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Judge upholds $2.46 billion sex abuse settlement against Boy Scouts

 March 29, 2023

In February 2020, the Boy Scouts of America organization entered Chapter 11 bankruptcy amid hundreds of lawsuits and thousands more claims of prior sexual abuse of Scout members, and two years later, a massive settlement plan was reached to create a trust fund to compensate an estimated 80,000 alleged abuse victims.

Not all parties involved agreed with the proposed $2.46 billion settlement, however, and it was challenged in court, but a federal judge in Delaware ruled Tuesday that the bankruptcy agreement had been made in good faith and the settlement amount was upheld, Axios reported.

The ruling allows Texas-based BSA to proceed with its bankruptcy reorganization plan that includes what is reportedly the largest sex abuse settlement ever and will likely set a precedent for future massive tort litigation battles.

Adam Slater, an attorney who represented victims in the settlement negotiations, told Axios, "This decision is a step toward closure and some measure of justice for tens of thousands of survivors of childhood sexual assault."

Plan to compensate abuse victims upheld

Reuters reported that U.S. District Judge Richard Andrews, in ruling in favor of the $2.46 billion settlement, dismissed the appeals of some abuse claimants and insurance companies that had balked at the deal that had otherwise been agreed to by around 86 percent of all parties involved.

Some of the abuse claimants had complained that the settlement would bar them from suing other organizations that weren't part of the agreement, such as local Boy Scout councils, while some of the insurance companies had accused the national organization of colluding with claimants to shift its liability onto insurers.

The settlement creates a special trust fund to pay out abuse claims that could potentially grow as large as $4 billion and will be contributed to by BSA, local councils, insurance groups, and sponsor organizations.

Payouts to individual abuse victims will depend upon a variety of different factors, such as the location and severity of the claim, and will reportedly range from $3,500 to as much as $2.7 million.

Settlement plan opponents could still appeal ruling

The Associated Press reported that the court ruling will allow BSA to continue operating as it moves forward with its plan to settle all abuse claims and eventually reemerge from bankruptcy.

That is because Judge Andrews said that he could find no faults in the agreement reached last year and that "The appellants have failed to put forth evidence that would demonstrate clear error in the bankruptcy court’s careful findings of facts."

The legal battle may not be over yet, however, as while the attorneys for the non-settling insurance groups who opposed the agreement declined to comment on the ruling, they had previously expressed their willingness to take the fight all the way to the Supreme Court.

The AP reported that of the $2.46 billion settlement to create a compensation fund, approximately 10 percent will come from BSA itself while local councils will pitch in around $515 million, albeit with liability protections built-in for sponsor organizations.

A majority of the fund will come from two main insurance groups – $800 million from Century Indemnity and $787 million from The Hartford – while an additional $69 million will come from other insurers.

BSA react to court ruling

"This ruling represents a pivotal milestone in the national organization of the Boy Scouts of America (BSA)’s financial restructuring case and solidifies a path forward for both survivors and Scouting," the BSA said in a statement on Tuesday.

"We are enormously gratified that the District Court has ruled to uphold the order confirming the BSA’s Plan of Reorganization, which is poised to establish the largest sexual abuse compensation fund in the history of the United States – currently valued at $2.4 billion, with the opportunity for significant additional contributions from non-settling insurance companies and other parties," the organization continued.

"The BSA’s proposed Plan of Reorganization already won overwhelming support from survivors of past abuse in Scouting, with more than 85 percent voting to approve it," the statement said. "We continue to be enormously grateful to the survivor community, whose bravery, patience, and willingness to share their experiences has been instrumental in the formation of this Plan.

"This ruling is a welcome step towards equitable compensation for survivors, and they will no doubt have a lasting impact on our organization," BSA added. "We look forward to the organization’s exit from bankruptcy in the near future and firmly believe that the mission of Scouting will be preserved for future generations."