Scouts insurers say abuse payments in bankruptcy cases include unverified claims

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Insurers who sold coverage to the Boy Scouts of America sought to prove on Tuesday that its sexual abuse settlement plan includes payouts for unverified claims and would compensate abuse survivors at higher rates than they did. would receive in the court system outside of Chapter 11.

As the youth group seeks approval from the U.S. bankruptcy court in Wilmington, Del., for a $2.7 billion plan to settle approximately 82,200 sexual abuse claims, legal counsel for insurers including National Surety Corp., devoted much of the second day of the trial to the interrogation of Bruce Griggs

an attorney hired in 2016 to coordinate Boy Scouts abuse complaints.

These liability insurers which also include American International Group Inc. and Travelers Cos.

have not contributed to the Boy Scouts settlement fund and remain exposed to further litigation from victims. They had said the bankruptcy plan, if approved, would expose them to inflated or unverified claims.

The amount each victim will receive is not yet finalized and will be decided by a trustee who will assess each claim based on factors such as the severity of the abuse, statutes of limitations in the affected states, whether the perpetrator was a repeat offender and the strength of the evidence provided.

On Tuesday, insurers said the number of claims had jumped to 82,200 from some 300 initial lawsuits when the Boy Scouts filed for bankruptcy in February 2020.

Todd Jacobs, an attorney for insurers who have yet to settle with the Boy Scouts, asked Mr Griggs if he was surprised by the number of claims filed in the bankruptcy, to which Mr Griggs replied : “I did not expect that many.”

The bankruptcy plan is now supported by 86% of the approximately 56,500 individual plaintiffs who voted, as well as liability insurers and religious groups who contributed to the settlement fund. Before the Boy Scouts reached the agreement with the committee for victims of sexual abuse last month, the agreement had not reached the 75% acceptance it sought.

A minority of abuse victims, some insurance companies, some Roman Catholic dioceses and the U.S. government’s bankruptcy monitor still oppose the plan.

Mr. Jacobs pointed out that proofs of claims have been filed in the bankruptcy in states in which the statute of limitations for bringing a lawsuit against the Boy Scouts would have expired.

Mr Jacobs presented a February 2021 document from Bates White, an advisory firm the Boy Scouts used during the bankruptcy, showing that 53,163 of the 76,185 claims that had been filed at that time could have been barred by the limitation period.

Mr Griggs said there were times before his bankruptcy when the Boy Scouts would settle a case even after the statute of limitations had expired, and the laws were not always enforced.

Mr. Jacobs also pointed to a 2019 document in which the Boy Scouts assessed potential payouts of up to $1 million, for the most serious sexual abuse offenses in a case. The current bankruptcy plan could provide individual payments of up to $2.7 million for adult sexual penetration and other aggravating circumstances.

“It’s a difference,” Mr Griggs said of the higher potential payout.

Mr Griggs said he was asked to advise on the trust’s distribution proceedings in the bankruptcy but was not involved in drafting, negotiating or approving them.

Victims of the most egregious cases of abuse could request an independent review of their claims.

Mr Jacobs said lawyers for plaintiffs who have represented victims of sexual abuse will be key in choosing the arbitrator who will make decisions on these independent reviews, tilting the outcome in favor of the victims.

Mr Griggs said he had no doubts that any former judge involved in the independent review in the bankruptcy will be independent, regardless of whether plaintiffs’ lawyers were instrumental in the choice. The review should be conducted by an external party selected from a pool of retired judges with tort experience.

Mr. Jacobs said he doubted the Boy Scouts would pay 82,200 statute-barred claims in the tort system, even at $3,500 each.

Mr Griggs agreed that might not be the case, but said the youth group could do so if they knew it would resolve all complaints.

The trial is expected to last about two weeks.

Write to Becky Yerak at [email protected]

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