The Costs of Penance

GRETCHEN ERTL/AP
LAW AND THE ORDER: The Cardinal is seeking funds

The medieval Roman Catholic Church sold indulgences to sinners who thought cash could purchase exoneration in heaven. Today it's the church that is handing out money in hopes of buying forgiveness for itself. The surging scandal over sexual abuse by the priesthood is proving as financially damaging to the church as it is hurtful to the faith, as Catholic dioceses across the country dole out huge sums to victims to compensate them for their pain and keep them silent.

Desperate to put the worst behind it, the Boston archdiocese agreed last week to pay $20 million to $30 million to settle the high-profile lawsuits brought by 86 victims of defrocked priest John Geoghan. But that was hardly all that the scandal has cost Boston's Catholics. In confidential settlements intended to avoid any whiff of publicity, the church, starting in 1994, gave $15 million to a group of victims molested by Geoghan. In one instance, according to the Boston Globe, a single family got $400,000 to hush up the sexually explicit phone calls Geoghan made to the children. And there are at least 120 more claims pending against Geoghan and a dozen other Boston priests that could jack up the total to $100 million.

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That may sound, at first, like a lot of hush money. Individual payments in the range of $50,000 to $300,000 will be parceled out to the 86 Geoghan victims on a sliding scale of severity: more for rape, less for a flash of nudity. Yet the cash doesn't go far. In 1992 David Gagnon, 37, quietly settled his suit for three years of sexual molestation by the Rev. Michael Doucette, one of two active Portland, Me., priests suspended March 9. After paying his legal bill, typically one-third of the total award, Gagnon netted $63,000. That kept him going for a year with therapy at $150 an hour. But 22 years after Father Doucette destroyed his trust, Gagnon has yet to regain his emotional footing. "Money can't heal anything," he says. "But it's an important sign that something went wrong. The church needs to acknowledge that."

The pedophile drain on Catholic coffers already is estimated to top $1 billion nationwide. Maine's church spent nearly $1 million to cover up past abuse allegations and is bracing for fresh claims against the two Portland priests. When Florida's Bishop of Palm Beach Anthony O'Connell resigned March 10, after revelations that he had fondled a student 25 years ago, church officials disclosed that they had handed the victim $125,000 to quash a lawsuit in 1996. In the past decade, four dioceses (see chart) have laid out $96.2 million in settlements. And these are only the ones that have become public; the vast majority carry confidentiality agreements that continue to conceal the full extent of priest misconduct and church payouts.

And that's the point. Catholic officials say the money was meant to provide therapy and support for victims. But the underlying purpose seems to have been to keep things quiet and thus discourage more victims from coming forward. Now that the silence has been broken, dioceses across the country face mountains of debt, even bankruptcy. The Vatican stands aloof at pay-up time; every diocese is responsible for its own financing. That drove the Santa Fe, N.M., diocese to the brink of insolvency, when it had to borrow from parish savings accounts to fill out a $50 million settlement. The diocese of Santa Rosa, Calif., sold off property, closed an elementary school and took out $7 million in loans from 90 other U.S. dioceses to pay $16 million to abuse victims.

Most dioceses pray their insurance will cover the costs, but that's unlikely. All dioceses carry general negligence and liability coverage, but that basic policy, underwritten by commercial companies like Kemper and Lloyd's of London, doesn't begin to cover settlements the size of Boston's. Commercial insurers have recently started to balk at paying claims if they can prove church officials knew about the abuse and failed to stop it. Most dioceses also insure themselves through a Catholic self-help pool to which they contribute healthy annual premiums. Sometimes nicknamed "the Bishop's Program," this extra insurance often provides the cash payments that church authorities use to conceal their priests' wrongdoings.

In Boston the diocese admits the remnants of its insurance won't equal the settlements already negotiated, much less new ones. Bernard Cardinal Law, under fire for years of covering up parish priests' sexual misconduct, has vowed not to raid collection plates, bingo nights or the church's ambitious $300 million capital fund-raising effort. Instead he's leaning on wealthy donors to float a special $25 million sex-abuse fund, looking at well-to-do lay fraternities like the Knights of Columbus for loans, and itemizing the properties in the church's rich portfolio that he can sell. Topping the list: the Archbishop's elegant residence. But press reports suggest the Boston church has been steadily selling off chunks of its stocks and bonds during the past five years to offset shortfalls in its operating expenses--the same period during which the diocese was making hefty secret payments to abuse victims.