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Catholic Dioceses Seek Bankruptcy Protection Following Sex Scandals

January 25, 2005 at 12:00 AM EDT
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JIM LEHRER: The child sex abuse trial of defrocked priest Paul Shanley opened in Massachusetts today. The revelations involving Shanley three years ago began a national scandal that has the Catholic Church facing hundreds of millions of dollars in claims. That has prompted some parishes to seek protection in bankruptcy court. Lee Hochberg of Oregon Public Broadcasting has our report.

LEE HOCHBERG: On the eve of the announcement that Spokane’s Catholic diocese would file for bankruptcy, parishioners gathered at the city’s downtown cathedral. The faithful went inside for Sunday night Mass. But others who say they’ve been sexually abused by Spokane’s priests assembled outside in a somber vigil against the bankruptcy.

MICHAEL ROSS: It’s a huge miscarriage of justice. It’s sad. It’s very sad.

LEE HOCHBERG: Michael Ross is one of 125 Spokane Catholics who claim they were abused. He sued the Church for $4 million but his and 18 other sex abuse suits are now on hold because of the bankruptcy. Former Spokane county prosecutor Don Brockett, himself a Catholic, said the delay of the trials further abuses the victims.

DON BROCKETT: And the bishop now says, “we’ll pray for you.” And we think that’s wonderful. It just doesn’t do anything for the victims. There have been no trials that have assessed any damages against the Church. So what’s the need for bankruptcy? How is the Church bankrupt, other than spiritually and morally?

LEE HOCHBERG: Spokane is the third Catholic diocese, after Portland, Oregon, and Tucson, Arizona, to go bankrupt in the face of increasing child sex abuse claims. There are 100,000 Catholics around Spokane; 58 of them have sued the Church. Half of those say they were molested in the 1970s and ’80s by Father Patrick O’Donnell, who has admitted to some of the crimes.

The bishop of the diocese, William Skylstad, has testified he knew of O’Donnell’s crimes but didn’t report them to police. Instead, he transferred O’Donnell to other parishes where he continued to molest. On Dec. 6, Skylstad took the Spokane diocese into the shelter of chapter 11.

SPOKESMAN: Demands by plaintiffs continue to be beyond the ability of the diocese to meet.

LEE HOCHBERG: The diocese reports a staggering $76 million in liabilities from abuse claims and more claimants could come forward. The Church says it has only $11 million in assets. Church Attorney Shaun Cross says $76 million is more than the Church should pay.

SHAUN CROSS: I don’t think it’s a reasonable number. You have a whole range and spectrum of factual circumstances. From extremely egregious situations that were clearly going to merit higher damages to situations that really weren’t serious at all, I mean, at all.

LEE HOCHBERG: Many parishioners agree. Across Spokane’s Catholic community, which includes eighty-one parishes, sixteen elementary schools, eight hospitals, homes for the aged and social service centers, some have turned against the abuse victims.

WOMAN: Why are you flocking in to the Catholic Church? Why don’t you go to the house of charity where all the poor people are getting a free meal to eat and are sleeping in the beds at night because of our money. I think it’s wrong for a priest to hurt a child, but I don’t think it’s right to flock the holy Catholic Church.

LEE HOCHBERG: But those closer to the scandals, those who filed lawsuits, are dismayed at what they see as further cover-up.

MICHAEL CORRIGAN, Brother of Abuse Victim: This is pretty clear that everything they’ve been done is– job one is to protect the Church and not protect the people that they’re supposed to be, you know…

SPOKESPERSON: Overseeing.

MICHAEL CORRIGAN: …Ministering to.

LEE HOCHBERG: Michael Corrigan’s brother, Cheryl Corrigan’s husband, committed suicide two years ago. Cheryl had asked her husband that morning about the abuse scandal reported that day in Spokane’s newspaper.

CHERYL CORRIGAN, Widow of Abuse Victim: And I said, “Were you abused?” He said, “No.” And I said, “Well, wait a minute. Did Father Pat get you naked? Did you have to get naked in front of Father Pat?”

And he said, “Yes.” And I asked, “Well, did Father Pat touch you in your privates?” He said, “Yes.” And he walked away from me. And then he gave me a big hug and a kiss and walked out the door and went to work.

LEE HOCHBERG: Later that day, her husband lay down on this railroad track, leaving behind Cheryl and their three children. The Corrigans say they never received a sympathy card from the bishop. The bankruptcy was declared just before their court date.

