(OSV News) — An insurance company has agreed to pay $30 million to settle abuse claims on behalf of the Diocese of Winona-Rochester, Minnesota, narrowly avoiding a jury trial.
The claims at issue date from the 1960s through the late 1980s, centering on former diocesan priest Thomas P. Adamson, who was dismissed from the clerical state in 2009 and died in 2019.
The case highlights continued tension between dioceses and their liability insurers in covering such claims, with the latter now often pushing back on payouts.
In an Aug. 27 letter, attorney Timothy W. Burns of Burns Bair, the firm representing the diocese’s settlement trustee, advised Judge Nancy Buytendorp of the Winona County District Court that an agreement had been reached between his client and United States Fire Insurance Company in the matter.
Will address abuse claims filed against diocese
The $30 million settlement will address abuse claims filed against the diocese, which concluded its 2018 bankruptcy filing in September 2022, after its plan was confirmed in October 2021.
In a statement provided to media, diocesan vicar general Father Will Thompson said the insurance settlement — by which the insurance company “honored its obligations” to the diocese –meant that “all future litigation stemming from our bankruptcy is concluded.”
Father Thompson said the diocese “remains committed” to its reorganization plan, which “has been incorporated into” its safe environment program.
“All are invited to pray for the healing of those impacted by sexual abuse and to work toward that healing to the best of their ability,” he said.
The diocese had filed suit against U.S. Fire and several insurers in 2018, saying the abuse claims were covered under their respective insurance policies.
Settlement specifically between trust and U.S. Fire
Bankruptcy scholar Marie T. Reilly, professor emerita of Penn State Dickinson Law, clarified to OSV News that the just-announced $30 million settlement is specifically between the diocese’s bankruptcy settlement trust and U.S. Fire.
In a Sept. 8 email to OSV News, Reilly explained that as part of its bankruptcy plan, the diocese and its parishes were “released from liability to sexual abuse claimants.”
Instead, that liability was “‘channeled’ to the settlement trust” in exchange for the cash and assets — including the right to coverage under the U.S. Fire Insurance policies — that the diocese contributed to the settlement trust, said Reilly.
As a result, the settlement trust “took over the diocese’s rights and responsibilities under the insurance policies including the right to sue U.S. Fire to demand coverage if it became liable for a covered injury,” said Reilly.
‘Non-settling insurers’ in the case
She noted that U.S. Fire and several other insurers, who did not contribute to the settlement trust, were termed “non-settling insurers” in the case.
In recent years, a number of insurers — including industry giant Chubb, which has been battling the Archdiocese of New York over the issue — have asserted the abuse claims are ineligible for coverage.
Several of the insurers sued by the Diocese of Winona-Rochester told the court they could not verify the abuse claims.
At least one insurer, St. Paul Surplus Liability, noted in its 2018 response to the diocesan suit that its excess claims policy “contains a sexual abuse exclusion.”
A first of its kind
Reilly told OSV News “the Diocese of Winona-Rochester bankruptcy case was the first one to confirm a plan that included non-settling insurers and a transfer of insurance assets to the settlement trust.”
At the same time, said Reilly, “Each diocesan bankruptcy case, and the insurance environment in each case, is unique.”
For that reason, she said, it remains unclear if U.S. Fire’s “decision to settle its potential liability in this case will affect other insurer’s decisions in other cases.”
OSV News has not yet received a response from U.S. Fire’s parent company, Crum and Forster, for comment on the settlement.
Gina Christian is a multimedia reporter for OSV News. Follow her on X @GinaJesseReina.
