Coverage Issues Flurry When Windows Open for Abuse Suits
The rising value of verdicts and plaintiff's costs and an influx of claims of sexual abuse have caused a growing number of Roman Catholic dioceses and other organizations to file for bankruptcy, resulting in more tenuous settlement negotiations with insurers, legal experts say.
James R. Murray of Blank Rome LLP told Law360 that although bankruptcy is typically the peacemaker, reaching a settlement agreement has gotten more strenuous due to rising plaintiff costs and the difficulty of combating carrier defenses.
"The more recent bankruptcies are kind of testing the limits of cooperation," Murray said. "The ability to try to resolve disputes purely through mediation without litigation could change in some of these cases."
Blank Rome's Murray, who has been special counsel to more than 13 Catholic diocese and order debtors, said that when he handled his first bankruptcy involving a Roman Catholic diocese in 2004, the key was to get everything done under the U.S. Bankruptcy Code despite the large number of claims.
In 2019, however, New York enacted legislation that opened the window for filing claims regardless of the statute of limitations.
"That's when the rubber hit the road," said Murray, who explained that since then, the number of abuse cases filed in the Empire State exploded, resulting in the bankruptcies of four Roman Catholic dioceses: Buffalo, Rochester, Syracuse and Rockville Centre on Long Island.
"The state of New York never had an open window statute, so any kind of abuse that happened historically was subject to a statute of limitations," he explained. "So, one of the most populated states in the country all of a sudden opened the [window?] for one year. There was an enormity of the cases."
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"Coverage Issues Flurry When Windows Open for Abuse Suits," by Shane Dilworth was published in Law360 Insurance Authority on September 2, 2022.