January 31, 2014 / 11:45 PM / 6 years ago

Montana Catholic diocese files for bankruptcy in abuse settlement

Jan 31 (Reuters) - A Montana Roman Catholic diocese filed for bankruptcy on Friday as part of a proposed $17.5 million settlement with hundreds of adults alleging childhood sexual abuse by its priests, nuns and lay workers, a church spokesman said.

The Helena diocese, serving an estimated 44,500 Catholics in 57 parishes and 38 missions in western Montana, is the eleventh U.S. diocese to file for Chapter 11 bankruptcy reorganization since 2004 because of liabilities linked to child abuse cases.

Under the proposed agreement, the church would pay $15 million to settle claims brought by 362 victims in two lawsuits filed in 2011. It also would set aside an additional $2.5 million for future claims and to cover legal costs, said Helena diocese spokesman Dan Bartleson.

“We don’t really have any reserves,” Bartleson said, adding that bankruptcy protection would help facilitate the payouts to abuse survivors. The agreement must still be approved by a federal bankruptcy court and by victims.

Attorneys representing the majority of claimants said the move brought the church closer to accepting responsibility for abuse that spanned three decades beginning in the 1940s and affected both young children and young adults.

“It’s an important step in the process of accountability by the church and one part in the long process of healing for the sex abuse survivors who have come forward,” said Dan Fasy, an attorney with one of four firms representing plaintiffs.

Child sex abuse litigation has cost the U.S. Catholic Church some $3 billion in settlements in the two decades since the ongoing scandal erupted with a series of child molestation cases uncovered in Boston in 1992.

Unlike dioceses elsewhere, the Helena diocese opted to ensure compensation for victims even as it sought bankruptcy protection, Bartleson said.

The $15 million to be paid to victims will be underwritten by diocesan insurance carriers while the church will provide at least $2.5 million for future claims and litigation. That will further deplete the coffers of a diocese whose financial strains recently caused it to lay off roughly 3 percent of its workforce of 200, Bartleson said.

Fasy said the sexual abuse suffered by his clients at the hands of priests, sisters and lay people associated with the diocese took place on church property, at parochial schools, during church-sponsored outings and at homes of victims by visiting clergy.

Helena Bishop George Leo Thomas said none of those “credibly” accused were now active in the ministry and most were deceased.

“I express my profound sorrow and sincere apologies to anyone who was abused by a priest, a sister, or a lay church worker,” he said in a statement.

The settlement does not include the Ursuline Sisters, also defendants in the case against the Helena diocese, Bartleson said. Claims against the sisters are tied to Native Americans who allege they were abused decades ago as students in Montana schools overseen by the order. (Editing by Cynthia Johnston and Tom Brown)

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