Judge Littlefield Rules Insurers Do Not Have Standing to Object to Survivor Claims

In a significant victory for Survivors, Judge Littlefield has issued a decision that has wide-ranging implications. Specifically, Judge Littlefield concluded that insurers who deny that they are financially responsible for survivor claims do not—without more—have standing (the ability to act in Court) to object to survivor claims. The decision is instructive with regard to when and whether insurance companies have the ability to act in bankruptcy cases.

In the Diocese of Albany case, two of the Diocese’s insurance carriers, London Market Insurers and the Hartford, objected to nearly 50 survivor claims. The Committee challenged the objections, arguing that the insurers did not have standing to object. Judge Littlefield agreed, writing:  “As the Court stated on the record, it is difficult to “understand how [the Insurers] create the thread that [the Insurers] have standing when [they] have nothing at stake, [they] have no skin in the game.” 

The Committee applauds this decision and is hopeful that it will recognized across the country in situations where insurance companies attempt to interfere in bankruptcy cases to the detriment of Survivors.

During our town hall meeting with Survivors, and throughout this bankruptcy, the Committee has heard a number of concerns about why this bankruptcy case is taking so long to reach a settlement. The Committee shares these concerns. One major obstacle has been the Archdiocese’s claim that it has legal immunity (what is called “charitable immunity” in Maryland). “Immunity” would mean that the Church is not required to pay Survivors any money, and so any settlement would be a gift or an amount paid by the Archdiocese on its own terms. This position is unacceptable to the Committee for many reasons.

To address the Archdiocese’s unacceptable position, the Committee filed a lawsuit asking the Bankruptcy Court to overrule the Archdiocese’s immunity defense. Recently, the Committee laid out its legal case in a motion for summary judgment. If the Committee succeeds, we are hopeful this case will move towards a prompt resolution, and Survivors will be able to negotiate with the Archdiocese in a less one-sided way.

If the Bankruptcy Court disagrees with the Committee’s position on immunity, then the Committee has asked that the Court dismiss the bankruptcy case. The Committee, comprised of seven Survivors, did not make this decision lightly. Instead, in a world where the Archdiocese is immune from Survivors’ claims, the Committee considered that the bankruptcy process likely causes more delay and harm to Survivors and cannot provide them with a fair outcome.

To be clear, the Committee has not given up hope that this bankruptcy process can be resolved and reach a fair settlement for Survivors. Instead, the Committee has requested that the bankruptcy be dismissed only if the Archdiocese is found to be immune from paying Survivors any monetary damages. In that limited case, the Committee believes bankruptcy is the wrong place to reach a resolution.