Some attorneys were signing literally hundreds of claim forms per day. One lawyer’s photocopied signature was pasted to hundreds of proofs of claim, mere seconds apart. This assembly-line operation was intended to generate as many claims as possible, without even a cursory review as to the legitimacy of the claims.”
The claimants’ attorneys’ formation of the Coalition of Abused Scouts for Justice, the insurers argue, was a way of taking control of the case, with the coalition ultimately proposing base rates for valuing claims 10 times higher than what its own expert, liability forecaster Charles Bates, reasoned they should be.
Bates found that if the 82,000 current abuse claims were being pursued as tort claims, 61% would be barred by the statute of limitations and 87% would either fail entirely or would be significantly discounted without proof of negligence by the Boy Scouts.
Coalition co-founder Ken Rothweiler of Eisenberg, Rothweiler, Winkler, Eisenberg & Jeck, which represents about 20% of all claimants, said his firm implemented a two-tier process for vetting claims for legitimacy, and he believes the other firms that are part of the Coalition have used a similar strategy.
The insurance companies that signed off on the objection are all among those that haven’t reached a settlement agreement, and Rothweiler said with the companies that have the most claims against them already agreeing to settle, the objection is simply an attempt to minimize liability exposure moving forward.
Prior to the Boy Scouts filing for Chapter 11 in February 2020, 275 abuse claims had been filed, and the objection alleges attorneys saw the bankruptcy venue as a way to pursue a mass tort proceeding without the usual checks.
The objection states the coalition has made sure that all claims will be paid out by waiving those tort standards, and the insurers contend that members have attempted to leave claim valuation in the hands of their own leadership and supporters in order to ensure high-value claims are approved at the rates they’ve come up with.
The proposed settlement plan requires releases of liability that aren’t in line with Third Circuit standards, and even with claim numbers allegedly inflated in favor of the claimants’ law firms, they haven’t met the approval levels needed to allow a channeling injunction and releases required to make the proposed plan work, the objection claims.
The insurers say without those requirements met, and while valuations show even with the current record-breaking settlement fund, there’s no way to promise claims can be paid in full at the proposed claim valuation base rates, the settlement can’t be approved.
Additionally, the objection alleges the settlement plan strips insurers of their rights in challenging various aspects of their liability for payouts.
A hearing Friday pushed presentation of the settlement plan for approval back two weeks to March 9, with insurers’ amended objections and the Boy Scouts’ response to be filed in the meantime.
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