Catholic diocese in Montana will file for bankruptcy after abuse lawsuits

Helena, Mont. • The Roman Catholic Diocese of Helena planned to file for bankruptcy protection Friday as part of a proposed settlement of $15 million for hundreds of victims who say clergy members sexually abused them over decades while the church covered it up.

Diocese spokesman Dan Bartleson said the Chapter 11 bankruptcy reorganization plan comes after confidential mediation sessions with the plaintiffs' attorneys and insurers, resulting in the deals to resolve the abuse claims.

The settlement details are being worked out, but the U.S. Bankruptcy Court in Montana would be responsible for approving and supervising the disbursement of $15 million to compensate the 362 victims identified in the two lawsuits.

In addition, at least $2.5 million will be set aside for victims who come forward later, Bartleson said.

The church anticipates paying at least $2.5 million of the costs, with the rest paid by insurers, which were part of the settlement talks, he said. Bartleson said the diocese does not expect to have to liquidate any of its assets or close any programs because of the filing.

Bishop George Leo Thomas apologized to the victims in a statement and said most clergy members who were credibly accused have died, and none remain in active ministry. The diocese has set up abuse-prevention programs, including worker screenings, a claims-review board and a hotline to report abuse, the statement said

Thomas said the settlement may make the church poorer, but it will remain committed to its mission.

"Once the reorganization proceedings conclude, we will be able to plan confidently for future ministry for the people of the Church of the Diocese of Helena," he said in the statement.

The victims and creditors will have the chance to vote on the proposed settlement, Bartleson said.

Molly Howard, an attorney for the plaintiffs, said she believes the bankruptcy process will resolve the case more quickly than years of litigation and trials with uncertain outcomes.

"Given the age and ill health of many of the victims, this is in their best interest," Howard said.

The Helena diocese is the 11th in the nation to seek bankruptcy protection in the face of sex-abuse claims

The two lawsuits filed in 2011 claim clergy members groomed and then abused the children from the 1940s to the 1970s. They claim the diocese shielded the offenders and knew or should have known the threat they posed to children.

The plaintiffs, the diocese and the Ursuline Sisters of the Western Province, another defendant, began mediation talks in 2012, but the talks faltered with legal challenges by the church's insurers over the claims they are obligated to cover.

A court hearing was scheduled for Friday ahead of the first civil trials, which were to begin in March. Howard said she expects the court proceedings will be suspended.

The diocese's territory covers all or part of 23 counties in western Montana and employs about 200 people in its parishes, schools and social-service programs. It was created in 1884, five years before Montana became a state, and covered the entire state until the Diocese of Great Falls was formed in 1904, according to the Helena diocese's website.

The Diocese of Great Falls-Billings now covers the eastern half of Montana.

In one of the lawsuits, the plaintiffs said they were repeatedly raped, fondled or forced to perform sexual acts while at school, on the playground, on camping trips or at the victims' homes.

The second lawsuit, filed a week after the first in 2011, contained similar allegations against priests, but also alleged that nuns at the Ursuline Academy in St. Ignatius abused dozens of Native American children.

The plaintiffs, the diocese and the Ursulines had pledged to work together to settle the lawsuits, and they have participated in three mediation sessions.

The Ursulines are not part of the proposed settlement, the diocese said.

The diocese's "tenuous" financial condition has already resulted in about a 3 percent reduction in staff and it has curtailed many parish building projects, he said.