PhillyDeals: How Wilmington Diocese paid for the abuse claims

Bishop W. Francis Malooly, of the Diocese of Wilmington, which filed for bankruptcy in 2009.
Bishop W. Francis Malooly, of the Diocese of Wilmington, which filed for bankruptcy in 2009. (STEVE RUARK / AP)
Posted: September 03, 2012

Lawmakers in Pennsylvania and New Jersey are weighing plans to lift the statute of limitations so people who say they were molested by Catholic priests years ago can sue local bishops and get paid for their pain.

Bracing for millions in potential claims, the Archdiocese of Philadelphia and other regional church bodies may seek federal bankruptcy protection, like broke businesses or homeowners.

So who will pay? And whose problems will this fix?

And why care, if you don't go there? As a group, Catholic parishes, schools and colleges, hospitals and agencies rank with the University of Pennsylvania and its health system as this region's biggest employers. Church schools and social programs save state and local property taxpayers millions. A financial collapse of the church would be felt beyond its sanctuaries.

So let's look at what happened in Delaware, which changed its law to allow civil suits alleging old sexual abuse of minors. Hundreds of claims drove the Diocese of Wilmington to file for bankruptcy in 2009.

After hard-hitting court decisions forced church records open, the church was found responsible for priests sexually abusing children, and brought on settlement talks. "The pot ended up at $110 million," to pay "154 survivors," the claimants' lead lawyer, Thomas Neuberger, told me.

The diocese paid $77 million of that. Orders of teaching priests and brothers (such as the Oblates who taught Neuberger at Salesianum School in Delaware) paid the rest. Neuberger and other lawyers kept one-third, he said.

Where did the church get the money?

About $54 million came from the Catholic Foundation of the Diocese of Wilmington, a charity started by the late John J. Raskob, financial brain of the DuPont Co. and General Motors.

The rest was paid from diocese assets, such as cash reserves, money held for parishes, and the church retirees' underfunded, uninsured pensions.

The foundation's loss stopped at least $2.7 million a year in annual income used to fix roofs, boilers, and other needs at aging church institutions, diocesan spokesman Robert Krebs told me.

Cut off from its foundation subsidy, St. Paul's parish shut its low-tuition grade school in Wilmington's poorest neighborhood, the Hill. Pope John Paul II School, serving working-class Philadelphia Pike neighborhoods, also shut down; a taxpayer-funded charter school replaced it. The diocese laid off workers, including a Hispanic ministry that served poor immigrants.

On the other hand, the bishop, W. Francis Malooly, a newcomer, kept his job. Prosperous, user-funded institutions such as St. Joseph on the Brandywine Church, where Vice President Biden attends when he's in town, and IHM School, where my five sons graduated, remain busy.

So the money was paid by the dead (donors like Raskob), the old (such as retired teachers), and the poor (like the St. Paul's kids.) And by taxpayers, to the extent the government now must educate and serve former church clients.

"I wish it had caused some greater changes," says Maureen Paul Turlish, a New Castle-based Catholic nun and "victims' advocate," who supported changing the law and suing the church.

Neuberger says the church still has plenty of money, citing a financial report by a big Wilmington city parish that has two schools and gyms and claims a value of $37 million. At that valuation, he said, the Archdiocese of Philadelphia's parishes would be worth "$10 billion plus."

But David Wilk, a longtime University of Delaware real estate instructor, laughed when I asked whether the church could sell properties for that much. Such parishes "have a value that would be several multiples below their use to the church," he said.

Are kids now safer? The law making it easier to sue "was pushed through under the argument that it will protect children," said Krebs. Child abuse is now a problem at public schools, not parish schools, he said. He counts nine reported allegations of student sexual contact by Delaware public school employees since 2006, and none in Catholic schools.

Neuberger, the attorney, says he was able to collect some settlements from public schools where teachers molested students, but "on average they were less" than the church paid. He won't say how much less.

That's not so much because of laws limiting government liability, he contends. The bigger problem, Neuberger told me, is that "public schools don't keep records like the Catholic Church."


Contact Joseph N. DiStefano

at 215-854-5194, JoeD@phillynews.com, or on Twitter @PhillyJoeD.

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