Insurer agrees to $800M settlement in Boy Scouts bankruptcy

Attorneys in the Boy Scouts of America bankruptcy case have reached a tentative settlement under which one of the organization’s largest insurers would contribute $800 million into a fund for victims of child sexual abuse.

The agreement announced Monday calls for Century Indemnity Co. and affiliated companies to contribute $800 million into the fund in return for being released from further liability for abuse claims. The payment would bring the amount of money in the proposed trust to more than $2.6 billion, which would be the largest sexual abuse settlement in U.S. history.

The settlement comes as more than 82,000 sexual abuse claimants face a Dec. 28 deadline to vote on a previously announced Boy Scouts reorganization plan.

That plan called for the Boys Scouts and its roughly 250 local councils to contribute up to $820 million in cash and property into a fund for victims. They also would assign certain insurance rights to the fund. In return, the local councils and national organizations would be released from further liability for sexual abuse claims.

The plan also includes settlement agreements involving another one of the Boy Scouts’ major insurers, The Hartford, and the BSA’s former largest troop sponsor, the Church of Jesus Christ of Latter-day Saints, commonly known as the Mormon church. The Hartford has agreed to pay $787 million into the victims’ fund, and the Mormons have agreed to contribute $250 million. In exchange, both entities would be released from any further liability involving child sex abuse claims.

The Century settlement, which is subject to court approval, provides for additional contributions from the BSA and its local councils on behalf of chartered sponsoring organizations. They include a $40 million commitment from the local councils and additional potential payments of up to $100 million from the BSA and local councils attributable to growth in membership because of chartered organizations’ continued sponsorship of Scouting units.

“This is an extremely important step forward in the BSA’s efforts to equitably compensate survivors, and our hope is that this will lead to further settlement agreements from other parties,” the Boy Scouts said in a prepared statement. “In addition to our continued negotiations with other insurers, the BSA has worked diligently to create a structure that will allow the Roman Catholic-affiliated churches and United Methodist-affiliated churches who sponsored Scouting units to contribute to the proposed settlement trust to compensate survivors.”

The Boy Scouts, based in Irving, Texas, sought bankruptcy protection in February 2020, seeking to halt hundreds of individual lawsuits and create a fund for men who say they were sexually abused as children. Although the organization was facing 275 lawsuits at the time, it’s now facing more than 82,000 sexual abuse claims in the bankruptcy.

Attorneys with an ad hoc group called the Coalition of Abused Scouts for Justice, which represents about 18,000 abuse claimants, said in a news release that the Century settlement is another reason for victims to vote for the BSA’s reorganization plan.

“Not only is the coalition creating the biggest possible compensation fund for survivors — it’s the only fund on the table, and it vanishes with a ‘no’ vote,” said attorney and coalition co-founder Anne Andrews. “The coalition also continues to work with the Boy Scouts of America on accountability and safety measures to ensure that no child will have to endure the horrific harm and abuse our clients have suffered.”

The coalition, which is affiliated with more than two dozen law firms, has played a dominant role in the bankruptcy despite the existence of an official committee charged with representing the best interests of all abuse claimants. It also has been at the center of various disputes over information sharing and how the BSA’s reorganization plan and trust distribution procedures were crafted.

Opponents of the plan include several other law firms, as well as the official abuse claimants committee appointed by the U.S. bankruptcy trustee. The committee has said the plan is “grossly unfair” and represents only a fraction of the settling parties’ potential liabilities and what they should and can pay.

The committee, for example, has said the settlements with local Boy Scout councils would leave them with more than $1 billion in cash and property above what they need to fulfill the scouting mission. The committee has also noted that sponsoring organizations such as churches and civic groups can avoid liability for abuse claims dating to 1976 simply by transferring their interests in insurance policies purchased by the BSA and local councils to the victims fund, without contributing any cash or property.

News of the Century settlement came the same day that a bankruptcy judge in Indiana approved a $380 million settlement involving USA Gymnastics and more than 500 victims of sexual abuse by former national team doctor Larry Nassar. The agreement, which also involves the U.S. Olympic and Paralympic Committee, is in addition to the $500 million that Michigan State University agreed to pay in 2018 to settle lawsuits brought by more than 300 victims of Nassar, a former associate professor and sports doctor at the school.

The $880 million in the combined Nassar settlements represents an average of more than $1 million per victim, while the proposed $2.6 billion settlement in the Boy Scouts bankruptcy averages about $31,600 per victim.