In Pa. first, Harrisburg Diocese seeks bankruptcy protection

Move will force victims into public eye

• Russ Walker
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  Russ Walker joined PA Post in 2019 as executive editor. He previously worked at KING 5 News, the NBC-affiliated TV station serving Seattle and Western Washington. At KING, Russ oversaw the award-winning investigative unit and managed the newsroom’s daily operations. His background includes stints as an editor for POLITICO, washingtonpost.com, FreedomChannel.com, American Health Line and U.N. Wire. He is a graduate of Vanderbilt University. Russ and his wife, journalist and cookbook author Kim O’Donnel, live in Lancaster.

 Brett Sholtis / WITF

Bishop Ronald Gainer of the Roman Catholic Diocese of Harrisburg speaking at a Feb. 19, 2020, press conference to announce the diocese's decision to seek bankruptcy protection. (Brett Sholtis / WITF)

Brett Sholtis / WITF

Bishop Ronald Gainer of the Roman Catholic Diocese of Harrisburg speaking at a Feb. 19, 2020, press conference to announce the diocese’s decision to seek bankruptcy protection. (Brett Sholtis / WITF)

For the first time, a Roman Catholic Diocese in the Commonwealth of Pennsylvania filed for bankruptcy protection on Wednesday, warning that it faces millions in claims from victims of sex abuse.

While a first for Pennsylvania, two-dozen U.S.-based dioceses have sought bankruptcy protection since 2004, according to a database maintained by a researcher at Penn State.

So what’s at stake for the diocese and the victims? Finding an answer to that question will be the difficult task of a U.S. bankruptcy judge who will be faced with applying a law designed for businesses and corporations to a religious institution.

The diocese’s filing goes to great lengths to separate its assets from those of the nearly 100 parishes located in the diocese’s 15-county region. PA Post’s Joseph Darius Jaafari spoke to legal experts who noted that church law will play a big role in addition to civil bankruptcy law. In the church’s view, the dozens of individual parishes in the diocese’s 15-county territory are independent operations whose assets — buildings, schools, homes and even cemeteries — cannot be seized by the diocese’s creditors.

That’ll be for a bankruptcy judge to decide. And given that so many dioceses have gone through the bankruptcy process over the past 20 years, Harrisburg’s will have a tested playbook to work from.

One step that many dioceses around the country have taken is to set up victim compensation funds. Victims benefit, sure, but the diocese also limits its exposure to potentially larger payments imposed through the court system. Harrisburg’s fund paid out $12.5 million last year, spread across more than 100 victims. In Philadelphia, the diocese has paid out $39 million to 181 victims. In Erie, $12 million was paid out. Across the state, it was $84 million to 564 victims by the end of 2019.

So why opt for bankruptcy if the victims funds were working? There are still more potential claims out there, and ongoing litigation is aimed at obtaining more church files to scrutiny. (There’s even a criminal case ongoing in Philly.)

For further reading, the diocese posted lots of information about its decision online. You can read the bankruptcy filing here. Here’s a good overview from The Philadelphia Inquirer, and another from AP.

The Harrisburg diocese’s filing came one day after the Boy Scouts of America sought bankruptcy protection, also warning that it faces too many claims from victims of abuse. Paul Muschick of The Morning Call says Boy Scout victims are paying the price of the Catholic Church’s influence in Pennsylvania’s legislature.

Muschick: “There aren’t many [Boy Scouts] lawsuits in Pennsylvania because, unlike in some other states including New Jersey and New York, state lawmakers haven’t opened a window for retroactive lawsuits by people who were abused as children and lost their right to sue because of the statute of limitations.” That’s because, Muschick writes, the church lobbied against such a law. The result? ““By filing for bankruptcy, the Boy Scouts are forcing their victims to go public and file as creditors in the court case. That means their names become part of the public record, unless a judge opts to seal them. That’s not right.”

Read local coverage of the Boy Scouts from Pittsburgh and Erie,

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