Boy Scouts organization lauds court's dismissal of insurer appeals to overturn sex abuse settlement

By Isha Marathe

May 14 - (The Insurer) - Scouting America, formerly Boy Scouts of America (BSA), praised a federal appeals court for rejecting calls from insurers and certain claimants to overturn its $2.46 billion sex abuse settlement on Tuesday.

The appellants argued that the deal was illegal because it contained legal protections for several organizations, like churches and local Boy Scouts councils, that did not file for bankruptcy.

"By dismissing these appeals, the Court has assured survivors that the Settlement Trust established under BSA's plan can continue its essential work of providing financial compensation to survivors," said Scouting America in a statement regarding Tuesday's ruling.

Scouting America filed for bankruptcy in 2020 after certain U.S. states enacted laws that allowed accusers to sue over older abuse allegations against Boy Scouts councils. It then emerged from bankruptcy in 2023.

The Philadelphia-based Third U.S. Circuit Court of Appeals judge said in the ruling that the appeals came too late to upend the settlement because the youth organization had already emerged from bankruptcy.

"The overall settlement fund for abuse claims is valued at $2.4 billion, with the opportunity for additional contributions by numerous other parties, including the BSA's insurers that have not yet settled," Scouting America said on Tuesday.

"Since it was established in April 2023, the Trust has distributed more than $138 million to approximately 20,000 survivors. Today's decision ensures that the Trust's work can continue without interruption."

Three settling insurers, The Hartford, Chubb and Zurich, had agreed to make contributions of more than $1.6 billion to the settlement trust.

But 15 sets of appellant non-settling insurance companies argued that the plan does not meet the requirements of the bankruptcy code. They objected to the plan in two different groups, with Liberty and Allianz also raising additional issues separately, The Insurer reported in 2023.

A Delaware district judge denied the appeal at the time.

The insurers appealing included subsidiaries of AIG, Arch, Argo, CNA, WR Berkley, Great American, Axa XL and Sompo International, among others.

The Hartford had previously entered into a new agreement-in-principle in the BSA bankruptcy, under which it will pay $787 million before tax for claims associated with its policies mostly issued in the 1970s.

Chubb had agreed to pay $800 million to settle its BSA claims relating to sexual abuse.