Insurer agrees to $30 million settlement over abuse claims against Minnesota diocese
An insurance company agreed to pay $30 million to settle abuse claims against the Diocese of Winona‑Rochester, Minnesota, avoiding a jury trial. The settlement addresses claims from the 1960s‑1980s involving former priest Thomas P. Adamson. It finalizes future litigation under the diocese’s 2022 bankruptcy reorganization plan. The payment is between the diocese’s bankruptcy settlement trust and U.S. Fire Insurance Company, not directly the diocese. The diocese remains committed to its safe‑environment program and urges prayer for healing.
22 days ago
An insurance company has agreed to pay $30 million to settle sexual-abuse claims connected to the Diocese of Winona-Rochester in Minnesota, avoiding a jury trial and concluding litigation related to the diocese’s bankruptcy.
The agreement was reached between United States Fire Insurance Co. and the diocese’s bankruptcy settlement trust. Attorney Timothy W. Burns notified Winona County District Court Judge Nancy Buytendorp of the agreement in an Aug. 27 letter.
The claims date from the 1960s through the late 1980s and primarily concern former diocesan priest Thomas P. Adamson, who was dismissed from the clerical state in 2009 and died in 2019.
The settlement follows the diocese’s 2018 bankruptcy filing, whose plan was confirmed in October 2021 and completed in September 2022. Diocesan vicar general Father Will Thompson said the insurance agreement meant that “all future litigation stemming from our bankruptcy is concluded.”
The $30 million will be paid to the settlement trust rather than directly through a new liability proceeding against the diocese. Under the bankruptcy plan, the diocese and its parishes were released from liability to abuse claimants, with that liability transferred, or “channeled,” to the trust.
The diocese contributed cash, assets and its rights under insurance policies to the trust. The trust consequently assumed the right to pursue insurers for coverage if claims involved injuries covered by those policies.
The Diocese of Winona-Rochester sued U.S. Fire and other insurers in 2018, arguing that the abuse claims were covered by their policies. Several insurers disputed the claims or said they could not verify them, while at least one insurer cited a sexual-abuse exclusion in its policy.
U.S. Fire and other insurers that did not contribute to the bankruptcy trust were classified as “non-settling insurers.” Insurers in other diocesan abuse cases have also challenged whether historical abuse claims qualify for coverage.
Penn State Dickinson Law professor emerita Marie T. Reilly said the Winona-Rochester bankruptcy was the first to confirm a plan involving non-settling insurers and the transfer of insurance assets to a settlement trust. She also said each diocesan bankruptcy and insurance dispute is unique, making it unclear whether U.S. Fire’s settlement will influence insurers in other cases.
Father Thompson said the diocese remains committed to its reorganization plan, which has been incorporated into its safe-environment program, and called for prayer and work toward healing for those affected by sexual abuse.
How does Catholic bankruptcy law affect clergy abuse settlements?
There is no distinct “Catholic bankruptcy law.” Clergy-abuse settlements are generally governed by the civil bankruptcy law of the country involved, while canon law governs the Church’s internal authority and discipline.
A diocese or religious institute may seek bankruptcy protection when abuse lawsuits and related claims threaten its ability to operate. Bankruptcy gathers claims into one court-supervised process rather than allowing individual creditors to pursue assets separately. Historically, religious entities have used Chapter 11 in response to tort litigation, including clergy-abuse cases.
Victims become creditors in the bankruptcy case. Their claims are assessed along with other claims, and a court-approved plan determines how available assets will be distributed. The settlement may therefore be paid over time or at a reduced percentage rather than immediately and in full.
The central dispute is often which Church assets are reachable. Plaintiffs may argue that parishes, schools, ministries, or related corporations are really one enterprise with the bankrupt diocese. Courts generally examine whether those entities are legal “alter egos”—that is, whether their separate corporate identities should be disregarded. The cited cases show that courts have often refused consolidation merely because a bishop exercises ecclesial authority; ownership, finances, management, and day-to-day control are crucial.
Bankruptcy does not automatically make affiliated entities liable. A parish or religious institute may have separate legal assets, but its protection depends on the facts and the applicable civil law. Canonical relationships do not by themselves settle questions of civil ownership or liability.
A settlement normally requires proper governance. For a religious institute, deciding whether to settle is a governance decision made by those possessing canonical authority, after appropriate consultation; civil lawyers may seek to trace assets beyond the particular institution connected with the accused cleric.
Catholic moral teaching distinguishes legal discharge from the underlying duty of justice. One who has unjustly caused harm owes reparation; bankruptcy may lawfully regulate or limit civil enforcement, but it does not make the original wrongdoing morally acceptable.
Older Catholic commentary also recognized that some legal systems release an honest debtor from legal liability while leaving a moral obligation, whereas other systems may extinguish both legal and strict moral liability after a valid discharge. The effect therefore depends on the law governing the particular case.
Thus, bankruptcy can coordinate and limit payment of abuse settlements, but it should not be treated as a way to evade justice, conceal assets, or shield responsible institutions. The precise result depends on the diocese or institute involved, the legal identity of its affiliated entities, the jurisdiction, and the bankruptcy plan.