New Proposed Settlement Even Worse for Survivors
On September 15, 2021, the Boy Scouts filed a new proposed plan for emerging from bankruptcy. This new proposed plan is even worse for survivors than the last proposed plan.
“The only winners in this latest proposal are the Boy Scouts, their local councils, the Mormon Church, and the Hartford insurance company,” said Michael T. Pfau, a sexual abuse attorney from PCVA who represents more than 1,000 survivors in the bankruptcy. “This proposal is an absolute windfall for them. It is hard to believe that any lawyer who represents abuse survivors would support this proposal. The Boy Scouts are offering abuse survivors a fraction of what their cases are worth and the assets available to pay them. The Mormon Church is reported to have roughly $100 billion in assets, but it is offering just $250 million to compensate the thousands of abuse survivors who were abused in Mormon Boy Scout Troops by Mormon Scout leaders.”
“If anyone claims this is a ‘historic’ settlement, it is historic only because it would be the worst settlement in the history of child sexual abuse cases by a wide margin,” said Pfau’s law partner, Jason P. Amala. “The Boy Scouts want their closest business partners to get off the hook for tens of thousands of abuse claims for just a fraction of their assets. For example, the Orange County Council is facing over 350 claims by abuse survivors, but it would get to keep $25 million of its unrestricted assets. The Silicon Valley Monterey Bay Council is facing over 275 claims, but it would get to keep about $23 million of its unrestricted assets. On the whole, the local councils would get to keep roughly $1.2 billion of their unrestricted net assets.”
Amala takes issue with BSA claiming the new plan will lead to more insurance settlements: “BSA and its supporters are trying to downplay these cheap settlements by claiming more insurance money is on the way, but this new plan settles with one of the two major insurance carriers. What they aren’t telling people is this new plan eliminates one of the last major sources of insurance by settling with Hartford on the cheap. If you were abused in the 1970s, there is likely at least $500,000 available in insurance from Hartford for just your claim. This proposal reduces that amount to an average of less than $10,000 per survivor. Century Insurance Company will be the only major insurer left, but Century has claimed it has no ability to pay the value of the claims it is facing. Nobody who wants abuse survivors to get fair compensation can support this latest proposal.”
“This plan adds insult to injury for child sexual abuse victims by allowing the BSA, its local councils, the Mormon Church, and a major insurance company to escape any meaningful financial responsibility to children who were victimized in Scouting,” said Irwin Zalkin, a sexual abuse attorney who has been representing abuse survivors for more than 20 years and who represents almost 150 survivors in the BSA bankruptcy. “Under this proposal, many child sexual abuse victims will be lucky if they receive a few thousand dollars in compensation. The Mormon Church is one of the most wealthy businesses in this country and it is facing thousands of claims by children who were sexually abused under its watch, usually by Mormon Scout leaders. Rather than ask the Mormon Church to pay a reasonable amount to the children it harmed, the Boy Scouts are proposing the Mormons pay a tiny fraction of what they owe. This is the most insulting proposal I’ve seen in more than 20 years of helping abuse survivors and we will do everything we can to see that it is rejected.”
The BSA’s Latest Settlement Proposal Would:
- Settle approximately 82,500 abuse survivor claims against the BSA and its 251 local councils for $219 million from BSA and $600 million from the local councils. The 82,500 claimants would receive an average of less than $10,000 from those entities
- Allow the local councils to keep more than $1.3 billion in unrestricted assets and approximately $1.5 billion in restricted assets. For example, the Orange County Council in California has at least $38 million in unrestricted net assets and is facing more than 350 abuse claims, but the Orange County Council is only contributing $13,008,500 to the $600 million – the Orange County Council is keeping approximately $25 million of its unrestricted assets.
- Settle the claims of approximately 24,000 abuse survivors who have claims covered by Hartford Insurance Company for $787 million, despite insurance coverage exposure of $8 billion.[1]
- Place the $787 million from Hartford into a settlement fund for all 82,500 abuse survivors. The 82,500 claimants would receive an average of less than $10,000 from the Hartford settlement. The Hartford insurance policies cover 1971-1979, 1981-1982, 1988, and 2012-2013. Most of the policies in the 1970s have per claim limits of $500,000 per year. Any survivor who was abused in those years would no longer be able to recover those limits from Hartford – they would be limited to an average of less than $10,000 from the Hartford contribution.
- Leave the Century Insurance Company as the only remaining insurance company that is facing significant exposure from the bankruptcy claims. Approximately 40,000 Boy Scout claims implicate Century’s insurance policies, but Century has indicated that it does not have sufficient money to pay the 40,000 claims.
- Settle all current and future Boy Scout-related claims against the Mormon Church for $250 million. Approximately 2,300 abuse survivors in the bankruptcy identified the Mormon Church as the organization who chartered their Boy Scout unit, but the real number may be closer to 5,000 because roughly 54% of survivors who filed a claim in the bankruptcy did not identify a charter organization.[2] The proposed $250 million would settle the 2,300-5,000 current claims against the Mormon Church and would also be used to settle the claims of abuse survivors who come forward in the future with a Boy Scout-related claim against the Mormon Church. The Mormon Church is estimated to have $100 billion in assets.
- The “Coalition of Abused Scouts for Justice” (“Coalition”) adamantly opposed Hartford’s prior offer of $650 million, but supports Hartford’s new offer of $787 million. On June 9, 2021, David Molton, an attorney for the Coalition, informed the BSA by letter that Hartford’s prior offer of $650 million “will be overwhelmingly voted down by the survivor community.”[3] At a hearing on May 19, 2021, Mr. Molton told the bankruptcy court that Hartford’s proposal of $650 million was “dead on arrival” and “not supported by any survivor constituency.” [4] The difference between $650 million and $787 million is $137 million, which BSA and the Coalition propose to spread across 82,500 claimants. This means abuse survivors would receive an average of $1,660 more from Hartford than the under the prior proposal at $650 million. The Coalition has not explained why $650 million from Hartford was “dead on arrival” but it now supports $787 million, particularly when then official Tort Claimants’ Committee estimates that Hartford’s exposure is $8 billion.