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Tensions with insurers mount in Archdiocese of Baltimore bankruptcy case

Alex Mann, The Baltimore Sun on

Published in News & Features

That type of request “usually is not controversial,” Reilly said. “But it has become a flashpoint in this case.”

Lawyers for the committee say they need outside expertise at a critical juncture in the case when they are beginning to evaluate the claims that have been filed and are working to calculate how much money is available to later settle those deemed valid.

The church is required to pay for attorneys and experts for the survivors committee, and the insurance companies contended that experts are a costly, unnecessary expense to incur while the fate of the child victims law that prompted the church to declare bankruptcy hangs in the balance.

The insurers seized on an April 1 ruling by Montgomery County Circuit Judge Jeannie Cho deeming the child victims law unconstitutional, saying her decision “calls into question whether the CVA will ultimately withstand constitutional scrutiny.”

Before Cho, judges in Prince George’s and Harford counties found the law constitutional.

Expecting such arguments in court, Maryland lawmakers included in the Child Victims Act an opportunity for mid-lawsuit appeals. That provision already is coming into play, with requests for the state Supreme Court to hear appeals from the pending Prince George’s and Harford cases. The plaintiff in the Montgomery County case also pledged to challenge Cho’s ruling.

 

The state Supreme Court already accepted a question on the victims act’s constitutionality from a federal judge in an abuse lawsuit against the Church of Jesus Christ Latter Day-Saints.

If Maryland’s top court finds the law unconstitutional, “this entire Chapter 11 case may no longer serve any purpose,” attorneys for two insurers wrote. “Even if the Debtor stays in bankruptcy, any reorganization plan will be dramatically different if the vast majority of the potential abuse claims fail as a matter of law.”

Baltimore Archbishop William Lori previously described the church’s motivation as twofold as it considered bankruptcy: “the healing of victim-survivors who have suffered so profoundly” and continuing “the many ministries of the Archdiocese that provide for the spiritual, educational and social needs of countless people — Catholic and non-Catholic — across the state.”

But insurance companies said the Child Victims Act was the archdiocese’s “sole reason” for declaring bankruptcy, citing a church official’s comment during an earlier bankruptcy proceeding.

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