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Financial Stakes High In Suits Against Church

Jun 4, 2002 | The Courier-Journal

The 104 people now suing the Roman Catholic Archdiocese of Louisville over allegations of past sexual abuse by priests have to clear tall legal hurdles to win their cases.

The entire pile of lawsuits could collapse, for example, if the courts reject the plaintiffs' argument for suspending the statute of limitations -- state laws that normally would bar lawsuits alleging decades-old abuse.

But if the plaintiffs' claims are borne out, the archdiocese could face tens of millions of dollars in damages -- based on the experience of other Catholic dioceses in the United States.

The Rev. Thomas Doyle, a canon lawyer who worked at the Vatican Embassy in Washington when the litigation explosion began in 1984, estimated that Catholic dioceses and organizations in the United States have paid $1.3 billion in verdicts, settlements, legal fees and medical costs related to clerical sexual abuse.

While liability insurance covers some of the costs, dioceses such as those in Dallas, Santa Fe, N.M., and Santa Rosa, Calif., have had to sell property or borrow money to help cover claims in the tens of millions of dollars -- options now being considered by the Archdiocese of Boston, which is the epicenter of the current church scandal after reports that its leaders knowingly assigned abusive priests to parishes.

Doyle said the church nationally has settled about 3,000 legal claims since 1984. ''Settlements now are getting into the millions'' per person, he said.

Some church officials give lower estimates, but Doyle contends they downplay the numbers. Doyle, a longtime critic of the church's response to these cases and now an Air Force chaplain, plans to give expert testimony on behalf of attorney William McMurry, who is representing most of the Louisville plaintiffs.

Brian Reynolds, chief administrative officer for the Louisville archdiocese, said it's ''premature to speculate'' on what damages might result from the dozens of lawsuits filed in Louisville since April 19.

But he noted that insurance may cover some or all costs -- and he stressed that Louisville parishioners should not fear that money they put in the offering plate will go to plaintiffs and lawyers.

Only 5 percent of parish receipts are sent on to the archdiocese.

''The majority of what people give to the church is given at the local level and remains there,'' he said.

Reynolds also said the archdiocese's financial profile -- including a $21 million administrative budget, about $100 million in annual parish revenue and $79 million in net assets -- remains healthy.

Financial help scarce

In the past, some dioceses lent money to others that were in trouble. But that is less likely to happen now because every diocese is bracing for possible legal claims, according to the Rev. Thomas Reese, a longtime church observer and editor of the national Catholic magazine America.

''If everybody is in a sinking ship, there are no buckets to loan,'' he said.

Nor is there a central United States Catholic treasury, said Sister Mary Ann Walsh, spokeswoman for the U.S. Conference of Catholic Bishops, who noted that the conference depends on annual assessments from dioceses.

And Walsh said U.S. dioceses should not expect a bailout from Rome.

''Money goes from this country to the Vatican; it does not come back,'' Walsh said. ''If you look at the great scheme of things, the idea where anybody would be supporting the United States in a world where people are starving in Africa and Asia would be ludicrous.''

Reese added that he can't foresee the Vatican selling off its one major asset -- its art collection -- to foreign billionaires.

''If they do that, the Italians will invade and take it back,'' Reese said.

The prognosis is clear, Reese said: ''There are a number of dioceses that are going to declare bankruptcy.''

Some dioceses already have come close.

The Archdiocese of Santa Fe paid at least $50 million in settlements and the Diocese of Dallas $30 million in a single case, according to The Associated Press. The Archdiocese of Boston backed out of a $15 million settlement with 86 victims this year, saying it feared being unable to pay dozens more victims who came forward this year.

Even small dioceses have taken hits.

The Diocese of Covington reported on May 17 that sexual misconduct by priests has cost it $3.2 million over the years. Of that total, $1.8 million in settlements was covered by insurance.

Reynolds said the Louisville archdiocese hasn't added up what it has paid in the past, though he acknowledges it has made payments in confidential settlements with some abuse victims and their relatives.

But Reynolds said church officials plan to begin including a separate line item on abuse-related costs in its published annual budget audits. Costs include counseling, legal fees and settlements.

The archdiocese's $79 million in net assets mostly include investments but also include $4.3 million in the central administration's property assets. The archdiocese does not maintain a list of current market values of all church properties, which include 124 parishes and 68 schools in 24 counties. County property valuation administrators say they also do not estimate current market values because church properties are taxexempt.

Seeking big damages

McMurry, who is lead counsel for 100 of the alleged victims who have sued as of Friday, said he may seek damages of as much as $1 million for each of the more severely affected plaintiffs, based on costs for past and future counseling, psychiatric medications, hospitalizations and general pain and suffering.

He could not say how many plaintiffs are in this category until they've been assessed by psychological specialists.

''All we will ask for on behalf of these victims is for a jury to make an award that will fairly and adequately compensate (victims and) fill up the hole created in their lives,'' he said, adding that the main goal is not money but ''bringing about social change and personal healing.''

To win their cases, McMurry's clients will need to prove that the abuse occurred, that it caused them lasting harm and that church officials covered up the alleged abusive tendencies of the 17 priests and other employees accused of misconduct between the 1950s and 1990.

Jurors could also award punitive damages against the archdiocese if they agree with McMurry's allegation that it was knowingly assigning sexual predators to positions working with children.

Juries have been known to make large punitive damage awards against corporations that they conclude have knowingly put people at risk, according to Richard C. Ausness, professor of law at the University of Kentucky College of Law.

''You can get a jury pretty mad at you,'' he said, citing a Florida jury's decision to assess $145 billion in punitive damages against a tobacco company.

While juries might think twice about monetarily punishing a nonprofit religious organization, ''I'm not sure that's going to be the case here if the bad publicity from the Boston case spills over,'' Ausness said. ''If there's anything they (church officials) did that can be characterized as a cover-up, I don't think a jury would be very sympathetic at all.''

And big awards can enrich a lawyer.

McMurry said he is taking all of his cases on contingency, meaning ''I get nothing unless I win.''

McMurry declined to say what he would earn if he does win, saying the information was between him and his clients.

But Ausness said lawyers typically earn from one-third to 40 percent of verdicts in personal-injury cases they take on contingency, and plaintiffs must pay for expenses out of their own share.

'A very risky case'

A large litigation case can also ruin a lawyer. That was illustrated in the book and movie ''A Civil Action,'' the true story of a Massachusetts lawyer who brought down his whole law firm under the crushing costs of a multimillion-dollar water-pollution case.

Attorney Sylvia Demarest -- who won a $30 million settlement from the Diocese of Dallas on behalf of former altar boys molested by a priest -- said lawyers suing the church typically must hire psychiatrists to assess the damage to alleged victims and incur other expenses. All of this comes with no guarantee of a victory.

''It's a very risky case,'' she said, adding that the Archdiocese of Louisville probably will defend itself vigorously, simply out of need for survival.

''The good news is that he (McMurry) has cases numbering in the 90s,'' she said in an interview when the lawsuits were approaching the 100 mark. ''The bad news is he has cases numbering in the 90s. The more cases that get filed, the more intransigent they (church officials) become.''

McMurry argues that ''the compensation of lawyers who take these enormous financial risks is reasonable by all standards.''

But Reese laments mega-verdicts against the church.

''Big jury awards make sense as a way to punish profit-making businesses, but they are a very blunt instrument for dealing with non-profit organizations, which have no stockholders,'' his America magazine said an April 22 editorial.

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