Archdiocese of Baltimore weighs bankruptcy with surge of child sex abuse lawsuits expected

The Baltimore Archdiocese is considering filing for bankruptcy as it anticipates a potential flood of lawsuits starting Oct. 1, when a new Maryland law will lift the statute of limitations on claims from those who say they were sexually abused as children, according to internal emails among church officials and a communications specialist.

While many have expected the nation’s oldest archdiocese might file for bankruptcy as dioceses in other states have done in the face of child sex abuse lawsuits, an email chain obtained by The Baltimore Sun confirms this is an option under consideration.

“I would suggest reverting back to the plan of not ‘announcing’ until the time of filing, and only confirming, if the media picks up on our internal conversations, that we are sharing information about the upcoming law change,” wrote Sean T. Caine of Caine Communications on Friday, “what it means, how it might impact the various agencies of the Church, and how the Church may respond.

“The issue of bankruptcy was raised among many optional responses,” he wrote.

Asked about a potential bankruptcy, Christian Kendzierski, the spokesman for the archdiocese, said in an emailed statement that officials are “preparing for the impact of the new law” and “considering how to best respond to it.

“The correspondence obtained is part of an internal discussion on one of those possible responses,” he said. “No decisions have been made, as the correspondence indicates. Once a path is decided upon, the Archdiocese will share that information.”

Multiple attorneys already are preparing lawsuits against the Baltimore Archdiocese now that the Maryland General Assembly passed, and Gov. Wes Moore signed, the Child Victims Act, which takes effect Oct. 1. It lifts a previous statute of limitations on filing claims for childhood sexual abuse. In the past, a victim had only until 20 years past the age of consent, or up to age 38, to file civil lawsuits against offenders.

Unlike similar laws passed in other states, the act does not require abuse victims to file lawsuits within a defined, limited timeframe — inside a so-called a “lookback window” — but allows for legal action at any time.

The subject has been in the spotlight since November when the Maryland Attorney General’s Office released the findings of its investigation of child sex abuse within the archdiocese. It detailed cases of more than 600 children who were sexually abused and tortured by priests and other archdiocese staff over the past 80 years, and said hundreds more likely had gone unreported.

[ Read The Sun's coverage of the child sexual abuse report ]

The email from Caine, a former spokesman for the archdiocese now in private communications consulting, was part of a chain that included Auxiliary Bishop Adam Parker and Kendzierski. The three were addressing how a potential bankruptcy filing might affect fundraising appeals that were going out to church members.

“We speculated that it is possible that the media pick up our intent to file by about the week of September 11,” Parker wrote, “and that we are likely going to consider some proactive messaging with the faithful in that regard the week of September 18. It sounds like that’s when the appeal piece could be landing.

“Should we delay and do we anticipate that there will actually be a better time this fall?” Parker continued. “It is really important that we do this mailing at some point.”

Kendzierski wrote that the final fundraising appeal for the year is being mailed “and should land at homes in the next couple weeks. Not sure how this plays into our timeline and how much risk involved — fall and holiday giving and offertory season.”

Andrew Freeman, a Baltimore-based attorney who has sued on behalf of child abuse victims, said bankruptcy can slow the process down and even reduce the amount survivors receive from what a jury might award them.

He points to the Archdiocese of St. Paul and Minneapolis, which filed for bankruptcy in January 2015 and in May 2018 agreed to create a $210 million settlement fund from which more than 400 survivors of child sex abuse would be compensated.

[ Read the Catholic church sexual abuse report ]

That works out roughly to an average of $500,000 for each survivor — the amounts varied — which Freeman said he would characterize as “substantial.”

But he has won jury awards exceeding $1 million, including one for $15 million, in abuse cases.

“At the end of the day, we are looking forward to obtaining justice for survivors of abuse by clergy and other people related to the church,” he said. “They can run but they can’t hide. We will eventually find all the assets and do our best to compensate survivors for the egregious treatment they received at the hands of the church.”

Should the archdiocese decide to file for bankruptcy, it would become the 36th Catholic entity in the United States to do so, Terry McKiernan, founding president of BishopAccountability.org, an advocacy group that researches and documents sexual abuse cases by Catholic clergy, said.

The first was the Archdiocese of Portland, Oregon, which filed for the legal protection in 2004; the most recent, the Archdiocese of San Francisco, took the step amid hundreds of lawsuits last month, becoming the third California diocese to do so this year.

Thirty-two of the entities are dioceses or archdioceses, and three are Catholic religious orders.

In filing for Chapter 11 bankruptcy, as most of the jurisdictions have done, a diocese is making the case that its liabilities would be so great if it had to pay them all out that it could no longer operate as an ongoing concern, Kathleen Hoke, a professor at the University of Maryland Francis King Carey School of Law who spent years advocating for statute of limitations reform, said.

After such a filing is made, the federal bankruptcy court is charged with deciding how much a diocese reasonably can be expected to pay survivors and still remain a viable operation — a decision that typically means reduced payouts for victims, Hoke said.

The dates mentioned in the emails do not specify when the archdiocese would file for Chapter 11, but they leave open the possibility it could take the action before the Child Victims Act takes effect — in other words, before any survivors could make a claim under the new law.

That would mean “doing it on the basis of prospective liability, based on what is in the Attorney General report and on the General Assembly’s passage of the Child Victims Act,” Hoke said. “They’d go in and say there are all these claims, some with a significant likelihood of success, and it would crush them.”

Hoke said if the Baltimore archdiocese did file before Oct. 1, it might be because an early filing date could “trigger certain things, such as when liability starts.”

Abuse survivors and their advocates have long been at odds with the church over the fairness of bankruptcy filings.

Church officials argue that filing for bankruptcy protects the capacity of dioceses to continue carrying out their ministries — and that has proved true in the vast majority of cases — and that bankruptcy is a way to ensure that all victims receive compensation through a single process. Survivors counter that payouts are greatly reduced and that bankruptcy law permits dioceses to be less open with their church records, even in ongoing cases.

According to McKiernan, many of the 32 dioceses that have declared bankruptcy have managed to keep proceedings from the public eye, undermining claims of transparency toward survivors.

Hoke added that under bankruptcy law, the court establishes a date by which claimants must file, which she says undercuts the spirit of the Child Victims Act.

“The whole purpose of the act is undermined because that person no longer gets the main intended benefit,” she said. “They must pursue their claim or it goes away at a certain date.”

A bankruptcy filing in Maryland would involve a few wrinkles. The battle to get the Child Victims Act passed was long and arduous, and both sides have acknowledged that there’s doubt as to whether the complete removal of statutes of limitations on sexual abuse cases is constitutional under state law.

The thinking is that the Baltimore archdiocese will simply wait until the first lawsuit is filed under the new law, then challenge its permissibility.

That could reduce pressure on the archdiocese to pursue the bankruptcy option.

“This is going to be litigated, so as soon as Oct. 1 happens and cases are filed, one case will settle the question of constitutionality, and every other case will be stopped,” Hoke said. “If the Maryland Supreme Court says it’s constitutional, then those go forward.”

Originally published in The Baltimore Sun by Jean Marbella and Jonathan Pitts.