Boy Scouts settlements reached with major insurer, Mormons
Dover, Del. — One of the primary insurers of the Boy Scouts of America announced Tuesday that it has reached a tentative settlement agreement with the organization and with attorneys representing tens of thousands of men who say they were molested decades ago by scoutmasters and others.
Under the agreement, insurance company The Hartford will pay $787 million into a fund to be established for the men, the company said in a news release. In exchange for the payment, the Boy Scouts organization and its local councils have agreed to release The Hartford from further liability regarding sexual abuse claims.
Under a separate settlement, the Church of Jesus Christ of Latter-day Saints has agreed to pay $250 million into the fund for abuse claimants, said church spokesman Eric Hawkins. The denomination, commonly known as the Mormon church, was the largest single sponsor of Boy Scout troops before ending its partnership with the BSA at the beginning of last year.
The proposed settlements are part of an ongoing effort by the Boy Scouts, which declared bankruptcy in February 2020, to forge a reorganization plan that must win approval by a majority of abuse victims and the court. Attorneys are still trying to negotiate a settlement with the Boy Scouts' other major insurer, Century Indemnity.
The proposed settlements are opposed by the official victims committee appointed by the U.S. bankruptcy trustee, as well as law firms separately representing hundreds of men who have filed sexual abuse claims. Representatives of the official victims committee described the proposed settlements as “grossly unfair.”
“The only winners in this latest proposal are the Boy Scouts, their local councils, the Mormon Church, and the Hartford insurance company,” Michael Pfau, an attorney whose firm represents more than 1,000 abuse claimants in the bankruptcy, said in a prepared statement.
“The Boy Scouts are offering abuse survivors a fraction of what their cases are worth and the assets available to pay them,” Pfau added. “The Mormon church is reported to have roughly $100 billion in assets, but it is offering a paltry $250 million to compensate the thousands of abuse survivors who were abused in Mormon Boy Scout troops by Mormon Scout leaders.”
The proposed settlements will be incorporated into a new reorganization plan that attorneys for the Boy Scouts were expected to file late Tuesday night.
The new agreement with The Hartford was negotiated after the bankruptcy judge last month rejected two key provisions of an $850 million deal that the BSA had reached with attorneys representing a majority of abuse claimants.
Judge Laura Selber Silverstein denied the BSA’s request as part of that deal for permission to withdraw from a previous $650 million settlement it had reached with The Hartford. The Boy Scouts sought to withdraw from that April agreement after attorneys for abuse claimants repeatedly insisted that their clients would never vote for a reorganization plan that included it.
Silverstein also rejected a proposal for the Boy Scouts to pay millions of dollars in legal fees and expenses of attorneys hired by a coalition of law firms that represent tens of thousands of abuse claimants. The judge noted that any such payment would come out of the pockets of abuse claimants themselves.
The new settlement with The Hartford was the product of negotiations that included attorneys representing an ad hoc group called the Coalition of Abused Scouts for Justice. Law firms affiliated with the group represent more than 60,000 sex abuse claimants.
“These are very significant developments,” said Ken Rothweiler, whose law firm is affiliated with the coalition and represents roughly 16,800 abuse claimants.
The proposed settlements, coupled with the $850 million contribution from the BSA and local councils, would bring the fund for abuse claimants to almost $1.9 billion. If the plan is approved, it would represent one of the largest sex-abuse settlements in U.S. history.
Meanwhile, the official victims committee has estimated the total liability exposure of Boy Scouts insurers for abuse claims at more than $100 billion.
The committee supported the previous arrangement, which called for the earlier settlement with The Hartford to be scrapped and for the Boy Scouts and local BSA councils, which run day-to-day operations for Boy Scout troops, to contribute $850 million and their rights to insurance policies to the fund for abuse claimants. The committee noted that the primary value for abuse survivors under that deal would come from available insurance coverage.
Insurance companies pushed back hard against that plan, arguing that the proposed transfer of insurance rights unlawfully stripped them of their ability to question claims and improperly allowed the trustee overseeing the victims fund to determine what insurers owed without being challenged. Insurers also questioned a provision allowing expedited payments of $3,500 from the fund to resolve abuse claims, no questions asked.
Sophia Eppolito, a Report for America corps member based in Salt Lake City, contributed to this report.