Harrisburg Becomes First PA Roman Catholic Diocese To Declare Bankruptcy
Leaders of Harrisburg’s Roman Catholic Diocese are outlining a Chapter 11 bankruptcy protection.
*This post was last updated at 3:52 p.m. and will continue to be updated as more information becomes available.
In documents filed Wednesday with the U.S. Bankruptcy Court for the Middle District of Pennsylvania, Harrisburg’s Roman Catholic Diocese says it faces “potentially significant exposure” from claims filed by survivors of sexual abuse. The diocese listed potential liabilities as being between $50 million and $100 million.
The decision comes more than a year after a grand jury report detailed decades of child abuse and cover-ups by authority figures in six of Pennsylvania’s eight Catholic dioceses. The revelations set off a wave of legislative and legal action aimed at holding churches accountable.
Harrisburg is the commonwealth’s first diocese to declare bankruptcy.
“I have a hard time believing that we’ll be the last, certainly in the country, and maybe not even in Pennsylvania,” said Matt Haverstick, an attorney representing the diocese.
According to Penn State Law, which keeps track of these bankruptcy filings, 25 diocese and other Catholic organizations filed for bankruptcy between 2004 and September, 2019.
In its filing, the Harrisburg diocese attributed its financial difficulties to “numerous claims by survivors of clergy sexual abuse.”
It said while it has settled many of those claims out of court, it still faces “potentially significant exposure from remaining claimants,” and so is declaring bankruptcy in order to settle those claims while still keeping its churches, schools and other ministries operating.”
It also notes that while it’s attempting to “fairly” disburse its remaining assets, “is not possible to pay all alleged claims in full.”
Attorney General Josh Shapiro, who ordered the grand jury investigation that publicized the extent of the abuse in Pennsylvania’s dioceses, called the filing “yet another attempt to deny survivors the justice that they are owed by the Church.”
“It is of no surprise to me,” Shapiro said, “that these dioceses who engaged in sophisticated cover up of child sexual abuse have found a legal maneuver to skirt responsibility, absolve themselves financially, and continue to avoid transparency.”
Haverstick said there is no single reason the Harrisburg diocese is in such financial trouble.
In the wake of the grand jury report, it — like most of Pennsylvania’s dioceses — set up a victim compensation fund that ultimately paid out about $12 million to more than 100 people its clergy, seminarians and other affiliates abused over the years.
The diocese keeps a list of all the people accused of sexually abusing children while associated with its churches and programs. The list, which only includes substantiated allegations, names 72 people implicated in abuse going back to the 1940s.
The compensation fund, Haverstick said, was a significant financial obligation — as were legal fees associated with the many abuse allegations.
He said perhaps the biggest factor was one case, Rice verses the Diocese of Altoona-Johnstown, in which the state Superior Court decided victims who the statute of limitations bars from suing can still take legal action over cover-ups.
That could mean an influx of suits on old cases the diocese had long stopped factoring into its financial plans.
“That is one thing that went into the thinking, the idea that well now, based on this Rice decision, we’re going to be opened to potentially really catastrophic lawsuits,” Haverstick said.
He added, however, that those stressors should “in no way, shape or form should that be interpreted to mean that survivors caused the bankruptcy.”
“They didn’t,” he said. “The church will never stop apologizing for the harm that was done to those people.”
The diocese’s potential legal costs could get even steeper next year.
The state legislature is midway through the process of passing a constitutional amendment that would open a window for statute-limited victims to file civil suits on their old cases. The bill still needs to be approved by the legislature next session, and then would go do voters for a referendum. If approved, the window for lawsuits would open next year.
It is unclear how the bankruptcy filing will affect the diocese’s operations, but Haverstick said officials intend to keep churches, schools and charity programs running as usual.
In the legislature, Senate President Pro Tempore Joe Scarnati (R-Jefferson) opposed efforts to retroactively change the statute of limitations in 2018, but he supported the lengthier process of changing the state constitution.
In a statement Wednesday, Scarnati said the bankruptcy announcement “is truly unfortunate.” But he said he was pleased that victim compensation funds that the diocese set up have provided financial support to victims.
“I was a strong and vocal advocate for compensation funds to be established, in order to help as many victims as possible,” Scarnati said. “Financial assistance cannot change the past, but is helping to aid victims as they attempt to move forward.”
Richard Serbin, an attorney who specializes in representing survivors of child sex abuse, said the diocese’s decision to seek bankruptcy is “disappointing for many reasons.” In bankruptcy documents, the diocese lists several of Serbin’s clients as among the largest creditors. Serbin said he represents two clients who have sued the diocese. He has also notified the diocese of claims of people he represents who have not yet filed complaints.