San Diego Diocese may file for bankruptcy amid abuse claims

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Cardinal Robert McElroy of San Diego announced last week that the diocese is considering declaring bankruptcy due to the “staggering” legal costs of responding to 400 new lawsuits brought during a three-year statewide expansion of the statute of limitations for child abuse cases.

“Bankruptcy would provide a pathway for ensuring that the assets of the diocese will be used equitably to compensate all victims of sexual abuse while continuing the ministries of the Church for faith formation, pastoral life, and outreach to the poor and the marginalized,” McElroy wrote a Feb. 10 letter to parishioners in the diocese.

“The sexual abuse of minors by priests and the way it was handled in the life of the Church constitute the greatest sin of our Church in the last century. We must and will continue to protect minors with ever deeper vigor, provide healing resources to those who have been abused, and use our diocesan assets to compensate those who were victimized. And we will never forget the harm that we have done.”

At issue, McElroy said, is a mounting number of abuse claims filed under a three-year window opened by California’s governor, which began in 2020 and expired on Dec. 31, 2022. Some of the new abuse claims brought to the diocese date back 75 years, the cardinal wrote.

California Gov. Gavin Newsom signed into law in 2019 a measure called AB 218, which extended the statute of limitations for childhood sex abuse victims. The law allows civil claims of childhood sexual abuse to be filed by victims until age 40 or five years after discovering the damages from the abuse. Previously, claims had to be filed by age 26 or within three years of discovering damages from the abuse.

“As a result of this change in the law, the Diocese of San Diego has received approximately 400 suits seeking monetary damages for alleged acts of sexual abuse by priests, religious, and laity in the diocese,” McElroy wrote.

“The majority of these suits concern actions that took place more than half a century ago. One important aspect of these lawsuits is that none of them claim sexual abuse by any priest of the Diocese of San Diego currently in ministry. This reflects the reality that the Church has taken enormous steps to root out the sexual abuse of minors in its life and to promote the protection of minors.”

In 2007, the San Diego Diocese paid out $198 million to settle 144 claims of abuse that had been brought during an earlier lifting of the statute of limitations, McElroy continued.

“This depleted most of the assets of the diocese. Even with insurance, the diocese will not be able to pay out similar sums now. This challenge is compounded by the fact that a bill has now been introduced into the Legislature that seeks to eliminate the statute of limitations entirely, leaving the diocese vulnerable to potential lawsuits forever,” McElroy wrote.

Separately, speaking to reporters on Friday, Kevin Eckery, communications director for the diocese, predicted that it would cost the diocese $550 million to settle the current cases.

Because of the corporate structure of the diocese, parish assets are held separately by individual parish corporations, McElroy noted. The bishop of San Diego in 2007, Robert Brom, requested bankruptcy at the time, but U.S. Bankruptcy Judge Louise DeCarl Adler dismissed the case.

“Almost without exception in other diocesan bankruptcies, parish assets have remained separate. At the same time, parishes in a diocese undergoing bankruptcy typically contribute some limited monies to the funds for claimants,” the cardinal wrote.

If the present bankruptcy comes to fruition, San Diego would join a growing number of U.S. dioceses in declaring bankruptcy in the past decade or so. The Diocese of Santa Rosa in California will likely declare bankruptcy in 2023 as well, the San Jose Mercury News reported in December 2022.

Since 2019, six of California's 12 Catholic dioceses have been under an independently managed compensation program, which provides compensatory payment to those alleging to be victims of priestly sexual abuse, regardless of when that abuse is alleged to have happened.

The program covers Los Angeles, Sacramento, San Bernardino, San Diego, Orange, and Fresno. These six dioceses represent 80% of California’s Catholics, according to an announcement about the compensation program.

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