Diocese of Rockville Centre, sex abuse survivors close to deal, officials say

The Diocese of Rockville Centre and hundreds of survivors of clergy sex abuse are close to reaching a settlement, nearly four years after the church declared bankruptcy, sparking a lengthy court battle, officials said Wednesday.

Neither side disclosed details of the potential deal during a hearing Wednesday in federal bankruptcy court in Manhattan but both said the only obstacle to an agreement is receiving a final offer from one insurance company.

James Stang, the main lawyer representing the survivors, said he was elated that a deal was close to completion.

"I cannot overstate how extraordinary it is" that the diocese and survivors "have reached agreement on the financial terms," he said. "I’m just flabbergasted that I can say that, and extremely pleased."

Corrine Ball, the lead attorney for the diocese, said that "after nearly four years ... we have the cornerstone of a resolution of this case and providing relief to survivors."

Rockville Centre is one of the largest Roman Catholic dioceses in the nation.

U.S. Bankruptcy Court Judge Martin Glenn on Wednesday expressed irritation with the insurance company, Interstate, for holding up the settlement, and ordered one of its representatives to get the company’s top executives to New York next week for a face-to-face meeting with mediators and other parties to settle the issue.

"It’s completely unacceptable to me that one insurer is keeping this immensely consequential case of such great importance" from reaching a conclusion, Glenn said.

"This has to come to an end," he added. "I want a date and time and the names of the decision-makers. It’s got to happen next week."

He suggested he would take action if Interstate executives did not appear.

A representative for Interstate said in court that the company was doing all it could to come up with its final offer, and that the process had to go through the chain of command.

In an interview after the court hearing, Stang said he did not expect the Interstate issue to derail the overall settlement.

The diocese declared bankruptcy on Oct. 1, 2020, because of potential payouts from the New York State Child Victims Act, saying it could face financial ruin. The law allowed people who were sexually abused as children to file lawsuits against their alleged abusers regardless of how long ago it occurred.

Negotiations between the diocese and the survivors have been going on for years. Earlier this year the diocese asked to have the entire bankruptcy proceeding that it had started dismissed since no agreement was being reached.

Glenn in May appointed two high-powered mediators to try to push negotiations to an end. Fees to lawyers have topped $100 million since negotiations began.

Lawyers for the survivors have in the past proposed a $450 million settlement to be paid out among more than 500 survivors. The diocese has offered $200 million.

In a statement after the court hearing, the diocese said, "Judge Glenn admonished the Interstate Insurance Company to submit its final offer, since the Creditors' Committee and the Diocese have come to a tentative agreement on the terms of a potential settlement of the bankruptcy case."

Nationwide, some 38 Catholic dioceses or religious orders have declared bankruptcy amid the sex abuse scandal that broke in 2002.

The negotiators appointed by Glenn were retired U.S. Bankruptcy Court Judge Shelley Chapman and Paul Finn, a lawyer with deep experience in resolving sexual abuse claims. As a judge, Chapman oversaw the 2008 Lehman Brothers Holdings bankruptcy case — the largest bankruptcy case in U.S. history — and other Chapter 11 mega-cases.

Glenn said in May the two were clearing their schedules to try to get the Rockville Centre case resolved.