By Nicholas K. Geranios
Associated Press
November 5, 2004

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SPOKANE, Wash. (AP) — Talks to settle 28 sexual abuse claims against the Roman Catholic Diocese of Spokane have failed, leaving the possibility the diocese will file for bankruptcy protection.

The lawsuits all involve alleged sexual abuse by former priest Patrick O'Donnell.

"We could not reach a solution which would provide fairness, justice, and equity for all involved parties," Spokane Bishop William Skylstad said in a press release late Thursday.

Insurance companies were not willing to pay the demands of the victims, which totaled millions of dollars, Skylstad said. Lawyers for the victims also sought additional millions from the diocese, which it could not pay, Skylstad said.

The amounts were not disclosed because of a confidentiality agreement between the parties.

Jim Biteman, Seattle director of the Survivors Network for Those Abused by Priests, a victim advocacy group, contended the breakdown in talks will prompt the Spokane diocese to declare bankruptcy to protect its assets.

"They came to the table with no intention of settling," Biteman contended. "Now they can blame the victims of Catholic sexual abuse for their bankruptcy."

The mediation efforts in Seattle that broke down earlier this week involved five lawsuits filed by 28 alleged victims of O'Donnell, who has admitted to sexually abusing boys from the time he was in seminary.

Skylstad said the diocese must consider its options. While he did not mention bankruptcy, he said in a letter to parishioners last week that failure of the talks might force the diocese to declare bankruptcy.

The Archdiocese of Portland, Ore., and the Diocese of Tucson have already filed for bankruptcy protection. The Portland diocese filed in July, the same week a lawsuit was scheduled for trial. In September, the Tucson diocese filed, saying it needed court protection because of legal costs from the cases.

O'Donnell, 62, served as a priest for the Spokane diocese until he was removed from ministry in 1986.

The first of the five lawsuits alleging that the diocese didn't do enough to protect children from O'Donnell is scheduled for trial Nov. 29.

The talks in Seattle began just two weeks before the national meeting of the U.S. Conference of Catholic Bishops. Skylstad is expected to be elected president.

In September 2003, the diocese reached a $50,000 settlement with one victim abused 25 to 30 years ago by priest James O'Malley, who now lives in Ireland.

In 2002-2003, the diocese spent about $625,000 to resolve victims' claims, according to the diocese's finance report published earlier this year. Of that, $346,068 went to legal fees. More than $279,000 went to communications and victims' counseling and assistance.

The diocese now faces 19 lawsuits involving 58 plaintiffs who have accused nine diocesan priests and two Jesuits. Three of the 11 are dead.

The diocese has received reports involving 125 people. More than half were allegedly abused by O'Donnell and O'Malley, dating back more than 30 years.

In a statement of damages filed earlier this year, three brothers who sued the diocese for "years of abuse, sodomy and rape" at the hands of O'Donnell sought a total of $13.5 million to $18 million in compensation. Twenty-three other victims asked for a combined total of $40 million.

Skylstad, in his recent letter to parishioners, said the total amount of claims "is in the tens of millions of dollars and far exceeds the net worth of the diocese."

Bankruptcy would not close down parishes and schools, Skylstad noted. One of the goals of a Chapter 11 filing would be to protect the assets of the more than 80 parishes in the diocese.