CHERYL CORRIGAN: I don’t think they’re facing it at all. I just think they’re just trying to save themselves. I don’t think bankruptcy has anything to do with the victims. I mean, they acted like the problem never existed. They would have kept this secret to their graves, all of them.

LEE HOCHBERG: Longtime church watchers say there’s more than money at stake. There’s also reputation. A trial could look at whether Bishop Skylstad, who’s just been elected president of the U.S. Conference of Bishops, participated in a cover-up. Reporter Paul Seebeck of Spokane’s Inlander newspaper.

PAUL SEEBACK: This is about both money and this is about protecting reputation and preventing truth from being told. By going to bankruptcy, they delay the story, have more time to continue to present their version of the truth rather than going to a civil trial and taking the risk that the details that come out in that would perhaps make them even more morally bankrupt than what some people think they already are.

LEE HOCHBERG: In the week leading up to the bankruptcy, six plaintiffs, some fearing a lengthy delay, settled out of court with the Church. Details of their abuse never went public. Bishop Skylstad promises, however, that the truth eventually will come out.

MOST REV. WILLIAM SKYLSTAD: We have really tried to be transparent and open about the proceedings as they have progressed forward. We would hope that this could be settled, you know, as expeditiously as possible.

But we realize, too, that there are very complicated issues involved. And so we pray for, as I said, a fair, equitable and just settlement as soon as that might happen– but we’re not naive that this may take some time.

SPOKESPERSON: For all those who have suffered from sexual abuse, especially members of this archdiocese, that help and healing may be theirs. We pray to the lord.

GROUP OF PEOPLE IN MASS: Lord, hear our prayer.

LEE HOCHBERG: In Portland, Oregon, the diocese is trying to heal the rift that was widened when it declared bankruptcy in July. The Church had paid 130 of 180 abuse claims before seeking Chapter 11 protection.

SINGING IN MASS: Senor, escucha nos

LEE HOCHBERG: Portland Archbishop John Vlazny is trying to reach out to abuse victims with healing services like this one in early December.

JOHN VLAZNY: And when alone, assure them of the support of your holy people.

LEE HOCHBERG: But the small handful of abuse victims who attended said the prayers rang hollow. Bill Crane is director of the Oregon Survivors Network of those abused by priests.

BILL CRANE: So you have supposedly a service for healing and yet there was no healing that took place tonight. If we’re going to have healing, we need to have accountability. And we need to move forward in that direction with disclosure. And we don’t have that.

LEE HOCHBERG: The Portland diocese has also faced setbacks in court. It asked for a firm date after which no new abuse claims could be filed. Judge Elizabeth Paris agreed to a deadline of next April, but she exempted minors, people with repressed memory syndrome and victims who have not yet recognized how their abuse damaged them.

The Portland church had hoped bankruptcy would bring an end to its liability. It refused our request for comment, but Spokane’s church attorney says the ruling is unfair.

ATTORNEY: You just don’t keep whipping an organization without end. We need to have some sense of finality.

LEE HOCHBERG: The most critical question for the Church is still unresolved. Should the bankruptcy court include assets like the Catholic schools in the list of assets available to settle claims?

SPOKESPERSON: Raise your hand and tell me: what are we going to add first –

LEE HOCHBERG: Under centuries-old Catholic church law, facilities of an individual parish, like Portland’s Saint Pious Elementary School, belong to the parish, not to the diocese, but they’re held in the diocese’ name.

Attorneys for the sex abuse victims say all property registered in the name of the diocese should be on the table for claims. Portland area parishes are fighting that idea. Saint Pious’s John Rickman.

JOHN RICKMAN: These assets were passed on by our past generations for the use at the parish level. And they’re in the parish for that purpose. They’re there for our children’s use, our grandchildren’s use. Not for sex abuse cases.

LEE HOCHBERG: The attorney for Portland sex abuse victims Michael Morey, says Church law doesn’t apply in civil bankruptcy cases.

MICHAEL MOREY: The parishes are the diocese. They are one and the same. There is no separate legal entity. It’s like me saying I want to hold property in my right pocket for my left pocket. You can’t do that. Who has ultimate control over those assets? That is the archbishop. So they are one and the same.

LEE HOCHBERG: How much weight the Portland judge gives to Church law could establish an important legal precedent in subsequent church bankruptcies. In the meantime, many victims of priest abuse now know their tortured past is not going to end soon.