New York Dioceses Consider Tapping into Massive Fund for Global Resolution

The Catholic Church in New York is facing a potential watershed moment in its ongoing struggle with sex abuse allegations. As six dioceses grapple with bankruptcy proceedings stemming from thousands of lawsuits, a new development suggests a possible path forward: a statewide settlement that could tap into billions of dollars from an unexpected source.

5 Key Points

  • New York Catholic bishops are considering a ‘global’ sex abuse settlement
  • The settlement could use funds from the $3.75 billion sale of Fidelis Care
  • Six Catholic dioceses in New York are currently in bankruptcy proceedings
  • The Mother Cabrini Health Foundation was created from the Fidelis Care sale proceeds
  • Survivors express cautious optimism about the potential settlement

The Prospect of a Global Settlement

In a significant turn of events, documents filed in the U.S. Bankruptcy Court reveal that attorneys for the Catholic Church have discussed using proceeds from the $3.75 billion sale of Fidelis Care to fund a statewide settlement for sex abuse claims. If approved, this “global” settlement could potentially resolve the bankruptcy proceedings that have left many aging survivors in limbo, particularly in Buffalo, where the process has dragged on for over four years.

The possibility of such a settlement has sparked a mix of hope and skepticism among survivors and their advocates. Rick Brownell, a member of the creditors’ committee representing abuse survivors in the bankruptcy proceeding, cautiously welcomed the news. “The fact that they’re talking about it is a good thing,” Brownell stated while expressing reservations about the church’s sincerity given past experiences. He added, “I mean, they’ve been so disingenuous over the years. If Cardinal Dolan wanted to step up and take care of this, he could do that.”

The Fidelis Care Sale and Mother Cabrini Health Foundation

At the heart of this potential settlement lies the 2018 sale of Fidelis Care, a highly successful insurance company led by the bishops of New York’s eight dioceses. The sale, which netted $3.75 billion, led to the creation of the Mother Cabrini Health Foundation, a nonprofit ostensibly dedicated to providing care to low-income and vulnerable populations.

The Catholic bishops of New York created this foundation using proceeds from the 2018 sale of Fidelis. Fidelis, a highly successful insurance company, was led by the bishops of the state’s eight dioceses, who had authority over mergers, dissolutions, acquisitions, and operations. This structure and the subsequent creation of the foundation have become central to the ongoing discussions about potential settlements.

The timing of this sale has raised eyebrows among some observers. It occurred less than one year before the New York State Legislature passed the Child Victims Act (CVA), which opened a window for survivors of child sexual abuse to file lawsuits against their abusers and the institutions that protected them. The Catholic bishops had spent millions lobbying against the CVA, which was ultimately signed into law by former Governor Andrew M. Cuomo in 2019.

Controversy and Skepticism

The potential use of the Mother Cabrini Health Foundation funds for sex abuse settlements has not been without controversy. Attorney Jeff Anderson, who represents hundreds of alleged survivors across New York, has questioned the motives behind the Fidelis Care sale. In 2021, Anderson claimed that the transfer into an independent foundation was part of a playbook to shield assets from impending legal and financial exposure. According to a report from the Albany Times Union, the fund’s assets are not considered the dioceses’ because they are not the legal owners of the nonprofit.

The Archdiocese of New York has previously denied any connection between the Fidelis sale and the Child Victims Act. A spokesperson stated in 2021, “Neither the Archdiocese of New York, nor any of the other dioceses of New York, owned Fidelis or controlled its assets, and the decision to sell Fidelis to Centene Corporation was totally and completely unrelated to the (Child Victims Act) in any way.”

However, documents filed Thursday in federal bankruptcy court show the use of the fund has been discussed in mediated settlement negotiations. The documents state that diocesan lawyers statewide have discussed a global settlement using the fund since at least May. According to the records, a proposed memorandum of understanding was drafted that included using funds to resolve Child Victims Act claims.

Legal and Financial Complexities

The potential use of the Mother Cabrini Health Foundation funds for a sex abuse settlement is not straightforward. Richard Suchan, Chief Operating Officer of the Diocese of Buffalo, has emphasized the complexities involved. “You can’t just tap into that without receiving prerequisite approval,” Suchan noted that such a move would likely require approval from New York Attorney General Letitia James.

Adding to the situation’s complexity, the fund’s assets are not technically considered the property of the dioceses, as they are not the nonprofit’s legal owners. This legal distinction could potentially complicate efforts to use the funds for settlement purposes.

An August invoice from diocesan bankruptcy attorneys Bond, Schoeneck & King provides further evidence of ongoing discussions. The firm billed the diocese after lawyers “received, reviewed and responded to correspondence amongst general counsel for Dioceses of New York State relative to global CVA proposal with Cabrini Foundation.” The global settlement is mentioned four additional times in the invoice, which at one point describes the proposal as coming from an unnamed “plaintiffs’ lawyer” who likely represents abuse survivors.

The Survivors’ Perspective

For survivors of clergy sex abuse, the prospect of a global settlement brings mixed emotions. Barbara Knight, who alleges she was abused decades ago when she was in sixth grade by Fr. John Doyle of Orchard Park, expressed hope that a swifter resolution to the bankruptcy process could bring closure. “I think it would be a huge relief, and it would bring a certain amount of peace,” Knight shared.

However, survivors like Brownell emphasize that the issue goes beyond financial compensation. “It isn’t about the money. It’s about the accountability and the actions that they took. How else do you hold people responsible for ruining people’s lives?” he stated, underlining the settlement process’s more profound emotional and moral dimensions.

The survivors who spoke with 2 On Your Side said they were pleased at the prospect of such a settlement but remained skeptical the Catholic Church would deliver. Their cautious optimism reflects years of frustration with the slow pace of the bankruptcy proceedings and the broader struggle for accountability.

The Path Forward

As discussions about a potential global settlement continue, many questions still need to be answered. The Diocese of Buffalo has expressed skepticism about using Mother Cabrini Foundation funds for survivor claims. Diocese spokesperson Joe Martone said, “The attorney time entries involved were in response to an inquiry made by certain claimants’ lawyers. The Diocese of Buffalo is not seeking to use Mother Cabrini Foundation funds to satisfy survivor claims.”

Cardinal Timothy M. Dolan, the archbishop of New York, whose approval would likely be necessary for any statewide settlement, has declined to comment on the matter through a spokesperson. Similarly, attorneys representing survivors have remained silent, citing a non-disclosure agreement.

The coming months will determine whether this potential global settlement becomes a reality. If realized, it could mark a significant turning point in the long-running clergy sex abuse crisis, potentially providing a measure of justice and closure for survivors while also helping the church to address its substantial legal and moral obligations. However, the complex legal and financial landscape and the varying positions of different stakeholders suggest that reaching such a settlement may still face significant challenges.